US: Where has the money gone?

2004-10-15 08:09

Washington - United States and Iraqi officials doled out hundreds of millions of dollars in oil proceeds and other moneys for Iraqi projects earlier this year, but there was little effort to monitor or justify the expenditures, according to an audit released on Thursday.

Files that could explain many of the payments are missing or non-existent, and contracting rules were ignored, according to auditors working for an agency created by the United Nations.

"We found one case where a payment ($2m) was authorised by the CPA (Coalition Provisional Authority) senior adviser to the Ministry of Oil," the report said. "We were unable to obtain an underlying contract" or even "evidence of services being rendered."

How where billions spent?

In a programme to allow US military commanders to pay for small reconstruction projects, auditors questioned 128 projects totalling $31.6m. They could find no evidence of bidding for the projects or, alternatively, explanations of why they were awarded without competition.

The report was released by Representative Henry Waxman of California, ranking Democrat on the House Government Reform Committee and a leading critic of reconstruction spending to rebuild Iraq.

"The Bush Administration cannot account for how billions of dollars of Iraqi oil proceeds were spent," Waxman said. "The mismanagement, lack of transparency, and potential corruption will seriously undermine our efforts in Iraq. A thorough congressional investigation is urgently needed."

The audit was performed by the accounting firm KMPG for the International Advisory and Monitoring Board, created by the United Nations to monitor the stewardship of Iraqi funds.

The report monitored spending by the Coalition Provisional Authority, the US-run governing agency which went out of existence in June; Iraqi ministries; the Kurdish Regional Government and Iraqi provisional governments.

Reconciliating accounts

It covered the period from January to June this year.

In the CPA programmes, "We found 37 cases where contracting files could not be located," the auditors said. The cost of the contracts: $185m. In another 52 cases, there was no record of the goods received for $87.9m in expenditures.

In a military commanders' programme to buy back weapons, $1.4m was spent from a fund that specifically prohibited such expenditures, auditors said.

Iraq's Ministry of Finance maintained two sets of accounting records, one manual and one computerised.

"A reconciliation between these two sets of accounting records was not prepared and the difference was significant," the report said.

- AP