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Where the missing $9 billion
went
By Emad Mekay
WASHINGTON - The US-run administration in
Baghdad failed to keep track of nearly US$9
billion of money it transferred to various Iraqi
ministries, according to an official audit
released Sunday.
The report by the US
Special Inspector General for Iraq Reconstruction
says that the now defunct US-lead Coalition
Provisional Authority (CPA) did not exercise
adequate managerial control over funds paid to
Iraqi government ministries, which employ hundreds
of experts from the US. This resulted in
potentially widespread corruption, including
paying salaries to "ghost" employees, and led to
the eventual disappearance of $8.8 billion between
early 2003 and mid-2004.
The CPA was
phased out last July to make way for the interim
Iraqi government, which will be replaced by an
elected body later this year. The report said that
although the CPA published reports on the Internet
of total disbursements to the Iraqi ministries, it
failed to specify what the funds were used for.
The inspector general, Stuart Bowen Jr,
who was appointed in January last year, accused
the CPA of not exercising enough oversight over
the contracting procedures at the Iraqi
ministries. In his 53-page report, Bowen
acknowledged the difficulties of working under war
conditions, but concluded that "we believe the CPA
management of Iraq's national budget process and
oversight of Iraqi funds was burdened by severe
inefficiencies and poor management".
The
CPA's Inspector General's office evaluates the
effectiveness of CPA management in areas including
ministry financial controls, and uses of seized
and donated funds in Iraq. It reports directly to
the US secretary of state and the secretary of
defense.
The Defense Department and the
former CPA administrator, L Paul Bremer, both
disagreed with the findings. In a statement
included in the report itself, Bremer said the
audit did not acknowledge the difficult context in
which the CPA was operating, and that it contained
"many misconceptions and inaccuracies". He said
that the report did not recognize the actions
taken to improve the weaknesses in Iraqi budgeting
and financial management.
The audit
referred to an instance in which the CPA paid
salaries to 74,000 security guards, although the
actual number of employees could not be validated.
The report says that in one case some 8,206 guards
were listed on a payroll, but only 602 real
individuals could be verified. At another
ministry, payrolls listed 1,471 security guards
when only 642 were actually working.
This is
not the first time that US financial conduct in
Iraq has come under fire, specifically over funds
slated for reconstruction after the US-led attack
in March 2003, which then went unaccounted for.
Last June, the British charity Christian Aid said
that at least $20 billion in oil revenues and
other Iraqi funds intended to rebuild the country
had disappeared from banks administered by the
CPA.
Other watchdog groups have complained
before about the opaque nature of the CPA's
handling of Iraqi money and the lack of
transparency of US and Iraqi officials, especially
in dealing with reconstruction contracts, some
awarded without a public tendering process.
Iraq Revenue Watch, a group funded by
international financier George Soros to monitor
the country's reconstruction, said last year that
the CPA had engaged in a last-minute spending
spree, committing billions of dollars to
"ill-conceived projects just before it dissolves",
in an apparent attempt to pre-impose those deals
on any future Iraqi government.
In a
single meeting, the US-controlled body in charge
of managing Iraq's finances approved the
expenditure of nearly $2 billion in Iraqi funds
for reconstruction projects, the group said.
A UN Security Council resolution passed on
June 8 required the new government to satisfy all
outstanding obligations against the Development
Fund for Iraq made before June 30, leaving the new
interim Iraqi government with no choice but to
honor those questionable expenditures.
Iraq Revenue Watch also says that the
occupation left the Iraqis burdened with a legacy
of hundreds of US "experts and advisors" working
in all of Iraq's 29 ministries, as well as other
government agencies.
Those advisors, who
mostly hail from US market institutions, wielded
enormous influence over decisions taken before the
nominal handover. They are believed to maintain
the real influence on economic decisions.
Washington had also initially restricted
the most lucrative reconstruction contracts in
Iraq to large US firms, fueling accusations that
the George W Bush administration was seeking to
benefit a select few US companies rather than find
the best, and possibly the cheapest, options to
help rebuild Iraq.
After numerous
complaints, the contracting process was officially
opened to firms from other nations, but many of
them still insist they are not competing on a
level playing field with US businesses.
Halliburton, a giant US company that has been
awarded $8.2 billion worth of contracts from the
Defense Department to provide support services
such as meals, shelter, laundry and Internet
connections for US soldiers in Iraq, has been
criticized for overcharging for some of those
services. From 1995 to 2000, the company was
headed by Dick Cheney, Bush's vice president.
(Inter Press
Service) |
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