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Residents gather at the site of a suicide bombing in Baghdad on April 23, 2009 - Source: Reuters -
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The US Department of Defense was unable to account properly for
$8.7b of Iraqi oil and gas money meant for humanitarian needs and
reconstruction after the 2003 invasion, according to an audit
released this week.
The figure is nearly 96% of the $9.1b funnelled to the Pentagon
from the Development Fund for Iraq (DFI), said the audit report
from the US Special Inspector General for Iraq Reconstruction
(SIGIR).
The report described relaxed management of some of the billions of
dollars designated for rebuilding war-shattered Iraq, where
residents routinely complain about lack of electricity and other
basic services more than seven years after the invasion.
The DFI was established by the Coalition Provisional Authority, the
US-run body that took charge of Iraq following the invasion.
It was meant to harness money from export sales of oil, petroleum
products and natural gas, as well as frozen Iraqi assets and
surplus funds from the UN oil-for-food program, and spend it for
the benefit of Iraqis. The UN Security Council approved the
creation of the fund.
"Weaknesses in DoD's financial and management controls left it
unable to properly account for $8.7b of the $9.1b in DFI funds it
received for reconstruction activities in Iraq," the SIGIR report
said.
The report cited poor record-keeping and said most of the
organisations at the Pentagon that received DFI funds failed to
establish required Treasury Department accounts.
"Our selective review shows the records were not always complete.
For example, DoD could not provide documentation to substantiate
how it spent $2.6b," it said.
The government of Iraq ordered the Pentagon to return DFI funds at
the end of 2007. But the audit found Department of Defense
organisations that were still holding and in some cases spending
DFI funds.
"The breakdown in controls left the funds vulnerable to
inappropriate uses and undetected loss," the report said.
Iraq is almost completely reliant on oil revenues to rebuild
infrastructure and housing stock devastated by years of war and
economic sanctions. More than 95% of the federal budget comes from
the oil sector.
The audit report said the Pentagon had agreed to adopt and
implement by November the inspector-general's recommendations to
tighten up financial controls.
"SIGIR believes the identified actions, if implemented as planned,
will address SIGIR's concerns," the report said.
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