A billion dollars has been plundered from the coffers of Iraq's defense ministry, seriously affecting the government's ability to combat the insurgency, the Independent newspaper reported yesterday, citing the Iraqi finance minister.
"It is possibly one of the largest thefts in history," it quoted finance minister Ali Allawi as saying.
Most of the money was "siphoned abroad in cash and has disappeared" to finance the purchase of arms in Poland and Pakistan, according to the report. But rather than purchasing state-of-the-art weaponry Iraq had procured "museum-piece weapons," the Independent said.
The paper listed a series of problems with the arms purchased, including armored cars which "turned out to be so poorly made that even a bullet from an elderly AK-47 machine-gun could penetrate their armor." Other armored cars reportedly leaked so much oil that they had to be abandoned.
A shipment of the latest MP5 American machine-guns turned out to be Egyptian copies worth a fraction of the price.
"Many Iraqi soldiers and police have died because they were not properly equipped," it added.
The rip-offs were so huge, it said, that Baghdad officials estimate the Iraqis involved "were only front men and `rogue elements' within the US military and intelligence services may have played a decisive role behind the scenes."
Iraqi Prime Minister Ibrahim Jaafari has been informed of the problem, "but the extent of the losses has become apparent only gradually. The sum missing was first reported as US$300 million dollars and then US$500 million dollars, but in fact it is at least twice as large," the paper said.
"It is nearly 100 percent of the ministry's procurement budget that has gone AWOL [absent without leave]," Allawi said, adding a further US$500-600 million dollars has allegedly disappeared from the electricity, transport, interior and other ministries.
"This helps to explain why the supply of electricity in Baghdad has been so poor since the fall of [former Iraqi president] Saddam Hussein 29 months ago, despite claims by the US and subsequent Iraqi governments that they are doing everything to improve power generation."