Corruption in Iraq is reportedly widespread and poses a major challenge to building an effective Iraqi government and effective institutions. A World Bank report notes that corruption undermines the government’s ability to make effective use of current reconstruction assistance. A 2006 survey by Transparency International ranked Iraq’s government as the second most corrupt in the world.
U.S. and international officials have noted that corruption in Iraq’s oil sector is pervasive. In 2006, the World Bank and Ministry of Oil’s Inspector General estimated that millions of dollars of government revenue are lost each year to oil smuggling or diversion of refined products. According to State Department officials and reports, about 10 percent to 30 percent of refined fuels are diverted to the black market or are smuggled out of Iraq and sold for a profit. According to State Department reporting, Iraqi government officials may have profited from these activities. The insurgency has been partly funded by corrupt activities within Iraq and from skimming profits from black marketers, according to U.S. Embassy documents. One factor that had stimulated black market activities and fuel smuggling to neighboring countries was Iraq’s low domestic fuel prices, which were subsidized by the government. However, under the IMF’s Stand-by Arrangement with Iraq, the government has already increased domestic fuel prices five times, significantly reducing the subsidy for many fuel products. The Iraqi government intends to continue the price increases during 2007, as well as encourage private importation of fuels, which was liberalized in 2006. The purpose is to decrease the incentive for black market smuggling and to increase the availability of fuel products.
Illegal connections to existing power lines and nonfunctioning meters negatively affect the Iraqi Ministry of Electricity’s ability to manage its electricity system and finance the improvements needed. According to U.S. and international donor officials, electricity meters may be old, intentionally damaged, inaccurate, nonfunctioning, or nonexistant for some businesses and households. As a result of illegal connections and lack of metering, the Ministry of Electricity cannot obtain an accurate measure of the electricity consumed by households and businesses, which contributes to inaccurate billing and low cost recovery.
Ness was born in Chicago, the youngest of five, to Norwegian bakers Peter and Emma Ness. As a boy, Ness was interested in reading, especially Sir Arthur Conan Doyle's Sherlock Holmes. He was educated at the University of Chicago, graduating in 1925 with a degree in business and law. Ness was a member of Sigma Alpha Epsilon fraternity. He began his career as an investigator for the Retail Credit Co. of Atlanta. He was assigned to the Chicago territory, where he conducted background investigations for the purpose of credit information. He returned to the University to take a course in criminology, eventually earning a masters degree in criminology. In 1926, his sister's husband, Alexander Jamie, a Bureau of Investigation agent (this became the FBI in 1935), influenced him to enter law enforcement. He joined the Treasury Department in 1927, working with the 300-strong Bureau of Prohibition in Chicago.
Following the election of President Herbert Hoover, Andrew Mellon was specifically charged with bringing down Al Capone. The federal government approached the problem from two directions: income tax evasion and the Volstead Act. Ness was chosen to head the operations under the Volstead Act, targeting the illegal breweries and supply routes of Capone. With Chicago's corrupted law-enforcement agents endemic, Ness went through the records of all the treasury agents to create a reliable team, initially of fifty, later reduced to fifteen and finally to just ten men. Raids against stills and breweries began immediately; within six months Ness claimed to have seized breweries worth over one million dollars. The main source of information for the raids was an extensive wire-tapping operation.
An attempt by Capone to bribe Ness's agents was seized on by Ness for publicity, leading to the media nickname "The Untouchables". There were a number of assassination attempts on Ness, and one close friend of his was killed. The efforts of Ness and his team had a serious impact on Capone's operations, but it was the income tax evasion which was the key weapon. In a number of federal grand jury cases in 1931, Capone was charged with 22 counts of tax evasion and also 5,000 violations of the Volstead Act. On October 17, 1931, Capone was sentenced to eleven years, and following a failed appeal, he began his sentence in 1932.
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EXCERPT: Additionally, the U.S. government, in coordination with the Iraqi Government, recently installed state of the art ultrasonic meters to further enhance metering capacity at both platforms. Ultrasonic meters typically have accuracy levels of 1% or better. These new technology meters confirm measurements taken by the turbine and PD meters. Sickman says the existing meters and the ultrasonic meters are more than adequate because they are only there as a check on the meters utilized by vessels that come to load oil. “What ABOT does not have but needs is continuous sampling to determine the average API (American Petroleum Institute) gravity weight of the blended crude loaded. This would provide the quality of the oil, which, combined with the volume of oil, helps to determine the value of the oil sold, “says Sickman. Currently, the Iraqi government has to depend on the vessel analysis for quality.
The International Monetary Fund reported in August 2006 that it does not have any concerns about the immediate replacement of the export metering at ABOT for the Standby Agreement. Between January and November 2006, the loading of 345 oil tankers has been metered at the ABOT, with total exports averaging 1.595 million barrels per day. Third party verification of exports is performed by SGS, a widely known industry expert in inspection, verification, testing and certification. SGS certifies that systems or services meet the requirements of standards set by governments, standardization bodies or by SGS customers. Purchasers of crude oil employ SGS to verify and certify loaded volumes for every tanker embarking from ABOT.