BAGHDAD, Iraq (AP) - Residents gave new details Monday about the shootings of civilians in a western Iraqi town, where the U.S. military is investigating allegations of potential misconduct by American troops last November.

The residents said troops entered homes and shot and killed 15 members of two families, including a 3-year-old girl, after a roadside bomb killed a U.S. Marine.

The military, which announced Friday that a dozen Marines are under investigation for possible war crimes in the Nov. 19 incident, said in a statement Monday that a videotape of the aftermath of the shootings in Haditha, 140 miles northwest of Baghdad, was presented in support of the allegations.

The charges against the Marines were first brought forward by Time magazine, which reported this week that it obtained a videotape two months ago taken by a Haditha journalism student that shows the dead still in their nightclothes.

The magazine report mirrored what was told independently to The Associated Press by residents who described what happened as "a massacre.'' However, Time said the available evidence did not prove conclusively that the Marines deliberately killed innocents.

A military spokeswoman said Monday the allegations were being taken "very seriously.''

Khaled Ahmed Rsayef, whose brother and six other relatives were killed, said the roadside bomb exploded at about 7:15 a.m. in the al-Subhani neighborhood, heavily damaging a U.S. Humvee.

A U.S. military statement in November described it as an ambush on a joint U.S.-Iraqi patrol that left 15 civilians, eight insurgents and a U.S. Marine dead in the bombing and a subsequent firefight. The statement said the 15 civilians were killed by the blast, a claim residents denied.

The residents said the only shooting done after the bombing was by U.S. forces.

"American troops immediately cordoned off the area and raided two nearby houses, shooting at everyone inside,'' said Rsayef, who did not witness the events but whose 15-year-old niece says she did. "It was a massacre in every sense of the word.''

Rsayef and another resident, former city councilman Imad Jawad Hamza, who spoke with hospital officials and residents, said the first house to be stormed was that of Abdul-Hamid Hassan Ali, which was near the scene of the bombing.

Ali, 76, whose left leg was amputated years ago because of diabetes, died after being shot in the stomach and chest. His wife, Khamisa, 66, was shot in the back. Ali's son, Jahid, 43, was hit in the head and chest. Son Walid, 37, was burned to death after a grenade was thrown into his room, and a third son, 28-year-old Rashid, died after he was shot in the head and chest, Rsayef and Hamza said.

Also among the dead were son Walid's wife, Asma, 32, who was shot in the head, and their son Abdullah, 4, who was shot in the chest, Rsayef and Hamza said.

Walid's 8-year-old daughter, Iman, and his 6-year-old son, Abdul-Rahman, were wounded and U.S. troops took them to Baghdad for treatment. The only person who escaped unharmed was Walid's 5-month-old daughter, Asia. The three children now live with their maternal grandparents, Rsayef and Hamza said.

Rsayef said those killed in the second house were his brother Younis, 43, who was shot in the stomach and chest, the brother's wife Aida, 40, who was shot in the neck and chest while still in bed where she was recuperating from bladder surgery. Their 8-year-old son Mohammed bled to death after being shot in the right arm, Rsayef said.

Also killed were Younis's daughters, Nour, 14, who was shot in the head; Seba, 10, who was hit in the chest; Zeinab, 5, shot in the chest and stomach; and Aisha, 3, who was shot in the chest. Hoda Yassin, a visiting relative, was also killed, Rsayef and Hamza said.

The only survivor from Younis's family was his 15-year-old daughter Safa, who pretended she was dead. She is living with her grandparents, Rsayef said.

The troops then shot and killed four brothers who were walking in the street, Rsayef and Hamza said, identifying them as the sons of Ayed Ahmed - Marwan, Qahtan, Jamal and Chaseb.

U.S. troops also shot dead five men who were in a car near the scene, Hamza and Rsayef said. They identified the five as Khaled Ayad al-Zawi and his brother Wajdi as well as Mohammed Battal Mahmoud, Akram Hamid Flayeh and Ahmad Fanni Mosleh.

It was not clear if the nine men were involved in the attack as the military statement said.

