Brigadier Andrew Gregory wore a polo shirt and khaki trousers with a Guards
regiment belt and desert boots. He looked at me intently.
“It’s Major Alderson, isn’t it?”
“Yes sir.”
“Do you know anything about finance?”
“Well, yes,” I replied cautiously, “I’m a former director of a merchant bank.
What is it you want to know?”
“We seem to have a problem with the Central Bank,” he said.
I realised I’d been ambushed. Half an hour later two nervous looking senior
Iraqi officials from the Basra branch of the Central Bank of Iraq were
ushered in and the brigadier disappeared, taking his interpreter with him. I
was expected to solve this problem without assistance.
“So,” I said, beaming across at the silent Iraqis. “What seems to be the
problem?”
The older of the two looked me straight in the eye. “You have stolen our
money!” he declared.
I’d been in Iraq for just three days. It was a very different scene from the
one I was used to. Since 1995 I’d worked for Lazard, part of the
“aristocracy” of the City of London. I’d helped advise on and negotiate
multi-million-pound deals, working exhausting days that had routinely
started at 7.30am and often lasted till 10pm.
In one of the biggest deals of my life — a multi-million-pound contract with
our client Granada — I had worked round the clock at my desk for three days,
only leaving it to buy fresh clothes. At 2am on the last day, with the
contract finally clinched, I drove home. Having just completed the deal of a
lifetime I should have been over the moon. Instead I just felt flat.
My response was dramatic. Having been a member of the Territorial Army since
university, I went “operational”. And, after a tour of duty in Kosovo, now I
found myself being sent to postwar Iraq in June 2003.
I was living in a sparsely decorated room with 11 others, and the beds were
Ikea bunks. As a merchant banker who had travelled the world I was used to
staying in more luxurious accommodation.
Basra’s rubbish, potholes and sewage reminded me of Kosovo — only 10 times
worse. The smell was truly, hideously, vile. But at least it wasn’t the City.
“I see,” I told the two Iraqi bankers demanding their “stolen” money. “That’s
clearly something I’ll have to look into and get back to you about.”
But where did I even begin to look for the answer? Major Frances Castle was in
charge of my brigade’s administration and pay. I hurried over to see her.
She was a little wary of an unqualified person trying to meddle in complex
financial issues.
“I’ve been directed by Brigadier Gregory to get involved in this. I think it’s
because someone told him that I worked for a merchant bank.”
Instantly her mood began to change. “We do have rather a lot of money for
safekeeping,” she said. “Here, you’d better have a look at this.”
With that Major Castle took me to a secure unit where there were five large
shipping containers lying side by side. She unlocked one to reveal that it
was full of sacks, plastic bags and bin liners. And every one was stuffed
full of Iraqi dinar banknotes.
I was dumbstruck. How on earth had they got here, I asked? The end of Saddam
Hussein’s rule, I was told, was greeted with widespread looting and the army
had feared that the banks would be stripped of cash. It was seized for
safekeeping until someone could think what to do with it. Millions of
dollars’ worth, all stashed in five vast containers.
Finding the money, I soon realised, had been the easy bit. I still had no
clear idea what that cash was for or how the Central Bank in Basra operated.
Over the coming weeks I was to undergo a crash course in state finance and
centralised bureaucracy, led deeper and deeper into the mysterious world of
Iraqi economics.
The country has a highly centralised command economy, run on similar lines to
the old Soviet-bloc models. At the centre was Baghdad, which handled the
huge army of civil servants and state-sector workers. In fact in Iraq there
was hardly anyone who wasn’t a state-sector worker. From oil and transport
to teaching, health and the police, nearly everyone was employed and paid by
the state.
When the coalition troops came in and removed the head of this centralised
economy, almost everything and everyone stopped working. Many civil servants
and key ministers fled — worried they might be implicated in Saddam’s crimes
or become targets for retribution by fellow Iraqis. There was no one left to
make decisions and many of the files disappeared too. They were either
destroyed or taken by the fleeing officials. Most important of all, no one
was left to pay the state workers.
