Identifier
Created
Classification
Origin
07BAGHDAD2241
2007-07-06 10:02:00
SECRET//NOFORN
Embassy Baghdad
Cable title:  

PRT TIKRIT: BEHIND THE SCENES OF BUDGET EXECUTION

Tags:  PGOV ECON KCOR PINR IZ 
pdf how-to read a cable
VZCZCXRO4827
PP RUEHBC RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #2241/01 1871002
ZNY SSSSS ZZH
P 061002Z JUL 07
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 2072
INFO RUCNRAQ/IRAQ COLLECTIVE
S E C R E T SECTION 01 OF 04 BAGHDAD 002241 

SIPDIS

SIPDIS
NOFORN

E.O. 12958: DECL: 07/04/2017
TAGS: PGOV ECON KCOR PINR IZ
SUBJECT: PRT TIKRIT: BEHIND THE SCENES OF BUDGET EXECUTION
IN SALAH AD DIN

REF: BAGHDAD 1124

Classified By: PRT Lead Steven R. Buckler for reasons 1.4 (b) and (d)

S E C R E T SECTION 01 OF 04 BAGHDAD 002241

SIPDIS

SIPDIS
NOFORN

E.O. 12958: DECL: 07/04/2017
TAGS: PGOV ECON KCOR PINR IZ
SUBJECT: PRT TIKRIT: BEHIND THE SCENES OF BUDGET EXECUTION
IN SALAH AD DIN

REF: BAGHDAD 1124

Classified By: PRT Lead Steven R. Buckler for reasons 1.4 (b) and (d)


1. (U) This is a PRT Tikrit, Salah ad Din cable.


2. (C) SUMMARY. While much work still remains in building
transparency and accountability in Salah ad Din's (SaD)
budget execution procedures, the provincial government has
made significant advances in 2007. The provincial government
is slowly realizing the necessity of automating its fiscal
records, and it has begun establishing an integrated Projects
Coordination Cell (PCC) with representatives from the
Engineering, Accounting, Auditing, and Legal Units, per the
2007 GOI regulations. Of its 117 billion Iraqi Dinar (ID)
capital reconstruction budget for 2007, 89 projects valued at
29.2 billion ID have been contracted and started, with an
additional 29 projects valued at approximately 12.3 billion
ID contracted but not yet started. Bureaucratic challenges
and political maneuvering still dominate the budget execution
process. Within the 2007 "PC-approved" budget, several
projects are still in flux. The process of awarding
contracts has largely followed the 2007 regulations, but the
actual award and distribution of projects is still
politically manipulated. Fiscal data and project status
reporting within the provincial government and to the GOI is
incomplete and inaccurate, but may be improving in time for
the June report. The 2006 budget will likely exceed the
allotment by between 2 and 15 billion ID, causing some 2006
projects to be canceled. Others may be funded out of the
already tight 2007 budget. As procedures take hold and
accountability improves, the qada-level officials and the
residents of Salah ad Din are putting increasing pressure on
provincial officials to produce quality results and use the
province's budget effectively. END SUMMARY.

--------------
The Project Coordination Cell
--------------

3. (C) Until recently, the provincial government was not
motivated to establish the Project Coordination Cell (PCC),

per the Ministry of Finance (MoF) and Ministry of Planning
and Development Cooperation (MoPDC) regulations. The PCC's
mandate is to coordinate the budget execution process by
having representatives from the Engineering, Administration,
Accounting, Legal, and Contracting Units working together in
the same room on the full spectrum of budget execution
activities, from project or program inception to project
completion and acceptance by the appropriate Director General
(DG) or executive staff. Additionally, the SaD PCC has the
task of supervising, monitoring, and tracking all projects.
Until recently, the Engineering Unit had dominated this
process, leaving little space for the Accounting Unit and
others. The Engineering Unit has recently acknowledged the
benefit of having input from the Accounting and Legal Units
early on in the process.


