Iraq development fund

[k hanly <khanly@xxxxxxxxxxxxxxx>]

This is a small part of compilation of material on Iraqi financial bodies by
Daniel O'Huiginn from the CASI analysis list. It would seem that the Iraq
Development Fund is far from transparent and that auditing is not taking
place as it should. Also, it seems as if some payments that one would expect
were coming from US taxpayers are actually being taken from the fund to pay
Halliburton susidiaries.

Cheers, Ken Hanly

Development Fund for Iraq This is an extremely important fund, acting in
effect as the budget for Iraq. Administered by the CPA, with funds held
primarily in New York. There are 2 sources of authority governing the DFI,
UN Security Council resolutions (1483 and 1511) and CPA laws (regulations 2
and 3) Administration UN Security Council resolution 1483: "13. Notes
further that the funds in the Development Fund for Iraq shall be disbursed
at the direction of the Authority, in consultation with the Iraqi interim
administration, for the purposes set out in paragraph 14 below;" Since 19
June 2003, payments from the DFI have been administered by the Program
Review Board (see below). Auditing In theory, the DFI is rigorously audited
by the International Advisory and Monitoring Board (see below). In
practise, the IAMB wasn't set up until 5 months after the DFI, and hasn't
yet got round to doing any auditing, let along moving to Iraq. Indirectly,
the UN secretary-general should be reporting to the security council on the
DFI's work (by para 24 of UNSCR 1483). Some donations have also been made
to the fund. According to an Iraq Revenue Watch report , the DFI had spent
about $1.5billion without any auditing, before the establishment of the
IAMB. In particular: " Many UN officials believe that Iraqi oil revenue
should not have been spent until the IAMB was functioning. Others are also
dissatisfied with the Development Fund's lack of transparency. Members of
Congress have called for an investigation into allegations that the US-led
Coalition Provisional Authority allowed Kellogg, Brown and Root, a
subsidiary of Halliburton, to purchase $600 million worth of fuel at
inflated prices with Iraqi oil money." PURPOSES CPA Order 2 and UNSCR1483
use essentially the same language to describe the DFI's aims, "to meet the
humanitarian needs of the Iraqi people, for the economic reconstruction and
repair of Iraq's infrastructure, for the continued disarmament of Iraq, and
for the costs of Iraqi civilian administration, and for other purposes
benefiting the people of Iraq;" CPA order 2 replaces the last clause of
this with "and for other purposes the Administrator deems to be for the
benefit of the people of Iraq." FUNDS. UNSCR 1483 (para 17) transferred to
the fund $1bn from the Oil for Food account, and any money remaining in the
account after outstanding payments. Para 20 diverts to the DFI all oil
revenue, less 5% in reparations for the 1991 Gulf War. Para 23 requires the
transfer to the DFI of foreign assets of Saddam Hussein, but many countries
have been slow to comply (see the re-iteration of this demand in
UNSCR1511); I'm not sure to what extent this problem has now been solved.
The DFI held about $5 billion in early December 2003 . According to the
CPA, it had dispersed by $5,330,304,430.02 by 5 March 2003 LEGAL STATUS.
UNSCR1483, para 22, confers on the DFI a degree of legal immunity which I
don't really understand: "22. Noting the relevance of the establishment of
an internationally recognized, representative government of Iraq and the
desirability of prompt completion of the restructuring of Iraq's debt as
referred to in paragraph 15 above, further decides that, until December 31,
2007, unless the Council decides otherwise, petroleum, petroleum products,
and natural gas originating in Iraq shall be immune, until title passes to
the initial purchaser from legal proceedings against them and not be
subject to any form of attachment, garnishment, or execution, and that all
States shall take any steps that may be necessary under their respective
domestic legal systems to assure this protection, and that proceeds and
obligations arising from sales thereof, as well as the Development Fund for
Iraq, shall enjoy privileges and immunities equivalent to those enjoyed by
the United Nations except that the above mentioned privileges and
immunities will not apply with respect to any legal proceeding in which
recourse to such proceeds or obligations is necessary to satisfy liability
for damages assessed in connection with an ecological accident, including
an oil spill, that occurs after the date of adoption of this resolution;"