Donald L. Barlett and James B. Steele& Claire Howorth / Vanity Fair – 2007-09-15 08:39:29

http://www.vanityfair.com/politics/features/2007/10/iraq_qanda200710

Billions over Baghdad:
Q&A: The Booty Vanishes
Donald L. Barlett and James B. Steele
interview by Claire Howorth / Vanity Fair Web Exclusive

(September 5, 2007) — In April 2003, the hastily created, American-led Coalition Provisional Authority in Iraq began distributing planeloads of cash-$12 billion by June 2004. To date, $9 billion is unaccounted for. In the October V.F., Donald L. Barlett and James B. Steele uncover evidence of a feeding frenzy that emptied the safe in Baghdad as the Pentagon shrugged. Here, the crack investigative duo give VF.com the scoop on their scoop, discussing how they got on the trail, how they followed it, and what the fiasco’s larger implications are. Says Barlett, “This is a story about money, but it’s really a story about the war.”

Vanity Fair.com: What led you to this story?

James B. Steele: It just kind of ballooned in the news in the first of the year. There was one hearing, and there were a couple of images of the pallets of cash, but that was it. It just fell off the screen. So we all talked about this and thought, Jeez, wonder if this would be worth looking at. We were very intrigued.

Donald L. Barlett: It was really how fast the story disappeared. Some stories pick up a life of their own-this one didn’t, for whatever reason.

Steele: A number of times people would say, “What are you working on?” And we’d tell people, “Well, you remember the story about all the cash that went to Iraq?” “Yeah, yeah.” “Well, we’re looking to see what happened to it.” And everybody remembered the images of the money, but that’s all they knew. We love to look at things below the radar screen and bore in and see exactly what happened, especially if the news media hasn’t followed up on it. Or in this case, Congress didn’t significantly follow up on it.

With this story in particular, you found that almost nobody was willing to talk to you. Why do you think that was the case this time?

Barlett: Well, [L. Paul] Bremer [head of the C.P.A.] did finally talk to us a couple days ago. But he didn’t know anything. Which really tells you something. The responses were cagey. Look, if I’m in charge of billions of dollars and it just disappears, I’m not gonna talk either. What’s to be said?

Steele: You can speculate a million years about why this is going on, but they’ve obviously got a hell of a problem on their hands. All this money came in, they didn’t track it, they have no idea where it went, they would just like to pretend the problem isn’t there — one of the main reasons nobody wants to talk. A lot of people talked about how Bremer was a micro-manager and an absolute disaster, and that that was part of the problem they had from day one. But that has nothing to do with what this story ultimately became, other than the fact that it’s ironic he’s micro-managing all this stuff, but not watching $12 billion in money.

Did you ever hit a wall and think the story wasn’t going to work? Or did it take any turns you didn’t expect? Sounds like you kept unfolding one thing into another.

Barlett: That’s basically the way we work at it. Sometimes it takes a little longer than other times. You just keep unraveling. This was clearly going to be a story from day one.

Steele: If the Pentagon had not come through with [the NorthStar] contract, there might’ve been a complication, but when it finally arrived, and we did some initial checks on NorthStar, we knew then that we had something. We didn’t know what it was, but our instincts right away told us that this one was going to be good. Particularly since their mailing address was in the Bahamas.

Did you just plug that address into Google?

Barlett: Well, we don’t like to talk about the secret methods of our investigations [laughter]. Our high-tech methods. That’s the kind of thing that just destroys all the mystique.

Steele: One of the things that just absolutely amazed us when we got the contract for NorthStar Consultants was that they blacked out all kinds of pertinent data — part of the phone number, the name of the officer who signed the contract, whatever his operating address was — but they left on the contract this post-office box in Nassau, which turns out to be a focal point of an awful lot of offshore tax activity. Was this ineptitude? It just boggles the mind why they just did not redact that. But they didn’t. And that was key toward unraveling an awful lot of the story.

Barlett: As it turned out, the post office box — during the same period it was set up for the company that ultimately was supposed to track money in Iraq — was also used for one of the largest stock swindles in history. Over $200 million disappeared. And this is at the same time the company was being set up that would eventually get the Iraqi contract.

