Meters Cost Iraq Billions In Stolen Oil

KTVT Investigation: Lack Of Metering At Terminals Funnels Billions Into Hands Of Corrupt Officials And Insurgents

(CBS)  The Iraq Study Group Report warned that corruption is debilitating in Iraq's oil sector and recommended putting oil meters at both ends of the supply line. It's a recommendation that has been stalled for the past three years. "Those people who are courageous and stand up and say, 'I am going to order these meters and I am going to oversee that they will be put in place' get up in the morning and their cousin is found on the street dead and assassinated or their life is threatened," Jaffe says. They were afraid to attend technical training in the United States or testify before the Iraq Study Group, "because you have this sort of layer of evil element of people who are willing to just shoot people to prevent these systems from going into place. It's very hard to implement."

Prior to the U.S. invasion, an elaborate system of corruption for stealing oil already existed in Iraq to funnel money directly to Saddam through corruption of the U.N Oil for Food program. Last May, the House Government Reform Subcommittee on National Security heard testimony that the lack of functioning oil meters at the ABOT, which had been known as the Mina al-Bakr port, enabled the Iraqi government to smuggle oil by inspectors and to top off tankers with undocumented oil. A year after the U.S. invasion, the GAO estimated that from 1997 to 2002, the former Iraqi regime had misused the Food for Oil program to attain $10.1 billion in illegal revenues through kickbacks from oil sales and smuggling oil out of Iraq .

Jaffe says a cottage industry exists for redocumenting stolen oil cargo with phony bills of loading so that it can be sold into the market through corrupt brokers. "Many of the oil trading entities that helped Saddam in the days of oil for food could be seen loading oil in Iraq after the war. So there's no question that an enterprising individual, if there were not good control systems, which of course there were not after the war, could get those same players that were fooling the U.N. to set up similar systems to fool whoever is now in the Iraqi government to continue this corruption."

Morris suspects the Iraqis are now running a new kickback scheme by paying from $6 to $9 a barrel discounts to compensate buyers for the risk of bringing tankers into the troubled waters around the ABOT. Morris recommended that Iraq could lease its own tankers and turn profits in the millions of dollars by not having to pay the discounts. But his suggestion met stiff opposition. "I thought the discounts could possibly be a kickback. But there's no proof of that. I couldn't get access to any of the contracts. It could have been a kickback, but there was no way to verify it.”

The United States is now spending more than $10 million to replace the inoperable meters on the al Basrah Oil Terminal. It's the last stage of a $57.8 million overhaul of the terminal.

Overall, the United States is pumping $38 billion into infrastructure projects across Iraq. That includes spending $1.7 billion on 182 reconstruction projects to help improve Iraq's oil production infrastructure, refinery and export capacity. Yet Iraq's reported oil production remains below prewar levels.


Despite the Iraq Study Group's recommendation to install meters throughout Iraq's oil infrastructure, there are no plans to put meters anywhere else, according to the U.S. Army Corps of Engineers.

Jaffe says U.S. troops should have cordoned off secure "green zones" around the giant oil fields in southern Iraq, where it would have been easier and less expensive to produce oil and account for the revenue. "We had this very haphazard plan where pipeline projects were picked inside the Sunni Triangle. Why would you build an oil pipeline which is long and easy to blow up in a place where you have major parts of the insurgency?"

For example, Morris says pipelines for Iraq's refinery in Baiji, which is located north of Tikrit outside the apex of the Sunni Triangle, would be regularly blown up and parts of the refinery sabotaged in concert with insurgents to create fuel shortages in Baghdad. The regular disruptions at the refinery, operated by the state-owned North Refining Company, were designed to drive up the price of fuel on the black market. "They constantly work with insurgents to keep the fuel lines blown up and work with insurgents to keep fuel shortages in Baghdad. They also threaten the lives and families of refinery workers and fuel tank drivers. This refinery was corrupt during the Saddam days and needs to be seized by the Coalition Forces."

Morris recalls receiving an urgent plea for security assistance from a director general in Iraq's Oil Ministry in December of 2005. The Iraqi official warned that tanker truck drivers leaving the refinery were being threatened by insurgents. Morris says State Department officials declined to provide guards and accused him of overreacting. A few days later, the ambushes of tanker trucks started and remain unabated. Morris says it became clear that intelligence about tanker truck schedules was being fed to insurgents from the Oil Ministry.

In mid-January 2007, Iraqi Deputy Prime Minister Barham Saleh told a budget session of Parliament that the country was losing $1.5 billion to fuel smuggling from the Baiji refinery every year. "Most of this money goes to the terrorists, who target us and target our security," he said.

Last March, Morris received what he believed to be was a forged U.S. Army document from an Iraqi director general that accused specific officials in the Oil Ministry of corruption. The document alleged that Iraqi officials were creating fake invoices for construction work and the sale of petroleum products to the U.S. Army. Morris suspected that the allegations were true and recommended that the Iraqis seize the records so that the U.S. State Department could open an investigation. The next day, Morris says a fire mysteriously broke out in the Oil Ministry’s financial documents office and destroyed all of the financial documents in question.

Morris says that the U.S. was overwhelmed by corruption in Iraq's state-owned oil industry. "I got the impression that it was such a problem like the insurgency that no one knew the extent of it. No one really had a plan to come up with procedures or processes that deal with the problem."

[clemenhagen1]

So billions of dollars goes missing from the untended meters in Iraq and we should automatically assume the evil powers that be in Iraq funnel the proceeds to shadowy insurgent and terrorist networks. How much money in cash disappeared under Viceroy Bremer's tenure? Nice title by the way - Viceroy possesses some thoughtful historical connotations don't you think. Got that number of missing cash yet? Oh that's right: eight billion dollars plus. Didn't that cash come from liquidated Iraqi assets. We convert Iraqi assets to cash and it mysteriously / magically disappears into the ether? But this missing oil couldn't possibly be a result of the same scenario, right? Right.

