News24

$8.7bn missing in Iraq

2010-07-27 22:02

Baghdad - The US Defence Department is unable to properly account for over 95% of $9.1bn in Iraqi oil money tapped by the US for rebuilding the war-ravaged nation, according to an audit released on Tuesday.

The report by the US Special Investigator for Iraq Reconstruction offers a compelling look at continued laxness in how such funds are being spent in a country where people complain that basic services like electricity and clean water are sharply lacking seven years after the US-led invasion that toppled Saddam Hussein.

The audit found that shoddy record keeping by the Defence Department left the Pentagon unable to fully account for $8.7bn it withdrew between 2004 and 2007 from a special fund set up by the UN Security Council.

Of that amount, the Pentagon "could not provide documentation to substantiate how it spent $2.6bn".

The funds are separate from the $53bn allocated by Congress for rebuilding Iraq.

The report comes at a critical time for Iraq.

Despite security gains made since 2008, bombings remain near a daily occurrence that compound the frustrations and fears of Iraqis increasingly weary of the current political crisis - one many say reflects how the country's politicians are more interested in their own interests than those of the nation.

Political impasse

Politicians have hit an impasse since inconclusive parliamentary elections were held March 7, unable to form a new government as Prime Minister Nouri al-Maliki, a Shi'ite, appears determined to stay in office when influential Shi'ite parties want to see him go.

The audit cited a number of factors that contributed to the inability to account for most of the money withdrawn by the Pentagon from the Development Fund for Iraq.

It said most of the Defence Department organisations that received DFI money failed to set up Treasury Department accounts, as required.

In addition, it said no Defence Department organisation was designated as the main body to oversee how the funds were accounted for or spent.

"The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss," the report said.

The audit found that the US continues to hold about $34.3m of the money even though it was required to return it to the Iraqi government.

The audit did not indicate that investigators believed there were any instances of fraud involved in the spending of these funds.

The DFI includes revenues from Iraq's oil and gas exports, as well as frozen Iraqi assets and surplus funds from the now-defunct, Saddam Hussein-era oil-for-food programme.

With the establishment of the Coalition Provisional Authority, which ran Iraq shortly after the start of the US invasion in 2003 until mid-2004, about $20bn was placed into the account.

The Iraqi government had agreed to allow the US continued access to the funds after the CPA was dissolved in 2004, but it revoked that authority in December 2007.