According to the Defense Department, the Marine who was killed near Haditha that day was Lance Cpl. Miguel Terrazas, 20, of El Paso, Texas. He was assigned to 3rd Battalion, 1st Marine Regiment, 1st Marine Division, I Marine Expeditionary Force.

Dr. Walid al-Hadithi, chief physician at Haditha General Hospital, said that about midnight the day of the attack, two U.S. Humvees arrived at the hospital - one carrying the bodies of men and the other those of women and children.

"They (the Marines) told me the women and children were shot in their homes, and they added that the men were saboteurs,'' al-Hadithi said. He said he was given a total of 24 bodies. "All had bullet wounds.''

Time magazine said its investigation showed that walls and ceilings in both houses were pockmarked with shrapnel and bullet holes as well as sprays of blood. The video did not show any bullet holes on the outside of the houses - holes that might support the military report of a gunbattle.

The military, after being shown the videotape in January, concluded civilians were killed by Marines, Time said, victims of "collateral damage.''

A human rights group condemned the shooting of civilians in Haditha.

"Regrettably the American military goes too far in their strikes against civilians because they consider many civilian areas as targets,'' said Wail al-Tai of the Baghdad Center for Human Rights Studies.

Human Rights Minister Nirmeen Othman would not comment on the incident.

U.S. military spokeswoman Lt. Col. Michelle Martin-Hing issued a statement Monday in response to an e-mail query from the AP:

"We take these allegations very seriously, and I believe the fact that two additional investigations are ongoing concerning this incident clearly demonstrates that. The incident in question was the first in a series of engagements that day that began when the Marine patrol was ambushed in a residential neighborhood with an IED followed immediately by small arms fire from multiple directions.''

Saying Marines tracked insurgents for more than five hours, Martin-Hing said "the investigation will examine whether any rules of engagement were violated in the Marines' response to the insurgent attack. We are committed to thoroughly investigating this incident.''

Lt. Gen. Peter Chiarelli, the No. 2 U.S. commander in Iraq, said about 12 Marines were under investigation for possible war crimes in the incident. He said the case was referred to the Naval Criminal Investigative Service; it was unclear which other ongoing investigation Martin-Hing was referring to in her statement.

They were tough, those marines, big-boned men with muck on their faces and ferocity in their eyes - they had been fighting for days without sleep - but they too were on the same lonely journey of despair that the Old Contemptables and the Frenchpoilus and the Bavarian infantry embarked upon almost a century ago.

Was this because we no longer have leaders who have experienced war at first hand? When I grew up, Churchill and MacMillan were Prime Ministers, men who fought in the First World War and who led us through the Second World War. Eden had been in the wartime Cabinet with Churchill. Tito had been wounded by German shellfire in Yugoslavia, Jack Kennedy had commanded a torpedo boat in the Pacific, de Gaulle fought in the Great War, and later helped to liberate France from the Nazis, but Blair, however much he may claim to be a friend of God, has no such distinction; nor Bush, who dodged Vietnam; nor Cheney, who also dodged Vietnam; nor Gordon Brown, nor Condoleezza Rice; nor John Howard of Australia. Colin Powell was in Vietnam; but he has gone, trailing his ignominious February 2003 UN performance on weapons of mass destruction.

Instead, the little men dressed up in the clothes of dead titans. Bush and Blair thought they were Churchills or Roosevelts. They flaunted themselves along with Aznar of Spain as the Big Three: Churchill, Roosevelt, and Stalin; though I never discovered which of them was supposed to play the Soviet mass-murderer, as they conspired in the Azores for war. They claimed that Saddam was the Hitler of Baghdad. My old, messianic friend Tom Friedman, a New York Times columnist, got it right when he described Saddam as part Donald Duck and part Don Corleone, but this was not the kind of reality that Bush or Blair were interested in.

They were the quick-fix men, the instant statesmen, the guys who had handle on war. Post-war control and reconstruction? Forget it, the Iraqis will do as we tell them after they have greeted us with roses and songs. Winston Churchill set up a British cabinet committee to organise the administration of post-war occupied Germany in 1941: four years before the end of the Second World War, and at a time when we still expected aWehrmacht invasion of Britain. The Churchill frauds had not even bothered to create such a committee fordays before their invasion of Iraq.

