CBS: Corrupt arms deals cost Iraq $800M

Associated Press, Monday, October 23, 2006

 NEW YORK - Iraq's former finance minister alleged in a U.S. television report that up to $800 million meant to equip the Iraqi army had been stolen from the government by former officials through fraudulent arms deals.

The former minister, Ali Allawi, told CBS' "60 Minutes" that $1.2 billion had been allocated from the Iraqi treasury to the defense ministry to buy new weapons. About $400 million was spent on outdated equipment, while the rest of the money was simply stolen, he said in the interview, which aired Sunday.

Allawi, who has repeatedly leveled such accusations in the past, said the arms fraud is "one of the biggest thefts in history" and that corrupt former Iraqi officials are now "running around the world hiding and scurrying around."

He did not name the officials who allegedly stole the money. Iraqi investigators are probing several weapons and equipment deals engineered by former procurement officer Ziad Cattan and other officials including former Defense Minister Hazem Shaalan.

Shaalan, a Sunni-Arab*, who held the defense portfolio under former interim Prime Minster Ayad Allawi's government, has denied any wrongdoing.

Most of the fraudulent arms purchases were allegedly made during Ayad Allawi's term. The former prime minister, who took office after occupation authorities turned over sovereignty to Iraqis on June 28, 2004, is a cousin of Ali Allawi.

When new Defense Minister Saadoun al-Dulaimi took office in May 2005, an investigation was opened into several alleged cases of corruption.

Tapes obtained by "60 Minutes" from a former associate of Cattan allegedly captured Cattan talking about paying large bribes to Iraqi officials.

Cattan, wanted by Iraqi authorities and now living in Paris, was interviewed in the same "60 Minutes" broadcast and said he can account for the hundreds of millions he used to purchase weapons.

"I have documentation. I give it to you in your hands," Cattan said.

He said the tapes, excerpts of which were played on the broadcast, had been doctored and were not authentic.

Experts at Jane's, a leading authority on military hardware, told "60 Minutes" the documentation Cattan provided did not prove whether any of the weapons he ordered — paid for in advance — had been delivered to Iraq.

Judge Radhi al-Radhi, chief of Iraq's Public Integrity Commission, told "60 Minutes" he had obtained arrest warrants for some top defense ministry officials in October 2005, and almost all of the suspects fled the country.

Al-Radhi said aside from the hundreds of millions of dollars believed to have been stolen by the officials, the arms that did make their way to Iraq — Soviet-era helicopters, bulletproof vests and ammunition — were in such poor shape they could not be used.

Al-Radhi said those accused of the fraud are thought to be hiding mostly in Europe and the Middle East but he is not receiving help from those countries in recovering any of the money or in apprehending the suspects.

Iraqi government officials could not immediately be reached for comment by The Associated Press.

But Sheik Sabah al-Saadi, chairman of the Iraqi Parliament's Integrity Commission, told the AP he had written to the Iraqi Foreign Ministry on Sunday asking it to contact Interpol to detain all those involved in the defense corruption case, including former Defense Minister Shaalan.

He said he had documents that show the theft of $2.2 billion from the time of Saddam Hussein's ouster in 2003 until now.

*Shaalan is a Shia in fact and the report got it wrong