US 'loses' billions in Iraq oil money

US 'loses' billions in Iraq oil money

America’s Defence Department is unable to account for around $9bn (€7bn) supposedly spent on rebuilding the war-shattered country.

A report by the US Special Investigator for Iraq Reconstruction seven years after the invasion that toppled Saddam Hussein found that shoddy record-keeping left the Pentagon unable to fully account for $8.7bn (€6.7bn) it withdrew between 2004 and 2007 from a special fund set up by the UN Security Council.

Of that amount, the Pentagon could not provide documentation to substantiate how it spent $2.6bn (€2bn).

The funds are separate from the $53bn (€41bn) allocated by Congress for rebuilding Iraq.

The report comes at a critical time for Iraq; Despite security gains made since 2008, bombings remain near a daily occurrence that compound the frustrations and fears of Iraqis increasingly weary of the current political crisis – one many say reflects how the country’s politicians are more interested in their own interests than those of the nation.

Politicians have hit an impasse since inconclusive parliamentary elections were held on March 7, unable to form a new government as Prime Minister Nouri al-Maliki, a Shiite, appears determined to stay in office when influential Shiite parties want to see him go.

The audit cited a number of factors that contributed to the inability to account for most of the money.

It said Defence Department organisations failed to set up Treasury Department accounts, as required.

In addition, it said no department organisation was designated as the main body to oversee how the funds were spent.

“The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss,” the report said.

The audit found that the US continues to hold about $34.3m (€26.4bn) 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 fund 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 invasion in 2003 until mid-2004, about $20bn (€15.4bn) was placed into the account.

The Iraqi government had agreed to allow the US continued access to the funds after the authority was dissolved in 2004, but it revoked that authority in December 2007.

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