US can't account for US$8.7bn in Iraqi funds
11:23 AM Wednesday Jul 28, 2010AGHDAD - The US Defence Department is unable to account properly for over 95 per cent of US$9.1 billion (NZ$12.43bn) in Iraqi oil money tapped by the US for rebuilding the war ravaged nation, according to an audit released overnight.
The report by the US Special Inspector General for Iraq Reconstruction offers a compelling look at continued laxness in how such funds were being spent in a country where people complain basic services like electricity and clean water are sharply lacking seven years after the US-led invasion that toppled Saddam Hussein.
The audit found that shoddy record keeping by the Defence Department left the Pentagon unable to fully account for US$8.7 billion it withdrew between 2004 and 2007 from a special fund set up by the UN Security Council.
Of that amount, Pentagon "could not provide documentation to substantiate how it spent US$2.6 billion."
The funds are separate from the US$53 billion allocated by Congress for rebuilding Iraq.
The report comes at a critical time for Iraq, which four months after inconclusive elections squabbling political factions have still not agreed on a new government.
The continuing impasse was highlighted on Tuesday when Iraqi lawmakers gathered for the second time this month only to indefinitely postpone the parliamentary session because there was still no decision on the new government.
Acting speaker Fouad Massoum told reporters that the postponement was designed to give the political blocs more time to discuss contentious issues and agree on the distribution of positions in the new government.
"With every delay, the suffering of the Iraqi people and security risks are increasing," lawmaker Salman al-Jumaili told reporters, criticizing the move.
The US audit is unlikely to do anything but further stoke that frustration felt by Iraqis who continue to suffer from poor infrastructure despite the billions spent.
The audit cited a number of factors behind the inability to account for most of the money withdrawn by the Pentagon from the Development Fund for Iraq.
It said most of the Defence Department organisations that received DFI money failed to set up Treasury Department accounts, as required.
In addition, it said no Defence Department organisation was designated as the main body to oversee how the funds were accounted for or spent.
"The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss," the report said.
Calls to Iraqi officials for comment went unanswered.
The Defence Department, in responses attached to the audit, said it agreed with the recommendations laid out in the report about establishing better guidelines for monitoring such funds, including appointing an organisation to be responsible for overseeing such funds mostly likely by November.
The audit found that the US continues to hold about US$34.3 million of the money even though it was required to return it to the Iraqi government.
The audit did not indicate that investigators believed there were any instances of fraud involved in the spending of these funds.
The DFI includes revenues from Iraq's oil and gas exports, as well as frozen Iraqi assets and surplus funds from the now-defunct, Saddam Hussein-era oil-for-food programme.
With the establishment of the Coalition Provisional Authority, which ran Iraq shortly after the start of the US invasion in 2003 until mid-2004, about US$20 billion was placed into the account.
The Iraqi government had agreed to allow the US continued access to the funds after the CPA was dissolved in 2004, but it revoked that authority in December 2007.
In other developments, seven people were killed in a series of bombings and apparent assassinations in Baghdad and Mosul, a northern city where al Qaeda is believed to still have a strong presence. Among those killed were two women shot dead in their home by gunmen and a Baghdad electricity official who died of wounds sustained after a morning roadside bombing.
- AP
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