For this was to be an ideological war. From its creation by the loonies of the American right - as a pro-Israeli policy to aid Likud Party leader Benjamin Netanyahu - and then foisted on Bush, to the hell-disaster that Iraq now represents, the real war had to be turned into myth; nightmares into dreams; destruction into hope; terrible truths into profound mendacity.

Even today the occupation powers tell awesome lies. Democracy is taking hold when the "Iraqi" government controls only a few acres of Baghdad greensward. The insurgency is being crushed when 40,000 armed Iraqis are ripping into the greatest army on Earth; freedom is taking hold when thousands of Iraqis are dying each month. "Operation Swarmer" is now supposedly targeting those who want a civil war in Iraq. Some of the men who are trying to provoke civil war however, work for the Iraqi Interior Ministry, and are paid, ultimately, by us.

For the truth, we should turn to a well-known analyst who warned us that in Iraq, the British have been "led into a trap from which it shall be hard to escape with dignity and honour. They have been tricked into it by a steady withholding of information. The Baghdad communiqués are belated, insincere, incomplete. Things have been far worse than we have been told. Our administration more bloody and inefficient than the public knows ... We are today not far from a disaster." This is the most concise and accurate account I have yet read of our present folly.

It was written about the British occupation of Iraq in 1920 by Lawrence of Arabia. In the long nights of 2003, when the dangers of each day under US bombardment were replaced by the insomnia of bomb-blasts in the Baghdad darkness outside. I would curl up like an animal in my bed and thumb through the predictions of this present folly.

I read a fearful prophecy by the evangelical preacher Pat Buchanan written five months before we illegally invaded Iraq. "This invasion will not be the cakewalk neo-conservatives predict," he said. "Terrorist attacks in liberated Iraq seem as certain as in liberated Afghanistan. For a militant Islam ... will never accept George Bush dictating the destiny of the Islamic world ... Pax Americana will reach apogee but then the tide recedes; for the one endeavour at which Islamic peoples excel is expelling imperial powers by terror and guerrilla warfare." There were the dreary precedents. Muslims drove the Brits out of Palestine and Aden; the French out of Algeria; the Russians out of Afghanistan; the Americans out of Somalia; and Beirut, the Israelis out of Lebanon. As Buchanan wrote, "we have started up the road to empire, and over the next hill we will meet those who went before." However, we shall not count the bodies.

What was it Bush told us a few weeks ago? That 30,000 Iraqis had been killed since the invasion, his very words a racist admission; for what he actually said was: "30,000 more or less". More or less, give or take a few hundred. Would he have dared to say that US casualties were "2,000 more or less"? Of course not. Our dead are precious; they are individuals with widows and children. The Iraqis? Well, they are lesser beings whose casualties cannot be revealed to us by the Iraqi Ministry of Health, on orders from the Americans and British; creatures whose suffering, far greater than our own, must be submerged in the democracy and freedom in which we are drowning them; whose casualties "More or less" are probably nearer to 150,000. After all, if 1,000 Iraqis could die by violence last July - in Baghdad alone; and if they are being killed at 60 or 70 a day, then we have a near genocidal bloodbath on our hands. Iraqis, however, are now ourUntermenschen for whom, frankly, we do not greatly care.

Civil war? There never was a civil war? It is a tribal, not a sectarian society. Some organisation wants a civil war; oddly, it was an occupation force's spokesman, a certain Dan Senor, who first warned of civil war in Iraq at an Anglo-American press-conference in 2003. Why? We talk of civil war far more than the Iraqis do. Why? Repeatedly, we are told that Iraqis and Westerners are kidnapped by "Men wearing police uniforms" or by "Men wearing army uniforms".