[firststate]

Does anyone really believe that quick draq and baba looey in the white house and their oil patch pals haven't known the possibilities opened up by a lack of metering? The skimming hasn't been a problem for almost 4 years until it started attracting attention. Nobody at Halliburton missed the fact that there were no meters and you can take that to the bank, but not their banks. Those are full, hence the meters being installed in May.

[radiob-2009]

The easy solution here is install new working meters.Let the Iraqis pay for them with the lost oil that they will be able to account for with the new meters.

[godmonkey-2009]

Well, Lars, you're probably right. We'll also probably destroy the environment and all die from thirst and exposure hahahaha. Of course, by then, life in America will be so miserable, an oligarchy so rife with corruption, that it'll come as a relief hahahaha.

How do you recommend we pay for this endless war? Is yore pa gonna sell his tractor and send the money to Washington? hil-hil-hil-hil

[bluestardad]

Hey Congress, We know you cannot protect innocent high school pages in the Halls of Congress nor put Pedophiles in Jail like Mark Foley, how about thieves of billions of dollars, and Liars that cause the deaths and Maiming of Thousands of American Soldiers and sends our country to a war on a lie? The Middle East is not in American Interest, we have invested 50 years of blood, and money is enough is enough! Did the Neocons slip you some money how about thirty pieces of silver for your vote or compliancy in this war?
firststatehttp://www.senate.gov/general/contact_information/senators_cfm.cfm

[gunnerv1]

Actually, Mark Foley didn't break any laws, other than being a "sick puppy". Don't worry, I'm not sticking up for him, just stating a fact.

[legendary240]

Why are 21st century Americans at the behest of 19th century ragheads?

[bluestardad]

This and the Slant drilling is why this war was started at the bidding of the Neocon chicken hawks from Saudi and Israel.

[bluestardad]

clestes ; thank you I wrote all of them except Levin of Michigan he had no contact page.

[lars008-2009]

doesn't matter.......... hahahahahaha

usa will have bases and troops in the middle east for a long long time...... get used to it.....

[bluestardad]

Great I wish more people would contact their senators!

[lars008-2009]

islam is a violation of international law

islam practices slavery on non muslims
islam practices aparthied on non muslims
islam practices rape on non muslims
islam practices genocide on non muslims

all are violations of international law and are crimes against humanity

[clestes-2009]

bluestardad, I already have.

[lars008-2009]

relax you stupid silly fascist nazi islamic muslims.......
the usa will have bases and troops in the middle east for a long long time...... get used to it.....

[bluestardad]

Hey Congress, We know you cannot protect innocent high school pages in the Halls of Congress nor put Pedophiles in Jail like Mark Foley, how about thieves of billions of dollars, and Liars that cause the deaths and Maiming of Thousands of American Soldiers and sends our country to a war on a lie? The Middle East is not in American Interest, we have invested 50 years of blood, and money is enough is enough! Did the Neocons slip you some money how about thirty pieces of silver for your vote or compliancy in this war?
firststatehttp://www.senate.gov/general/contact_information/senators_cfm.cfm

[arthurcl1]

Sure, what funds the insurgents? How do they buy weapons to shoot down our helicopters? Oil Money from their own pumps! Emperor Dyanastic Bush is responsible for this Vietnam War! He is Bankrupting this country!

[edjohn66]

I sure am glad that securing Iraq right after major hostilites ended was the #1 U.S. priority.

Wait! No it wasn't! Chaos reigned supreme for weeks because we had no post-war occupation plan!

We did, however, secure the oil fields and refineries. I sure am glad that securing the oil fields and refineries was accomplished.

Wait! You mean that wasn't done either?????

Would someone please tell me what Bush, Cheney, and Rummy did RIGHT during this whole operation? And now we are supposed to trust Bush and Cheney with an escalation of the war????????

Impeachment now! Its the only option that makes sense.

[bluestardad]

Contact your senator; The middle East is not in American Interest, we have invested 50 years of blood, money enough is enough! Saudia Arabia, Israel the lot of them, their neocons got us in this mess!
firststatehttp://www.senate.gov/general/contact_information/senators_cfm.cfm

Founded in 1953 by Isaiah L. "Si" Kenen, AIPAC's original name was the American Zionist Committee for Public Affairs. According to UCLA political science professor and author, Steven Spiegel, "the tension between the Eisenhower administration and Israeli supporters was so acute that there were rumors (unfounded as it turned out) that the administration would investigate the American Zionist Council. Therefore, an independent lobbying committee was formed, which years later was renamed [AIPAC]." [SPIEGEL, p. 52].[citation needed] Today, AIPAC has over 100,000 members.[1]
AIPAC's stated purpose is to lobby the Congress of the United States on issues and legislation "to ensure that the U.S.-Israel relationship is strong so that both countries can work together" to meet the challenges of "stopping Iran from acquiring nuclear weapons, fighting terrorism and achieving peace".[2] It regularly meets with members of Congress and holds events where it can share its views, and provide analysis of voting records of U.S. federal representatives and senators with regard to support of Israel. The New York Times described AIPAC on July 6, 1987 as "a major force in shaping United States policy in the Middle East."

[stevex47]

Anyone going to win in this debacle? Freedom for Iraqi's? Snuffing out world terrorists? Secure energy for the west?
I'm guessing none of the above. How the heck did we let this happen? Oh boy we're gonna pay for this for a LONG time. Nic job reich wing.

[bluestardad]

clestes; well spoken but who is listening? Here is how to contact your senator.

Make it count!

firststatehttp://www.senate.gov/general/contact_information/senators_cfm.cfm