I first heard a description of how corruption works in Iraq through an unexpected friendship with one of the country’s richest men, a tribal sheik from the troubled Anbar region. We met shortly after Saddam Hussein’s regime was toppled and got together a few times a month for the next year in his office — a converted mansion, gone a bit to seed — in Baghdad’s wealthy Mansour neighborhood. The sheik is a large man, overflowing with humor and self-confidence. We’d sit in his office, chain-smoking and drinking sweet Iraqi tea. He seemed to delight in shocking me with tales of backroom deals.

At first it was all history: He explained how Hussein’s regime worked, but he wouldn’t talk about the present, afraid of angering the new American overseers of Iraq. He told me that Hussein’s cronies would invite him to their offices, offer him multimillion- dollar contracts for constructing a new bridge, say, or importing a few million dollars’ worth of medical supplies. The contract was his as long as he kicked back half the money to Hussein’s people.

Over time, my sheik friend told me how he saw things working these days. He said it was hard to figure the Americans out. On the one hand, they seemed fiercely opposed to corruption. Contracting officers at the U.S. government agencies would never accept a bribe, kickback or gift. Not even a wristwatch, he said. But he insisted that wasn’t the case when it came to the U.S. government’s surrogates: the private contractors who do much of the actual rebuilding and the Iraqi officials put in charge of the ministries. They, he said, seemed eager to engage in corruption.

It’s hard to verify my Iraqi friend’s stories. He doesn’t give the kind of details a reporter can track down. But the sorts of things he describes don’t seem outlandish given some of the stories that have been documented. KBR, a subsidiary of Halliburton, for example, has admitted that two of its employees accepted $6 million in bribes. Halliburton is also under investigation for allegedly overcharging for fuel and food. Many other companies — including Custer Battles, a security company that runs Baghdad International Airport, and BearingPoint, a consulting firm reconfiguring Iraq’s economy — are under investigation for alleged billing irregularities.And a Pentagon official is being investigated for allegedly attempting to alter a cellular phone contract in ways that would have benefited a consortium that included his friends and colleagues.

The inspector general at the Iraqi Ministry of Health, Dr. Adel Mohsen Abdullah, explained to me the difficulties he’s had staunching corruption within the health system, how nurses demand bribes before treating patients and how hospital administrators sell much-needed medicine on the black market. At one mental hospital, the patients were forced to work, full time, under harsh conditions at a factory owned by an administrator.

While reporting in recent months for the Public Radio program Marketplace, I came face to face with corruption myself. While trying to arrange an interview about police bribery, a senior Iraqi police official said he’d take care of me — but only if I paid him a bribe.

Iraq is a difficult country to report in. The U.S.-led Coalition Provisional Authority is extremely stingy with information, while Iraqis are all too generous. Nearly every Iraqi has elaborate and sometimes fantastical stories about all sorts of horrific crimes and corruption. Rumor is presented as incontrovertible fact. Before Hussein was captured, for example, several Iraqis insisted to me that he was living in the White House. It is quite difficult to weed out the truth from simple anti-American rumor-mongering. But the stories about corruption were so consistent and detailed that it seems probable that many are true. U.S. administration officials would not confirm any specific instance but repeatedly confirmed that corruption was widespread throughout Iraq.

The big money in Iraq these days is in the massive reconstruction contracts. More than $20 billion in U.S. taxpayer funds is going to rebuild the country’s infrastructure: electricity, water, roads, bridges, buildings. The money is being funneled through huge private U.S. companies — Bechtel, Halliburton and the like.

The sheik insists that although U.S. government officials may stay clean, the money becomes tainted the second it leaves their hands. Translators are on the take. Iraqi Governing Council employees are on the take. Contractors are on the take. The plumber who worked on my house said he had to pay bribes to get work. In the end, in the eyes of the Iraqis, the fact that corruption still exists on such a grand scale discredits the United States and its plans for Iraq.

It’s common to hear Iraqis say the U.S. regime is just like Hussein’s. At first, I found this bizarre. The U.S. is not hacking the ears off of innocent people. The U.S. isn’t massacring entire villages. But I learned that when Iraqis make the Hussein comparison, they’re talking, in large part, about corruption. Though most Iraqis did live in a state of general fear under Hussein, the vast majority were not victims of his brutality. As citizens of totalitarian states generally do, Iraqis learned to accommodate the regime. They kept quiet, never complained and tried to ignore the mass graves and other evidence of criminal acts. But no Iraqi was able to ignore corruption.

In a centralized economy, in which the government controlled nearly every financial transaction, corruption was more than just rampant; it was the primary way business was done. From traffic tickets to multibillion-dollar deals, the entire economic structure of Iraq was designed to take money from less powerful people and put it in the pockets of the more powerful. Corruption — as much as mass graves and torture — marked Hussein’s horrible leadership.

I arrived in Baghdad last April, shortly after Hussein’s regime disappeared. Nearly every Iraqi I spoke with asked the same question, translated, somewhat awkwardly, by my fixer, as: “Are the Americans here for the good benefit or the bad benefit of the Iraqi people?” Back then, when the occupation was new, this was an honest and urgent question. Iraqis wanted to know — and somehow thought I could answer — whether the Americans would really be different.

When I left Baghdad a few weeks ago, nobody was asking that question anymore. Most Iraqis I know have long since decided that the Americans are just like Hussein, just like every other leader they’ve had. Iraqis still have to pay bribes to get out of traffic tickets and to get medicine from a hospital. Judges still decide cases based on who paid the largest bribe. Wealthy Iraqis are still getting even richer because of the same backroom shenanigans.

In the last few weeks, the U.S. has introduced a handful of anti- corruption measures. L. Paul Bremer III, the U.S. civilian administrator overseeing Iraq, has appointed inspectors general to each ministry, empowered Iraq’s Board of Supreme Audit to look over the government’s books and created a Commission on Public Integrity to seek out and prosecute corruption. But this is all way too little, way too late. The Iraqi inspectors general I met told me they had no idea what they were supposed to do or how to fight corruption.

Robert Dawes, former Coalition Provisional Authority inspector general, told me the U.S. couldn’t have done much to fight corruption early on, that in the early days of the occupation the military had enough trouble just restoring basic order. It makes sense, he said, that corruption wouldn’t be addressed until nearly a year later.

But this is just wrong. In those first days — as the occupation began — Iraqis were prepared to believe the U.S. was bringing a new way of doing things to their country. Strong anti-corruption statements and swift and severe action against corrupt officials would have sent a message that the U.S. was, indeed, quite different from Hussein.

But that didn’t happen, and Iraqis adapted — as they have become so good at doing — to this new leadership. Iraqis learned not to hope for change or transformation. They learned that corruption would continue to be the only way to do business. They learned that in the “new Iraq” power and money would still congeal around a small number of morally questionable insiders.

Certainly, no matter what the U.S. had done, a certain percentage of Iraqis would have violently rejected the occupation. What has become most troubling in Iraq lately is that more and more regular Iraqis are supporting the resistance, supporting violence against U.S. forces. And they’re doing this because they have not seen anything in the last year to convince them that the U.S. came to Iraq for the “good benefit” of Iraqis.

Credit: Adam Davidson’s radio reports on corruption in Iraq, part of the Marketplace Radio series “Spoils of War,” can be heard online at www.marketplace.org