CORRUPTION ENDEMIC IN BABIL PUBLIC WORKS CONTRACTS

UNCLAS SECTION 01 OF 02 HILLAH 000009

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: KCOR PGOV ECON IZ
SUBJECT: CORRUPTION ENDEMIC IN BABIL PUBLIC WORKS CONTRACTS

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1. (SBU) Summary: Big ticket corruption in Babil province
involves tens of millions of dollars of public works contracts
reportedly steered to a contracting company owned by the brother
of Governor Salim Saleh Al-Muslimawi, who Provincial Council
members tell us sits at a nexus of corruption. Systematic
bureaucratic corruption and taking advantage of specific targets
of opportunity are particularly pronounced in land transactions.



A Nexus of Corruption

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2.(SBU) Provincial Council (PC) members told the PRT that
Governor Salim Saleh Al-Muslimawi sits at the center of a nexus
of corruption for public works contracts. Working with his
closest cronies, technical assistant Abdul Razak and chief of
staff Lieutenant-Colonel Thamir (Abu Huda),the Governor has
reportedly steered tens of millions of dollars of lucrative
contracts and sub-contracts to political allies, associates and
family members, in particular to through the Almuraba'a company
owned by the Governor's brother Sheikh Ne'ama Saleh Al-Muslimawi
according to local politicians and businessmen. Businessmen have
complained to the PRT that steering public works contracts to
selected firms reduces the quality of infrastructure because
after officials take their cut less remains for the actual work;
creates a culture of corruption in which contractors are forced
to pad bids on public sector projects and; undermines public
confidence in the government.



3.(SBU) PC members and local construction companies have told
the PRT that the contracts for building two street-bridge
contracts in Babil's capital Al-Hillah are good examples of the
way the Governor operates. In the 80th street-bridge project
the contract reportedly went to a company with no experience for
USD 3.5 million over the original estimate because it agreed to
give Almuraba'a a lucrative sub-contract. In the 60th
street-bridge project the Abdullah Uwaiz company (not owned by
the Governor or his relatives) had its low bid rejected on a
technicality so the project could be awarded to Almuraba'a at a
higher price. When Abdullah Uwaiz complained, Almuraba'a
reportedly paid it USD 225,000 to drop the issue.



4.(SBU) The Almuraba'a company has lost contracts, but even
that has raised questions. The PC reportedly stopped a contract
with Almuraba'a for the construction of five water processing
plants based on a finding that the company lacked the capacity
to do the work. The Albu'd Alrabe'a company won the second bid
at a price USD 8.5 million less than that the price Almuraba'a
had won the bid for the first go-round. PC members have
questioned how Almuraba'a could have received the first bid at a
price that was so much higher than a later bid.



5.(SBU) Governor Salim Saleh Al-Muslimawi reportedly has
demanded kick-backs for projects that are not done by
Almuraba'a. Foreign companies were reportedly discouraged from
bidding on sewer and water expansion projects by being falsely
told the projects were already bid out: the Governor wanted them
to go to local companies that would give him a kickback.
Reportedly a project for a new five-story Government Center was
held up because no contractor wanted to pay the governor the USD
350,000 kick-back he insisted on.



Rigging Contracts

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6.(SBU) Different techniques are used to rig contracts. One
method is to provide requests for bids only to a preselected
company which then submits multiple bids under different names.
This was the method reportedly used to ensure that one company
got the bids for building Water Department warehouses. Arguably
the most brazen method is to simply change competitors' bids.
Reportedly the fix was in for the Al Kifil hospital construction
project to go to a company in which some PC members had an
interest: when the bids were opened a PC member simply took the
lowest bid and added a 0 making the bid appear ten times higher
than it was so that the selected company then had the lower bid.
When the company whose bid was multiplied learned what happened

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they complained to the Governor to no avail.



7.(SBU) Another method to rig bids is for a contractor to
submit a bid with a blank price. Colluding officials then fill
in a bid price after they have opened the other bids to ensure
that the preselected bid is the lowest. A variant leaves blanks
for sub-items but has a total price. Officials fill the blanks
in and recalculate the total bid price to ensure that it is
lower. The advantage of this method is that the company can
wait until after it has been awarded the contract and then claim
the initial higher bid price should be used.



Administrative Corruption: Baksheesh

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8.(SBU) Institutional corruption in which government employees
require payment for services, baksheesh, is particularly
pronounced in offices dealing with registering lands or persons.
When land is transferred its value is estimated and a new tax
rate is established based on the estimate. Booths of land-value
facilitators line the streets in front of the land registration
building and, for a fee, use their connections to get a lower
tax rate. Facilitators are well organized: they recently came
to a common agreement to double their standard rates from about
USD 150 to USD 300 because land values in the province had
increased dramatically in the past year.



9.(SBU) Renewing resident cards and obtaining passports often
costs more than the official price. Muktars in Babil reportedly
ask for 5,000 ID for the initial certification for resident
cards and police (who issue the card) demand 25,000 ID to
accelerate the process. Police may feel some justification in
demanding baksheesh since they reportedly have to pay their
first two months salary to the selection committee to get a job.
Getting a passport can also cost an extra USD 100, especially
if the applicant needs it quickly.



Targets of Opportunity

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10.(SBU) Land issues create numerous targets of opportunity.
Employees of the government Land Department have reportedly been
forging ownership documents when owners are dead. Land is
either put in the name of their relatives or people willing to
pay the employees a price. A senior surveyor in the office has
reportedly been charged with taking bribes to forge land
registration documents and fake surveys.



11.(SBU) Criminal cases also create the potential for
corruption. The murder trial for the assassination of Babil's
police chief Maj. Gen. Qais Hamza Mamouri has been repeatedly
postponed due to a failure to bring the defendants from
Baghdad's detention center to the Central Court. One excuse was
that police could not locate the defendants in the jail. The
sergeant responsible for bringing the defendants to court was
recently spotted driving a 2009 Toyota sedan worth about two
years of his salary according to an Iraqi journalist.



12.(SBU) Comment: The level of corruption in public works
construction controlled by the provincial government, endemic in
Babil province, may be an unintended consequence of
decentralization. It may also help explain why Babil has almost
1,500 PC candidates (more than any province outside of Baghdad).
One local construction contractor told us that almost all PC
members are busy getting a piece of the action.
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