What is this nonsense? Are we really to believe that there is a vast warehouse in Fallujah containing 8,000 made-to-measure police uniforms for potential insurgents? No! The truth is that many of the policemen and soldiers or Iraq, upon whose loyalty and courage our retreat, according to Bush, depends, are themselves insurgents. So deeply have the nationalists/Islamists forces infiltrated these men that the Bush-Blair promises of withdrawal are the very opposite of the truth. We are on our own. We may persuade our ex-spooks, like the former "interim prime minister" Iyad Alawi, who obediently claimed yesterday that therewas a civil war in progress, to try to frighten Iraqis. The reality is that our armed presence in Iraq is destroying an entire people.

So we proceed down the crumbling staircase. Let us forget the weapons of mass destruction; the 45-minute warning; the links between Saddam and 11 September 2001; the dossiers; and the lies; and our torture - yes, torture, at Abu Ghraib and Guantanamo Bay; and the ever-widening chasm between Blair's tomfoolery and the truth. Bush told us yesterday that "More sacrifices will be required". You bet they will be if we continue this march of folly.

© 2006 Independent News and Media Limited

n a dilapidated maternity and paediatric hospital in Diwaniyah, 100 miles south of Baghdad, Zahara and Abbas, premature twins just two days old, lie desperately ill. The hospital has neither the equipment nor the drugs that could save their lives. On the other side of the world, in a federal courthouse in Virginia, US, two men - one a former CIA agent and Republican candidate for Congress, the other a former army ranger - are found guilty of fraudulently obtaining $3m (£1.7m) intended for the reconstruction of Iraq. These two events have no direct link, but they are none the less products of the same thing: a financial scandal that in terms of sheer scale must rank as one of the greatest in history.

At the start of the Iraq war, around $23bn-worth of Iraqi money was placed in the trusteeship of the US-led coalition by the UN. The money, known as the Development Fund for Iraq and consisting of the proceeds of oil sales, frozen Iraqi bank accounts and seized Iraqi assets, was to be used in a "transparent manner", specified the UN, for "purposes benefiting the people of Iraq".

For the past few months we have been working on a Guardian Films investigation into what happened to that money. What we discovered was that a great deal of it has been wasted, stolen or frittered away. For the coalition, it has been a catastrophe of its own making. For the Iraqi people, it has been a tragedy. But it is also a financial and political scandal that runs right to the heart of the nightmare that is engulfing Iraq today.

Diwaniyah is a sprawling and neglected city with just one small state paediatric and maternity hospital to serve its one million people. Years of war, corruption under Saddam and western sanctions have reduced the hospital to penury, so when last year the Americans promised total refurbishment, the staff were elated. But the renovation has been partial and the work often shoddy, and where it really matters - funding frontline health care - there appears to have been little change at all.

In the corridor, an anxious father who has been told his son may have meningitis is berating the staff. "I want a good hospital, not a terrible hospital that makes my child worse," he says. But then he calms down. "I'm not blaming you, we are the same class. I'm talking about important people. Those controlling all those millions and the oil. They didn't come here to save us from Saddam, they came here for the oil, and so now the oil is stolen and we got nothing from it." Beside him another parent, a woman, agrees: "If the people who run the country are stealing the money, what can we do?" For these ordinary Iraqis, it is clear that the country's wealth is being managed in much the same way as it ever was. How did it all go so wrong?

When the coalition troops arrived in Iraq, they were received with remarkable goodwill by significant sections of the population. The coalition had control up to a point and, perhaps more importantly, it had the money to consolidate that goodwill by rebuilding Iraq, or at least make a significant start. Best of all for the US and its allies, the money came from the Iraqis themselves.

Because the Iraqi banking system was in tatters, the funds were placed in an account with the Federal Reserve in New York. From there, most of the money was flown in cash to Baghdad. Over the first 14 months of the occupation, 363 tonnes of new $100 bills were shipped in - $12bn, in cash. And that is where it all began to go wrong.

"Iraq was awash in cash - in dollar bills. Piles and piles of money," says Frank Willis, a former senior official with the governing Coalition Provisional Authority. "We played football with some of the bricks of $100 bills before delivery. It was a wild-west crazy atmosphere, the likes of which none of us had ever experienced."

