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Transcript:

September 28, 2007

The Moyers Clip File: Loose Change

(NOTE: You can read the articles mentioned at this link.)

BILL MOYERS: Let's take a look now at the clip file of stories we have been collecting on the cost and conduct of the war in Iraq. You heard John Bogle talk about how those costs could soar beyond a trillion dollars.

By one estimate, we are now spending half a million dollars on the war every minute. And now President Bush is asking Congress for another $200 billion dollars for next year. That would make 2008 the most expensive year of the war yet.

It's not just the cost that boggles the mind; it's the fact that no one in Washington, from the President on down, really knows where that money is going.

The government is required by law to have outside auditors review the federal books. But this month, when the Associated Press took its own look at the audits of 15 executive departments, it found that the Defense Department and the Department of Homeland Security hadn't passed their audits and didn't even meet basic accounting requirements. They were given "Disclaimers" - that is their fiscal records are so disorganized and inconsistent, they can't be fully assessed. By these departments' own admission, this makes them vulnerable to waste and fraud. For example, the Defense Department, with a $460 billion budget this fiscal year alone - is easy pickin's for every Jesse James wannabe with an empty sack to fill.

Rep. Jim Saxton (R-NJ): There are 78 criminal investigations and 20 indictments, we're told related to contract fraud in theater. The 20 indictments are a combination of civilian and military personnel.

Rep. John Kline (R-MN): So I am doubly appalled, triply, quadruply appalled at this day at the horrific conduct of commissioned officers, at a clear breakdown in leadership.

BILL MOYERS: Members of the House Armed Services Committee could hardly believe their ears last week when they learned that $6 billion dollars worth of military contracts are under criminal review. Another $88 billion dollars in contracts — that's right: $88 billion dollars — are also being audited for fraud. Here are some excerpts from that hearing.

REP. CAROL SHEA-PORTER (D-NH): $6 billion here, $9 billion unaccounted for, you know, I feel sorry for you all because you are here defending the indefensible and you and I know that. But Americans are asking us how? How could this have happened? And what was the climate for this?

Shay Assad, Dept. of Defense Procurement & Acquisition Policy: We've not done a very good job of educating our leadership, our officers who are on the ground doing contracting, on what fraud indicators are, what they should be looking for.

Rep. Phil Gingrey (R-GA): Some of the witnesses have said that what, you know, we need more ethics training. Ethics training for a full colonel in the US army to me is like asking a Catholic bishop to re-read the Baltimore Catechism. I'm just absolutely appalled.

Rep. Ike Skelton (D-MO): Why is it that the United States military has this problem as opposed to large multinational corporations, Mr. Gimble?

Thomas Gimble, Dept. of Defense Principal Deputy Inspector General: Mr. Chairman that's a great question. And if I could give you a really definitive answer, I'd be - I think I'd be in pretty good shape.

BILL MOYERS: There are 630 private companies under U.S. government contract in Iraq. Their employees do everything from construction to guarding diplomats. You've surely heard of Blackwater — it's just one of many mercenary companies operating there.

Jeremy Scahill, Investigative Journalist: Blackwater works for the State Department, there are scores of contractors who work for the US military. The investigative journalist Jeremy Scahill wrote a best-selling book on private contractors and was asked to share his findings at a meeting of the Senate Democratic Policy Committee.

Jeremy Scahill, Investigative Journalist: I sat in a defense authorization hearing this past May and watched as representative after representative asked officials from the military and the federal government how many contractors do we have? What are they doing? How much are they being paid? What nations are they drawn from? The answers were I don't know. I don't know. I don't know. I think it's ridiculous I have representatives calling me asking me for government documents. It should be the other way around.

The Senators also heard from whistleblowers about contractor fraud. Robert Isakson, a former FBI investigator of white collar crime, went to Iraq with his disaster recovery firm. He won a subcontract with an American company called Custer Battles.

Robert Isakson: Former Contractor in Iraq: They asked me three times to assist in preparing fake invoices and leases that they could then submit to the government. The first time I told them no. The second time I told them hell no. The third time, after telling them no, I told them they were all going to prison. As a result of my continued refusals to cooperate in their fraud they pointed machine guns at us and seized our identifications.

Later I learned that this company had handed in $10 million in fake invoices for approximately $3 million dollars of work.

BILL MOYERS: Isakson sued Custer Battles for fraud and to have that $10 million restored to the United States. He won in civil court.

But a federal judge overturned the decision, ruling that the, now defunct, Coalition Provisional Authority, which hired the firm was not part of the U.S. government — so Isakson couldn't sue them under U.S. law. He's still fighting it.

Sen. Byron L. Dorgan (D-ND): The question of accountability is important. It appears to me from all that I know there is precious little accountability with respect to contractors in Iraq and it seems to me that leads to frightening problems.

BILL MOYERS: As Inspector General of the State Department, Howard Krongard — known as "Cookie" — was supposed to be the watchdog guarding against corruption there. But he's a political appointee with strong partisan loyalties, and now seven people on his staff have accused him not only of failing to do his job but of actively blocking their efforts to do theirs. The reason? Quote: "To protect the State Department and the White House from political embarrassment."

Chairman Henry Waxman of the key House Oversight Committee is asking "Cookie" to answer those allegations in person. Waxman sent the Inspector General a l4-page letter with a litany of investigations that may have been blocked. Cookie, says the Chairman, has some explaining to do.

But so does his boss, Secretary of State Condoleezza Rice. Waxman claims she is holding back documents on Blackwater as well as what the State Department knows about corruption in Iraq.

Stay tuned: Chairman Waxman has scheduled hearings on both Blackwater and corruption in the Iraqi government next week.

(NOTE: You can read the articles mentioned at this link.)

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