4. (C) One of the major obstacles to standing the PCC up
properly has been the necessity to maintain the parallel 2006
and 2007 bureaucratic structures for budget execution. With
spending still taking place on the 2006 budget and with the
associated project tracking and accounting support, the
provincial government has had to leave contracting and
accounting personnel under the PC to comply with the 2006
regulations. In the absence of enough well-trained
engineering and accounting professionals and positions, the
2007 bureaucratic structure-- the PCC -- has suffered.

--------------
Accounting: No Automation and No Motivation
--------------

5. (C) The provincial Accounting Unit has been and continues
to be reluctant to automate its systems and is uninterested
in fully integrating itself into the budget execution
process. At present, it enters the process only when payment
needs to be made to a contractor or vendor, rather than when
the PCC begins the project approval and contracting process.
Consequently, many projects are approved with estimates well
above the budgeted amount, and there is no meaningful
forecasting of available cash and future expenditures.


6. (C/NF) Resistant to change and automation, the Accounting
Unit has remained uninvolved for several reasons: poor
internal leadership, the Engineering Unit's domination in the
process, and protection for the Governor and Deputy Governor
for questionable spending.


7. (C) The Account Unit is currently led by Acting Head
Accountant Akram Faisal Azawi al Azawi. Formerly, the Deputy
Head Accountant, Akram took the lead position in the summer
of 2006 when the Head Accountant was kidnapped. (His

BAGHDAD 00002241 002 OF 004


whereabouts are still unknown.) Although not in the same
tribe as SaD Deputy Governor General Abdullah H. M. Ajbarah
al Jabouri, Akram lives in the al Alam district of Tikrit, an
area staunchly loyal to and under the control of the Deputy
Governor. In his tenure as Acting Head Accountant, he has
shown little interest in automating the accounting process,
providing usable information to accountability bodies (such
as the Provincial Council and the Auditing Unit),and has
actively obscured misspending by the provincial leadership.
Akram insists on using antiquated methods to track fiscal
information. Until recently, Akram maintained the province's
official accounting records in paper registers that he
carried on his person in two plastic bags.


8. (C/NF) The Governor and Deputy Governor have been
uninterested in replacing the Acting Head or improving his
performance, presumably, because he has been willing to cover
their questionable and potentially illegal spending. For
example, an accounting clerk showed PRToffs receipts for the
repair of tribal sheikhs' cars, semi-official meals, and
other spending not related to capital projects, all approved
by the Governor and the Deputy Governor. Recently, however,
one accounting clerk and one engineering clerk have taken a
more active role in automating the accounting records and
ensuring the proper tracking of fiscal records. Akram,
however, often reduces the positive impact their efforts
could have. Additionally, the Auditing Unit has no
significant role in the provincial government or the budget
execution process. (COMMENT: The Governor and Deputy
Governor's improper spending is reportedly taken from the
supervision and monitoring guarantees allotments meant to
equip support offices, to give bonuses to workers, and to
cover other project-related expenses. Though potentially
illegal, many of their expenditures go to official or
semi-official business. Much of this spending would likely
be eliminated if they had a more substantial operations
budget. END COMMENT.)


9. (C) Indicative of its dominance in the budget execution
process, the Engineering Unit, under the leadership of
Assistant Governor for Technical Affairs Qahtan Hamadi Saleh
al Jabouri, provides all financial reports to the Provincial
Council and to other government institutions. The reports
are always given orally and in an illogical format, making
the ability to comprehend them or the current state of the
province's financial affairs nearly impossible. Qahtan
maintains a tight reign on project selection, approval, and
implementation, causing a break-down in transparency and, at
times, lengthy delays. He has, however, removed himself from
much of the actual contractor selection process. His direct
reporting unit has approximately six engineers, all of whom
follow his direction explicitly.