The environment created by the coalition positively encouraged corruption. "American law was suspended, Iraqi law was suspended, and Iraq basically became a free fraud zone," says Alan Grayson, a Florida-based attorney who represents whistleblowers now trying to expose the corruption. "In a free fire zone you can shoot at anybody you want. In a free fraud zone you can steal anything you like. And that was what they did."

A good example was the the Iraqi currency exchange programme (Ice). An early priority was to devote enormous resources to replacing every single Iraqi dinar showing Saddam's face with new ones that didn't. The contract to help distribute the new currency was won by Custer Battles, a small American security company set up by Scott Custer and former Republican Congressional candidate Mike Battles. Under the terms of the contract, they would invoice the coalition for their costs and charge 25% on top as profit. But Custer Battles also set up fake companies to produce inflated invoices, which were then passed on to the Americans. They might have got away with it, had they not left a copy of an internal spreadsheet behind after a meeting with coalition officials.

The spreadsheet showed the company's actual costs in one column and their invoiced costs in another; it revealed, in one instance, that it had charged $176,000 to build a helipad that actually cost $96,000. In fact, there was no end to Custer Battles' ingenuity. For example, when the firm found abandoned Iraqi Airways fork-lifts sitting in Baghdad airport, it resprayed them and rented them to the coalition for thousands of dollars. In total, in return for $3m of actual expenditure, Custer Battles invoiced for $10m. Perhaps more remarkable is that the US government, once it knew about the scam, took no legal action to recover the money. It has been left to private individuals to pursue the case, the first stage of which concluded two weeks ago when Custer Battles was ordered to pay more than $10m in damages and penalties.

But this is just one story among many. From one US controlled vault in a former Saddam palace, $750,000 was stolen. In another, a safe was left open. In one case, two American agents left Iraq without accounting for nearly $1.5m.

Perhaps most puzzling of all is what happened as the day approached for the handover of power (and the remaining funds) to the incoming Iraqi interim government. Instead of carefully conserving the Iraqi money for the new government, the Coalition Provisional Authority went on an extraordinary spending spree. Some $5bn was committed or spent in the last month alone, very little of it adequately accounted for.

One CPA official was given nearly $7m and told to spend it in seven days. "He told our auditors that he felt that there was more emphasis on the speed of spending the money than on the accountability for that money," says Ginger Cruz, the deputy inspector general for Iraqi reconstruction. Not all coalition officials were so honest. Last month Robert Stein Jr, employed as a CPA comptroller in south central Iraq, despite a previous conviction for fraud, pleaded guilty to conspiring to steal more than $2m and taking kickbacks in the form of cars, jewellery, cash and sexual favours. It seems certain he is only the tip of the iceberg. There are a further 50 criminal investigations under way.

Back in Diwaniyah it is a story about failure and incompetence, rather than fraud and corruption. Zahara and Abbas, born one and a half months premature, are suffering from respiratory distress syndrome and are desperately ill. The hospital has just 14 ancient incubators, held together by tape and wire.

Zahara is in a particularly bad way. She needs a ventilator and drugs to help her breathe, but the hospital has virtually nothing. Her father has gone into town to buy vitamin K on the black market, which he has been told his children will need. Zahara starts to deteriorate and in desperation the doctor holds a tube pumping unregulated oxygen against the child's nostrils. "This treatment is worse than primitive," he says. "It's not even medicine." Despite his efforts, the little girl dies; the next day her brother also dies. Yet with the right equipment and the right drugs, they could have survived.

How is it possible that after three years of occupation and billions of dollars of spending, hospitals are still short of basic supplies? Part of the cause is ideological tunnel-vision. For months before the war the US state department had been drawing up plans for the postwar reconstruction, but those plans were junked when the Pentagon took over.

To supervise the reconstruction of the Iraqi health service, the Pentagon appointed James Haveman, a former health administrator from Michigan. He was also a loyal Bush supporter, who had campaigned for Jeb Bush, and a committed evangelical Christian. But he had virtually no experience in international health work.

