Mid-2003: A reporter in Iraq stands on a pallet filled with shrink-wrapped bricks of C-Notes

“Who in their right mind would send 363 tons of cash into a war zone?” — Rep. Henry Waxman, D-Calif.

Pres. Bush said he vetoed the Democrats’ expansion of the SCHIP children’s health insurance program because it was too costly. This confirms what we know about the president’s priorities. But the cost to cover 10 million additional children would be $35 billion, Democrats have pointed out, which is roughly what it takes to run Bush’s war in Iraq for 41 days.

An even more apt example of the misplaced values of Bush and his party is the story of the $12 billion or so that was flown into Iraq in 2003 and then went missing and will never be recovered. It sounds like a financial scandal of historical proportions, and yet it is one of the most under-reported story of the war:

The United States flew nearly $12 billion in shrink-wrapped $100 bills into Iraq, then distributed the cash with no proper control over who was receiving it and how it was being spent.

The staggering scale of the biggest transfer of cash in the history of the Federal Reserve has been graphically laid bare by a U.S. congressional committee.

In the year after the invasion of Iraq in 2003 nearly 281 million notes, weighing 363 tons, were sent from New York to Baghdad for disbursement to Iraqi ministries and US contractors. Using C-130 planes, the deliveries took place once or twice a month with the biggest of $2,401,600,000 on June 22, 2004, six days before the handover.

After this was revealed in an investigation into Bush’s handling of his invasion of Iraq, Rep. Henry Waxman, chairman of the House Government Oversight Committee was prompted to ask:

“Who in their right mind would send 363 tons of cash into a war zone?”

Security in the war zone was so lax as to be non-existent:

“One [Bush Coalition Provisional Authority (CPA)] official described an environment awash in $100 bills,” the memorandum [on the investigation for Waxman’s committee] says. “One contractor received a $2 million payment in a duffel bag stuffed with shrink-wrapped bundles of currency. Auditors discovered that the key to a vault was kept in an unsecured backpack.

And:

“They also found that $774,300 in cash had been stolen from one division’s vault. Cash payments were made from the back of a pickup truck, and cash was stored in unguarded sacks in Iraqi ministry offices. One official was given $6.75 million in cash, and was ordered to spend it in one week before the interim Iraqi government took control of Iraqi funds.”

The Bush team — many of whom were inexperienced Republican Party operatives, cronies of the president and their twenty-something kids — lost or ripped off millions of dollars from the UN that was intended to feed Iraq’s poor people:

On April 12, 2004, the [CPA] in Erbil in northern Iraq handed over $1.5 billion in cash to a local courier. The money, fresh $100 bills shrink-wrapped on pallets, which filled three Blackhawk helicopters, came from oil sales under the UN’s Oil for Food Programme, and had been entrusted by the UN Security Council to the Americans to be spent on behalf of the Iraqi people.

The CPA didn’t properly check out the courier before handing over the cash, and, as a result, according to an audit report by the CPA’s inspector general, “there was an increased risk of the loss or theft of the cash.”

Paul Bremer, the American pro-consul in Baghdad … kept a slush fund of nearly $600 million cash for which there is no paperwork: $200 million of this was kept in a room in one of Saddam’s former palaces, and the US soldier in charge used to keep the key to the room in his backpack, which he left on his desk when he popped out for lunch. Again, this is Iraqi money, not US funds.

To get a sense of the Bushies’ attitude about the loss of the money, here is retired Admiral David Oliver, who was Bremer’s financial advisor, on the loss of billions of Oil for Food dollars:

“I have no idea. I can’t tell you whether or not the money went to the right things or didn’t – nor do I actually think it’s important.”

Q: “But the fact is billions of dollars have disappeared without trace.”

Oliver: “Of their money. Billions of dollars of their money, yeah I understand. I’m saying what difference does it make?”

The reason Adm. Oliver should have cared — aside from the fact that finance was his purview — is that some of this cash very likely fueled the insurgency that ensued a few months later. It is also likely the money ended up in the hands of terrorists who used it to buy weapons to kill our troops.