10. (S/NF) Until very recently, any meaningful communication
and information-sharing that happened between the Accounting
and Engineering Units was initiated by the PRT. In a recent
positive development, Qahtan stated that he also plans to
hire accountants to assign directly to the PCC because the
Accounting Unit is not providing the necessary support to the
contracting process, though the preferable answer would be to
improve relations between the Accounting and Engineering
Units. Additionally, in the last two weeks, he has taken a
more proactive approach to completing the required monthly
reports to the MoF and MoPDC. (NOTE: Although from the same
tribe as SaD powerbroker Deputy Governor General Abdullah,
Qahtan is from an opposing sub-clan, which was reportedly
involved in the January 8 kidnapping of the Deputy Governor's
older brother and SaD leading tribal figure Sheikh Ahmed Naji
Mohammad Ajbarah al Jabouri. Qahtan's power based on the
provincial level constantly remains tenuous, though he has
garnered the support of the 16 PC members from Tuz. There is
a consistent flow of other reporting about his involvement in
questionable activities. At present, all that is known for
certain is that Qahtan associates with individuals who
associate with AQIZ. In part because of necessity, we
continue to work with him as a provincial official. END
NOTE.)


11. (C/NF) SaD Governor Hamad Hamoud al Shaki al Qaisi,
without a powerbase of his own and whom many believed was
elected to his position through a backroom deal with the
Deputy Governor's older brother, the kidnapped Sheikh Ahmed
Naji Mohammad Ajbarah al Jabouri, has largely left budget
execution to the Deputy Governor. The Governor's final
approval on contracts is largely pro forma, and he has shown
little interest in being involved in the internal workings of
the process, including the awarding of contracts. Though
vastly improved from 2006, the bidding and awarding of 2007
contracts still appears to be easily manipulated by insiders,
including the Deputy Governor, who reportedly funnels
contracts to contractors from his home district of al Alam.

BAGHDAD 00002241 003 OF 004


The Governor, Deputy Governor, and PC Chairman all claim that
project announcements are made through the media, to which
all contractors in the province have access. However,
officials in other SaD cities often complain that the letting
of contracts is not publicly announced and that preference is
given to al Alam contractors, who largely have a poor
reputation for quality and timeliness. City leaders have
begun asking for bid opening and closing dates to ensure
their local contractors are aware of projects and have time
to bid.


12. (C) Though the Accounting Unit has largely been resistant
to change, the recent discovery that the province overspent
by between 2 and 15 billion ID on the 2006 budget has
inspired some of the unit's employees to be more fervent
about automation and closer maintenance of spreadsheets (see
para 15).

--------------
The 2007 Budget Itself - Still Changing
--------------

13. (C) The province's budget remains influx. After its
original approval in March 2007 (reftel),the budget was
changed after the PC members from Tuz, who were absent from
the PC meeting that approved the budget, requested and were
granted a change to several of the qada's projects; Tuz,
however, did not receive an increase in its total allotment.
Additionally, several projects that were not approved by the
PC appeared on later drafts of the budget. These projects
were likely added by Deputy Governor General Abdullah and/or
Assistant Governor for Technical Affairs Qahtan. PRT
attempts to have these changes voted on by the full PC have
been rebuffed, with provincial leaders indicating that a
re-vote is not necessary because the total allotment for each
district remains the same with only certain scopes of work
changed. The latest copy of the budget has 255 projects and
totals 121.4 billion ID, with 106.9 billion ID going directly
to projects and 10.5 billion ID for the overhead and reserve
sums. (COMMENT: The provincial leadership may be uninterested
in amending the budget as a face saving measure, becaue it
was extremely proud to be the first provincial government in
Iraq to approve its budget. END COMMENT.)


14. (C) The bank account for the 2007 budget has been opened,
and currently holds approximately 10.7 billion ID, roughly 10
percent of its 117 billion ID budget. Approximately 941
million ID has already been disbursed.

--------------
Status of the 2006 Budget ) Over Expenditures
--------------

15. (C) Maintenance of the financial records for the 2006
budget was largely abandoned once the monies for the 2007
budget began rolling in. Only recently did the accountants
begin re-tracking expenditures, at which time they discovered
the province will overspend on the 2006 budget by between 2
and 15 billion ID. Poor project scopes of work and bills of
quantity along with inadequate oversight of contractors have
resulted in many projects exceeding their cost, including the
seven percent reserve. The provincial government has
indicated that any unfunded amounts from the 2006 budget will
be made up by funds from the 2007 budget, a change that will
require PC approval. Additionally, it appears that some
projects that have not begun will be canceled.

