IRAQ: ELECTION AFTERMATH: US failed to keep track of $9bn given to ministries in Baghdad

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The Independent Online
THE US occupation authority that ran Iraq until mid-2004 failed to monitor the end use of almost $9bn (pounds 5bn) in funds it transferred to government ministries in Baghdad, according to an official audit report published in Washington.

In his latest accounting to Congress, General Stuart Bowen, the federally appointed special inspector general for Iraqi reconstruction, suggests that the inadequate controls may have opened the way for fraud and corruption.

The money - $8.8bn in all - consisted mainly of money from Iraqi oil exports, vestiges of the pre-war oil for food programme and assets confiscated from elements of the toppled Saddam regime. These were then combined into a Development Fund for Iraq, part of whose proceeds were channelled to the Iraqi ministries.

But the US authorities had to rely on Iraqi audit offices, which basically were not operating in the period between October 2003 and 28 June 2004, when power was handed over to an interim Iraqi government.

Although no specific incidents of corruption or embezzlement are listed, the report says there was "no assurance that the funds were used for the purposes mandated" - humanitarian assistance, economic reconstruction, and infrastructure repairs.

Among General Bowen's findings, one Iraqi ministry received money to pay 8,206 guards, although evidence of no more than 602 guards could be established. At another ministry, funds went to pay 1,417 guards, but only 642 could be identified.

The findings come as controversy rages over the United Nations' handling of the oil-for-food programme, currently under investigation by the UN itself as well as by several US congressional committees. It is alleged by some US legislators that billions of dollars were siphoned off by Saddam Hussein, both for his own enrichment and as kickbacks to beneficiaries in many countries.

Any such parallels were hotly rejected by Paul Bremer, head of the Coalition Provisional Authority (CPA) at the time. The latest audit report, he complained in a written response to the report, "seemed to assume that Western-style budgeting could be immediately and fully implemented in the midst of a war". The Pentagon said it "simply disagreed" with the conclusion that the CPA provided less than adequate controls.