I soon learnt how the Iraqis viewed this centralised system when I was
introduced to my new interpreter, Abdul. He had helped Frances Castle and
her team deal with various pensioners and welfare groups who had been
turning up at brigade HQ demanding money. Now he was going to help me.
“So what do you know about finance?” I asked.
“Well, nothing actually,” he cheerfully admitted. Then he added: “Here
everyone works for the government — so that makes things easier because
everyone is the same, doesn’t it?”
“Er, I guess,” I said hesitantly. The senior of the two central bankers, Mr
Raffaq, also opened my eyes to the Iraqi view of government when I met him
to explain I had “found” his missing money. He now admitted he knew all
along that the British military had stored it for safekeeping. The Iraqi
Central Bank had even been given a key to the containers.
So why hadn’t he simply taken what he needed to pay the city’s workers? Mr
Raffaq wearily informed me that the situation wasn’t as simple as that. He
had been told that he couldn’t use the Iraqi dinars to make salary payments.
“Why not?” I asked, puzzled. “The money belongs to the bank.”
“Yes, but Baghdad has told us to make the payments in dollars.”
“Okay,” I said. “So why don’t you do that?”
“Because I don’t have any,” came the perfectly reasonable reply.
On the surface the instructions from Baghdad made sense. The Ministry of
Finance and its American advisers wanted to keep a healthy balance of dinars
in Basra to stabilise the economy. This meant any substantial payments
should be made in dollars. This was great in theory. The trouble was Mr
Raffaq had no US dollars, and he certainly wasn’t going to ask for them.
Because that isn’t what you do in a command economy. You just follow
instructions and wait to be told what to do next.
There was something else that puzzled me. Why had Mr Raffaq gone around saying
the British Army had “stolen” his money if he knew all along where it was?
This too soon became clear. Amid the chaos, looting and disorder of Basra,
Mr Raffaq didn’t want to be blamed for people not getting their wages. He
had opened his bank doors and the vaults to show the disgruntled people on
the streets that he had no money. Instead he could blame it on the British
Army.
It was quite understandable. It was a lawless society out there and had the
bankers been suspected of hiding the cash they’d have been lynched. Mr
Raffaq and his colleagues were simply waiting for someone — us or
Baghdad — to tell them what to do. I soon realised that the problem
with the bank was absolutely central to the immediate future of southern
Iraq.
On the streets tempers were beginning to boil. The daytime temperature was
moving above 40C, while water supplies and electricity were intermittent,
and none of the state workers had been paid for something like six weeks. No
wonder the army was keen for someone to sort out the Central Bank. The only
people who really understood the issue — the old Iraqi Ministry of
Finance — had long since headed for the hills.
Now we’d overthrown Saddam and his henchmen, ordinary Iraqis naturally looked
to us. Most had genuinely celebrated the demise of the hated Saddam in
Basra. But if we didn’t pay them it might not be long before they took out
their anger on the new “rulers”. Protesters were already throwing stones at
our HQ.
First, I had to figure out how the banking system worked. I told Mr Raffaq I
needed to see some paperwork to show me how the money moved — where it
came in and to whom it was paid. At first he shrugged and told me all the
paperwork had disappeared. However, as I got to know him, a series of vast
old bank ledgers slowly and mysteriously began to appear, all written in
Arabic.
With Abdul’s help and my laptop, I laboured for hours in a stiflingly hot
office. My biggest fear was that I wouldn’t be able to work it all out
before the city erupted in violence.
Finally, after four days, I went to see Brigadier Gregory. “We’re $48m short,
sir.”
“What? Who’s stolen it?”
“No one has stolen it, sir,” I replied. “The money’s in Baghdad —
it’s just not here.”
“So what do you suggest?” asked Major Hugh Eton, the chief of staff.
“Well, if this was my civilian job I’d get on aeroplane and go see someone.
I’ve always found these things are best sorted face to face.”
Eton shook his head. The correct way to ask for the $48m, he said, was to pass
the request upwards until it finally went to someone in the Coalition
Provisional Authority (CPA) in Baghdad.
It was a perfectly logical response, but my heart sank. It wasn’t hard to
imagine the reaction of someone higher up the chain of command faced with a
request from Basra for $48m. “Have they gone stark raving bonkers?” they’d
say.