The coalition's health programme was by any standards a failure. Basic equipment and drugs should have been distributed within months - the coalition wouldn't even have had to pay for it. But they missed that chance, not just in health, but in every other area of life in Iraq. As disgruntled Iraqis will often point out, despite far greater devastation and crushing sanctions, Saddam did more to rebuild Iraq in six months after the first Gulf war than the coalition has managed in three years.

Kees Reitfield, a health professional with 20 years' experience in post-conflict health care from Kosovo to Somalia, was in Iraq from the very beginning of the war and looked on in astonishment at the US management in its aftermath. "Everybody in Iraq was ready for three months' chaos," he says. "They had water for three months, they had food for three months, they were ready to wait for three months. I said, we've got until early August to show an improvement, some drugs in the health centres, some improvement of electricity in the grid, some fuel prices going down. Failure to deliver will mean civil unrest." He was right.

Of course, no one can say that if the Americans had got the reconstruction right it would have been enough. There were too many other mistakes as well, such as a policy of crude "deBa'athification" that saw Iraqi expertise marginalised, the creation of a sectarian government and the Americans attempting to foster friendship with Iraqis who themselves had no friends among other Iraqis.

Another experienced health worker, Mary Patterson - who was eventually asked to leave Iraq by James Haveman - characterises the Coalition's approach thus: "I believe it had a lot to do with showing that the US was in control," she says. "I believe that it had to do with rewarding people that were politically loyal. So rather than being a technical agenda, I believe it was largely a politically motivated reward-and-punishment kind of agenda."

Which sounds like the way Saddam used to run the country. "If you were to interview Iraqis today about what they see day to day," she says, "I think they will tell you that they don't see a lot of difference".

President George W. Bush planned to head to Cleveland, Ohio, Monday as part of his public relations campaign to defend his Iraq strategy as opinion polls showed approval of the war at a new low.

Bush said Sunday he had been informed by US ambassador to Iraq Zalmay Khalilzad "of the progress the Iraqis are making toward forming a unity government" three months after national elections were held.

But with a mounting death toll from bombs and assassinations and the failure to agree on forming a new Iraqi government, a top member of Bush's own Republican Party said US policy needs "some new thinking".

"It's important that we stop this talk about we're not going to leave until we achieve victory," said Republican Senator Chuck Hagel. "We need some new thinking here."

Thousands of demonstrators in Asia and across the world denounced the US-led war on Sunday.

Hong Kong's South China Morning Post Monday said little apart from freedom of expression had been achieved three years after the invasion. "Civil conflict and rising sectarianism mean even that gain is under threat," it said in an editorial.

The Manila Times warned that US policymakers must take "a long hard look at Washington's role as Iraq's shepherd."

"Sooner rather than later, Iraq must be given a free hand to chart its destiny," an editorial said.

In Japan, which had deployed troops in Iraq, small demonstrations demanding a pullout were held over the weekend. However, the country's top spokesman said Tokyo's support for the war remains unchanged.

"Iraqi people have been progressing to build a new country by themselves with steady political steps based on the UN resolution," Chief Cabinet Secretary Shinzo Abe told reporters.

Japan is expected to pull its troops from Iraq in the coming months but Abe declined to comment on the timeframe for the withdrawal.

The Yomiuri Shimbun, Japan's top-selling daily, called on the United States to remain engaged in the world despite the turmoil in Iraq.

"Although US President Bush dismissed isolationism and protectionism in his State of the Union address, there are signs that the US Congress is being tempted by these doctrines," the Yomiuri said.

The conservative daily cited the stiff opposition in Congress to an Dubai-based company's attempted takeover of six US ports.

The Nihon Keizai Shimbun business daily also said international cooperation remained crucial, particularly to fight nuclear proliferation.

The sharpest rebuke predictably came from communist North Korea, which Bush once labeled as part of the "axis of evil" along with Iran and pre-war Iraq.

"The US imperialists provoked wars in ... Afghanistan and Iraq in the 1990s and the new century, mercilessly destroying peaceful towns and villages and civilian establishments and cruelly killing countless innocent people," said Rodong Sinmun, the party newspaper.

"This clearly proves that the US is a war maniac, the ringleader of evils and the worst human rights abuser."