Steele: When we first got the contract, the last four digits of [NorthStar’s] phone number were redacted, so when you plugged in the area code and the first three digits, you could figure out that this was somewhere in north San Diego or the La Jolla area. It occurred to us to do the same thing with the post-office box. The fact that anything at all turned up just amazed us. We try so many things just to see what’s there, and that’s just part of the process.

And lo and behold, there were several hits on that post-office box, and one of them showed up this company, Lions Gate Management, which was [run by] this fellow Patrick Thomson, who, we found out later, actually set NorthStar up for [Thomas] Howell, the guy who actually ran NorthStar. Or “had” NorthStar would be a better term-it’s not much of a company.

The two of you have been an investigative team for a long time now. How have the Internet and other technologies helped you to investigate stories like this?

Steele: The post-office box is the best example. Technically you could find that, but in reality you couldn’t, because how would you know to look at a court case somewhere that would show that post-office box? The Internet was tremendously powerful and influential in helping us get to the heart of this thing. In the case of the post-office box, there was probably no other way to get it.

Barlett: There’s a flip side to this. In this case the Internet was helpful, but you can also see and envision cases in which the Internet won’t do you any good. There’s a growing tendency to destroy court files. Under the old system, the record of a case was entered in ledgers, and it was basically impossible to destroy any evidence that the case existed. That’s not true with the Internet. Now, with the flick of a switch, a case can disappear — and it does. So it cuts both ways.

As you worked on this story, did you ever feel like you were endangering yourselves?

Barlett: No [laughter].

Steele: No [laughter].

Barlett: That’s only in the movies.

I always wonder if somebody calls and says, “You better back off.”

Steele: No, no-we’re still waiting for that. It hasn’t happened yet. The thing here is, nobody wants to talk about it in any way. And it does raise the question: Is there something beyond the waste, the fraud, and the basic corruption? Was some of this money used for purposes we can’t even imagine? You just don’t know. Because of the unique nature of the Coalition Provisional Authority, which wasn’t an entity of the United States government and wasn’t an entity of the United Nations, it was not subject to the normal auditing and budgetary constraints of a lot of our defense programs.

There was even less oversight with them than in the usual process, and that’s why the fraud was so rampant, and the corruption, and so forth. Add to that the chaos in Baghdad and Iraq that first year. Oh gosh, that must seem like the good ol’ days now. The other thing that struck us is that nobody in any kind of official capacity seems to be upset by this. And that’s amazed us as much as anything.

It seems like they must have been willingly not watching the money.
Steele: Yes.

Barlett: You noticed! The question is, where did it go? Did they put someone in charge of the money who they knew would not look at it too closely? Or did they put someone in charge of the money who channeled it into certain areas that the government doesn’t want you to know about?

Steele: Everybody we talked to who was over there didn’t think any of the money that was actually turned over to the Iraqis got to people. Or I shouldn’t say any, but very little. The whole reason for that money was to pay pensions, and civil servants, but you talk to people who were over there and you’re under the impression that most of the Iraqis who were in those ministries were solely taking care of themselves because it was so chaotic, and all order had broken down.

And none of them had ever run an agency before, because Saddam’s boys had been Ba’ath party members in administrative positions. So the sense of chaos _ I guess that’s the thing that struck us both. We all knew it was very chaotic over there, but when you actually talk to people who were there at that time, you realize this thing was absolutely doomed from the beginning. Nobody was in control. And the money was one illustration of that.

Barlett: It is a metaphor for the whole war. This is a story about money, but it’s really a story about the war.

Is there anything larger we should take away from this story?

Barlett: The great unanswered question is where did this money go. And the cavalier attitude of the C.P.A. people just raises too many questions. The response of so many of them was, Well, this is wartime, and this is what happens in war. And my response to that is, It does not happen in war. You don’t lose that kind of money.

How did you decide who got to go to the Bahamas?

Barlett: Well, Jim always gets those trips! He’s a snorkeler.

Steele: Yeah. Also, I can speak British English.

Barlett: He speaks British English very well. But to be perfectly fair, on the other side of the coin, he also gets all of the far-north Alaska trips in February too.

Can you say what you’re working on next?

Barlett: Of course not. We’d have to kill you!

• Read “Billions over Baghdad.”

Claire Howorth is an executive assistant to the editor of Vanity Fair.

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