Audit shows $8.8 billion in Iraq funds missing
Coalition official cites body for lax ‘stewardship’
Reuters
Updated: 6:06 p.m. ET Aug. 19, 2004
WASHINGTON - At least $8.8 billion in Iraqi funds that was given to Iraqi ministries by the former U.S.-led authority there cannot be accounted for, according to a draft U.S. audit set for release soon.
The audit by the Coalition Provisional Authority’s own inspector general blasts the CPA for “not providing adequate stewardship” of at least $8.8 billion from the Development Fund for Iraq that was given to Iraqi ministries.
The audit was first reported on a Web site earlier this month by David Hackworth, a journalist and retired colonel. A U.S. official confirmed that the contents of the leaked audit cited by Hackworth were accurate.
The development fund is made up of proceeds from Iraqi oil sales, frozen assets from foreign governments and surplus from the U.N. oil for food program. Its handling has already come under fire in a U.N.-mandated audit released last month.
Ghost workers
Among the draft audit’s findings were that payrolls in Iraqi ministries under the control of the Coalition Provisional Authority were padded with thousands of ghost employees.
In one example, the audit said the CPA paid for 74,000 guards even though the actual number could not be validated. In another, 8,206 guards were listed on a payroll but only 603 people doing the work could be counted.
Three Democratic senators — Ron Wyden of Oregon, Tom Harkin of Iowa and Byron Dorgan of North Dakota — demanded an explanation from Defense Secretary Donald Rumsfeld over the use of the funds by the CPA, which handed over authority to the Iraqis in June.
“The CPA apparently transferred this staggering sum of money with no written rules or guidelines for ensuring adequate managerial, financial or contractual controls over the funds,” said the letter sent by the senators on Thursday.
‘Serious questions’
“Such enormous discrepancies raise very serious questions about potential fraud, waste and abuse,” said the senators.
A spokesman for the CPA inspector general’s office confirmed “field work” had been completed on the audit but declined to give specifics. He said auditors were awaiting comment from the Pentagon before releasing the final report, probably later this month.
The Pentagon did not immediately respond to questions.
An international audit report released last month that was requested by a U.N.-mandated monitoring body chided the CPA for oversight of spending of Iraq’s oil revenue.
Halliburton also benefited
While the International Advisory and Monitoring Board said the audit found no evidence of fraud in spending by the CPA after the U.S. invasion in March 2003, it said oversight was insufficient to ensure money was used for its intended purposes.
One of the main benefactors of the Iraq funds was the Texas-based firm Halliburton, which was paid more than $1 billion out of those funds to bring in fuel for Iraqi civilians.
The monitoring board said despite repeated requests it had not been given access to U.S. audits of contracts held by Halliburton, which was once run by Vice President Dick Cheney, and other firms that used the development funds.
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