I was getting more and more frustrated, although I had little choice but to
obey orders. I was just a TA major and the regular army generally regarded
TA soldiers as second-class citizens.
Another regular officer, Colonel David Amos, in charge of “operations
support”, had been listening, however. He took me to one side. “Okay,” he
said, “what would you do now if you were a civilian?”
“I would go straight to Baghdad.”
“But you know that would cause some problems,” said the colonel thoughtfully.
Sending me to Baghdad to talk to the CPA would go against normal military
protocol. The CPA leadership in Baghdad was equivalent to a five-star
general while even the head of the British Army Corps was only at the level
of a three or four-star general. I, meanwhile, was just a part-time major
who had been in Iraq for barely a week.
Amos considered the matter for a few moments. Then he winked. “Okay, put some
civilian clothes on, use that phone over there and book a flight to Baghdad
and go,” he said. “I’ll cover for you if need be.”
I told Phil Smith, an American consultant on contract to the British
Department for International Development (DFID), that he was going with me,
because he had contacts in the Ministry of Finance.
Phil was horrified. “Why do we bloody hell want to do that? It's dangerous up
there!”
“Yes, but we need to get the money.”
“Yeah, okay, but there are Americans up there and they shoot at people —
I’m American and I wouldn’t want to go there.”
WE SET OFF at dawn. Instead of uniform, I wore chinos, polo shirt and a pair
of deck shoes with a small green day sack slung over my shoulder concealing
my flak jacket, pistol, spare magazine, helmet and first field dressing.
Phil puffed on his first cigarette of the day.
We were the only two civilians in a Hercules full of soldiers. I tried to
sleep. Suddenly the plane dived and began to corkscrew. My feet, below me
one second, were above my head the next. There was a loud thud. We had
landed in Baghdad, almost colliding with the runway.
The Americans hadn’t been in Baghdad for long and bureaucracy still hadn’t
taken grip. So Phil and I managed to hitch a lift to the city centre on a
military convoy. Our destination was the famous Saddam palace, the
headquarters of the CPA. Inside there was corridor after corridor and set of
stairs after set of stairs. Eventually a quiet corridor revealed a sign
saying Ministry of Finance on a panelled door.
Inside we met two advisers, a British guy called John and an American called
Jacob. I explained the situation in Basra. They seemed receptive.
I was in full flow when a man in his mid-fifties shuffled in and sat in a big
chair next to our table. With his greying hair and gold-rimmed glasses he
had a military bearing, though he was casually dressed in filthy-looking
chinos, socks and sandals.
I was still talking when he sat back in his chair, pushed up his glasses,
looked to the ceiling and exclaimed: “Five hundred! Oh my God, all I wanted
was 500! I mean, doesn’t the appropriations committee understand?” He was
talking about the United States Senate appropriations committee and I
quickly worked out that he didn’t mean $500 but $500m. It was an impressive
figure but nonetheless I felt irritated with this man — who looked like
a cleaner — for interrupting us. Then I worked out who he was.
David R Oliver Jr was a retired US rear-admiral who had been a deputy
undersecretary of defence under Bill Clinton and George W Bush. Now he was
the director of management and budget for the coalition forces. In effect he
was the main moneyman in Iraq.
“So who are you?” he said, suddenly staring at me.
“I’m Andrew Alderson,” I said, careful not to reveal my military rank. “I’ve
just come up from Basra where the locals are a bit restless — I
wondered if you could give us some money?”
I was relieved to see that he smiled. “Yeah, I saw your name on an e-mail, I
think. You know what,” he added, still smiling, “we figured that for $48m
someone would get in an airplane and come to get it. I guess you did —
so I guess we should give you the money.”
I could hardly believe it: no argument or discussion. I felt the familiar
sensation of excitement and achievement you get as a banker when you make a
trade. My only aim now was for Phil and me to get out as soon as possible
before he changed his mind.
David Oliver was still talking, however. “Can we do that, John?” he asked,
looking at his adviser, who nodded.
“Yes,” continued Oliver, “that’s right, we have this fund of $1,000m so I
guess we could take it out of that?”