--------------
The Projects
--------------

16. (C) It is clear that projects in key officials' districts
are given priority. Officials from underrepresented
districts have complained that projects in their areas have
been placed at the bottom of the priority list or have been
canceled altogether.


17. (C) The provincial leadership, in visits to major cities
and qadas throughout the province, have stated publicly that
both the 2006 and 2007 budgets have largely been fairly
allocated to qadas by population. However, similar to in the
2006 budget, Tikrit, home to the province's major political
players, and Tuz, which holds 16 of the 41 PC seats, have
received substantially more than their fair share of the 2007
budget. Conversely, Samarra, which has no representation on
the PC due to is boycott of the 2005 elections, and Ad
Dujeel, a predominantly Shia enclave in southern Salah ad
Din, have proportionally much smaller budgets. Likely due to
poor fiscal record management as much as political
maneuvering, the disproportional allocation of the budget
runs contrary to the 2007 guidelines laid out by the MoF and
MoPDC. Additionally, officials from all qadas in the
province, including Tikrit, complain that they have not
received information about the province's budget and coming

BAGHDAD 00002241 004 OF 004


projects in their areas. The provincial leadership maintains
that it sends this information through each qada's PC
members, though there is no evidence that it is actually
received by qada officials. This lack of communication has
become a major sticking point between the provincial
government and the qadas, as qada officials have not been
satisfied with the quality of the projects that have been
done and as contractors outside Tikrit want a share in the
reconstruction projects. The PRT will discuss with the
provincial government ways to more evenly distribute the
budget before all of the 2007 projects have been contracted
and will be working with the qada-level Coalition Forces (CF)
Civil Affairs Teams to help disseminate the project
information, when appropriate.


18. (C/NF) At present, 89 projects valued at 29.2 billion ID
have been contracted and started, with an additional 29
projects valued at approximately 12.3 billion ID contracted
but not yet started. The provincial government will be
soliciting bids for the rest of the projects in the coming
weeks. Additionally, when the PC approved the 2007 projects,
each project's total included the seven percent reserve (per
MoF, para 20b) and the one to three percent supervision fee
(per MoF, para 21). When the bid analysis committee met, it
failed to reduce the funding available for each project to
account for these two sums, causing several projects to be
awarded for more than the budgeted amount. The Assistant
Governor for Technical Affairs claims to have received
authorization from the MoPDC to reduce the seven percent
reserve in order to fund these projects. In other
administrative difficulties, the various units implementing
the projects (including engineering, accountant, legal, and
auditing) have had trouble maintaining universal tracking
numbers on each project, further confusing the process and
status reports.

--------------
Reporting ) Inaccurate and Incomplete
--------------

19. (C) Budget execution reporting from the Governor's Office
to the Provincial Council and other accountability bodies in
the provincial government remains very weak. The project
status cards required by the MoF and MoPDC regulations are
reportedly being maintained in a word processing format as
requested by the MoF, though the provincial government has
not been able to produce them and has yet to submit them to
the GOI on a monthly basis. The May fiscal report to the GOI
was incomplete and inaccurate. It contained limited fiscal
information, with no reporting on payments completed. We
anticipate the June report will be similar, but have noticed
that the Engineering and Accounting Units are working to
improve the reports.

--------------
Comment
--------------

20. (C) Given that less than five years ago the Head
Provincial Accountant was little more than a chai boy with a
checkbook and that all major construction projects were
governed from Baghdad, Salah ad Din province has made
significant strides in executing a decentralized
reconstruction budget. As procedures take hold and
accountability improves, the qada-level officials and the
residents of Salah ad Din are putting increasing pressure on
provincial officials to produce quality results and use the
province's budget effectively. END COMMENT.


21. (U) For additional reporting from PRT Tikrit, Salah ad
Din, please see our SIPRNET Reporting Blog:
http://www.intelink.sgov.gov/wiki/Tikrit.
CROCKER