Missing Iraqi Defense Funds

According to news reports, Iraqi defense officials have embezzled $1.27 billion from their country's defense budget, supposedly rendering it totally defenseless against the insurgency. Now the current Iraqi army is obviously fighting with something. So what was stolen and what was not stolen? Apparently the thefts took place over an 8 month period covering late 2004 and early 2005. According to the Independent:

The fraud took place between 28 June 2004 and 28 February this year under the government of Iyad Allawi, who was interim prime minister. His ministers were appointed by the US envoy Robert Blackwell and his UN counterpart, Lakhdar Brahimi.

The man accused as the principal embezzler was a certain Ziyad Cattan, who as the further excerpt below shows, was unlikely to have been acting without the knowledge of the Iraqi Defense Minister, a Mr. Hazem Shalan.

Mr Shalaan says that Paul Bremer, then US viceroy in Iraq, signed off the appointment of Ziyad Cattan as the defence ministry's procurement chief. Mr Cattan, of joint Polish-Iraqi nationality, spent 27 years in Europe, returning to Iraq two days before the war in 2003. He was hired by the US-led Coalition Provisional Authority and became a district councillor before moving to the defence ministry.

For eight months the ministry spent money without restraint. Contracts worth more than $5m should have been reviewed by a cabinet committee, but Mr Shalaan asked for and received from the cabinet an exemption for the defence ministry. Missions abroad to acquire arms were generally led by Mr Cattan. Contracts for large sums were short scribbles on a single piece of paper. Auditors have had difficulty working out with whom Iraq has a contract in Pakistan.

Mr. Shalan has this biography provided by the CPA:

Minister of Defense Mr. Hazem Sha’alan is Sheik of the Ghazal Tribe. He earned his degree in economics and management from Baghdad University in 1972 and began his career managing the Kut Dewanyah branches of the Iraqi Real Estate Bank. He served as Inspector General of the main branch in Baghdad from 1983-1985. He was forced to leave Iraqi in 1985 because of his opposition to the former regime and managed a successful real estate firm in the U.K. He has been governor of Diwaniyah since April 2003. He was born in 1947 in Diwanyah.

It would appear that at least some Iraqi equipment is being delivered from Multi National Security Transition Command (MNSTC). For example, in 2004:

"November's rollout totaled more than 2 million RPK/PKM machine-gun rounds; 1.2 million 9 mm pistol rounds; 2.8 million AK-47 assault-rifle rounds; 450,000 12 gauge shotgun rounds, including 200,000 slug rounds; 999,000 5.6 mm rounds; 48 shotguns; 1,000 various-make 9 mm pistols; nearly 1,000 RPK and PKM machine guns; 1,120 smoke and riot grenades; roughly 1,900 9 mm Glock pistols; 5,400 AK-47s; 20 Walther pistols; 78 rocket-propelled grenade launchers; 16,000 sets of body armor; more than 7,400 helmets, including 150 riot helmets; 44 French- designed Panhard M-3 armored personnel carriers; four T-55 Russian-designed heavy tanks; 18 multi-purposed armored vehicles; and four Comp Air 7SL light reconnaissance aircraft. ..." et cetera, et cetera.

Anthony Cordesman, a much quoted senior defense analyst at CSIS provides this table of equipment deliveries to the Iraqi Security Forces between May, 2004 and July 2005 -- roughly the same period in time the Iraqi defense officials are reported to have been looting their ministry. (from pages 13 to 19)

Vehicles	10,539
Radios	24,051
PKM Machineguns	7,082
AK-47s	155,034
Pistols	140,239
Ammunition	305,587,537
Uniforms	561,568
Helmets	92,883
Body Armor	168,104

And so on. The kind of equipment structure for the New Iraqi Army that the MNSTC appears to have wanted for it was divided into "sets", as in light infantry sets, armor sets, etc. Global Security notes that the New Iraqi Army activated its first armored brigade in August 2005.

By August 2005 Iraq's first armored brigade was trained and in the field, with 77 Soviet-designed T-72 tanks donated to Iraq by Hungary expected to arrive in Iraq soon. Defense Solutions announced 27 July 2005 that it would deliver the first five rebuilt T-72 Main Battle Tanks to the Iraqi Army. Iraqi Staff Major General Mahmood Ayoub Bashar accepted these tanks on behalf of the Iraqi Ministry of Defense during his attendance at program review meetings held at the HM Currus Combat Vehicle Technique Company (Currus), Gödöllõ, Hungary.

It is entirely possible that some money, perhaps even vast amounts of money were stolen. However, in the light of the equipment that is physically in evidence, at least in training and operations, the Independent's depiction of the absence of Iraqi equipment seems something of a stretch.

The carefully planned theft has so weakened the army that it cannot hold Baghdad against insurgent attack without American military support, Iraqi officials say, making it difficult for the US to withdraw its 135,000- strong army from Iraq, as Washington says it wishes to do. ... Many Iraqi soldiers and police have died because they were not properly equipped. In Baghdad they often ride in civilian pick-up trucks vulnerable to gunfire, rocket- propelled grenades or roadside bombs. For months even men defusing bombs had no protection against blast because they worked without bullet-proof vests. These were often promised but never turned up.

What and where did Mr. Cattan want to buy his equipment? The Independent says he was buying Polish helicopters, fake Egyptian submachineguns, armored cars of unknown provenance and avers to mysterious contracts with Pakistan. These equipment types look to be a garage-sale assortment at total variance with the "equipment sets" planned by the MNSTC.

This is still a breaking story, but I hope this backgrounder helps.