Oliver was clearly a man used to dealing with large sums of money and the $48m
I was asking for certainly didn’t faze him. I later discovered why when I
saw their vaults downstairs. They were huge. But then they needed to be to
house the $2 billion in cash that was routinely stored there.
It turned out that they’d be able to deliver the money the very next day. I
felt pretty good.
I WAS still in good spirits when we were met at Basra airport by two 4x4s laid
on by Colonel Amos. It was done quite discreetly as Phil and I were still
supposed to be operating covertly.
Our mini-convoy was heading back towards the safety of brigade HQ when we took
a wrong turn, plunging straight into the centre of Basra old town, out of
bounds to us without a properly armed patrol.
There must have been up to 5,000 Iraqis milling around. The evening light was
starting to fade and suddenly some of the Iraqis started to bang on the roof
of the vehicles demanding to talk to us. Phil and I were in our civilian
clothes in the back seat and by now he was anxiously chain-smoking. We could
just about grasp that there was a gunman down the street, that someone had
been shot and the crowd wanted us to do something about it.
As the crowd grew thicker I began to fear the worst. I thought of that
horrible occasion when two British soldiers in civilian clothes had
accidentally driven into the middle of a funeral procession in Belfast in
1988 and were savagely beaten then shot dead. Today had been one of the
biggest days of my life so far; now suddenly there seemed a real possibility
it could be my last.
Scotty, the sergeant driving, turned round from the front seat and asked how
many rounds we all had. I’ll always remember Scotty saying grimly: “If we
go, we’re going down fighting. And you may want to save a round for yourself
. . .” We inched forward and, though people banged on the roof, we
eventually got through unscathed.
It turned out that earlier that day the mood of the protesters outside
military HQ had turned ugly. A group of 5,000 had blocked the entrance road,
and one had produced an AK47 assault rifle and fired off several rounds. A
passenger in a trapped military convoy had also opened fire. Fortunately no
one had been seriously hurt but the incident showed tension was rising.
The sound of Chinook helicopter blades across the Shatt al-Arab river the next
day heralded the arrival of the cash. It was brought on two large palettes
straight into the palace compound. Officials from the Central Bank loaded
the bales of cash first into a lorry then into the shipping containers that
were still standing in for a bank vault.
Curious onlookers from the camp came to watch. After all, it’s not every day
that $48.3m in cash arrives at a military base. Word had raced around the
city that cash had arrived. People now genuinely believed they would at last
get paid. An eerie quiet fell and though the number of protesters at the
main gate grew there was now an air of expectation rather than hostility.
The tension began to ease.
SADLY it didn’t last, although I ended up as the leader of a team of 50
advisers who for 10 months ran the economy of southern Iraq. Hundreds of
millions of dollars passed through our hands on its way to Iraqi workers.
Usually I went to Baghdad to collect it in a holdall and flew with it back
to Basra.
But when the CPA handed over power to Iraqis in 2004 only a tiny team of
British advisers remained in Basra. I felt passionately that the UK was
abandoning its responsibilities.
Department for International Development personnel arriving in Basra focused
on poverty, gender issues and the environment. A new breed of “postconflict”
nation-builders had developed in Whitehall. Their aim was to help existing
government institutions to take charge of their own countries. The problem
in Iraq was there were no functioning institutions to take charge.
Someone had to step into the power vacuum, and it was the militias, who
started shooting Iraqis who had worked with us. They soon ran the south, and
corruption became endemic in the misuse of aid funds.
Still, there were highlights to my service there. The day I fled in my
underpants — to the delight of other officers — on being shot at
on the loo. The officious new American colonel who, unlike David Oliver,
demanded I send my files by the truckload from Basra to Baghdad before he
would release $32m to me. And the thief who broke into our money store.
Intent on attacking the (empty) old safe, he climbed over a large stack of
plastic-wrapped bundles without realising that these were “bricks” of $100
bills. Each contained $100,000.
© Andrew Alderson 2007
Extracted from Bankrolling Basra by Andrew Alderson to be published by
Constable and Robinson on April 23 at £8.99. It is available for £8.54
including postage from The Sunday Times BooksFirst on 0870 165 8585
