US: $6.6bn in Iraq aid 'may have been stolen'

Years after American auditors said they had lost track of vast sums of reconstruction cash for Iraq in the wake of the ousting of Saddam Hussein they are now admitting for the first time that much of it was almost certainly stolen.

In a revelation that is stirring anger both on Capitol Hill and among Iraqi officials in Baghdad, the office that was created by the Bush administration to monitor efforts to get Iraq on its feet after the 2003 invasion is saying that $6.6bn (£4bn), all delivered in cash, cannot be accounted for.

Just how much of the missing money was pocketed either by US contractors or Iraqis is not clear, nor is it likely that a full picture of what happened will ever be painted. Even so, Stuart Bowen, who runs the monitoring office, says that the errant billions may represent the "largest theft of funds in national history".

What does seem clear is that, in its rush to get cash into Iraq to help persuade the population that economic and social order could be re-established quickly, the US did not ensure the proper level of financial controls. The US was sending C-130 Hercules transport planes from Maryland to Baghdad stuffed to the gunnels with $100 bills. A single plane was capable of carrying as much as $2.4bn.

The money was mostly drawn from Iraqi oil revenues and the UN Oil-for-Food fund. Consequently, the Iraqi government may demand that Washington compensate the country for the missing money. "Iraq has an interest in looking after its assets," said Samir Sumaidaie, Iraq's ambassador to the US. That will not be well received by the US Congress, however, which has seen more than $60bn spent on Iraqi reconstruction. "Congress is not looking forward to having to spend billions of our money to make up for billions of their money that we can't account for," noted the Congressman Henry Waxman.

Roughly 20 cash-carrying flights took off for Iraq from the US in the months before May 2004 delivering more than $12bn. Once on Iraqi soil, the haul was stored in a former Saddam Hussein palace and in US military camps. Thereafter it was usually stuffed into sacks, piled into the backs of open pick-up trucks before being distributed to beneficiaries.