US occupation officials in Iraq ‘lost track of $9bn’

Larry Margasak, Washington

The US officials relied on Iraqi audit agencies to account for the funds but those offices were not even functioning when the funds were transferred between October 2003 and June 2004, according to an audit by a US inspector general.

The findings were released by Stuart Bowen, special inspector general for Iraq reconstruction. Mr Bowen issued several reports on the Coalition Provisional Authority (CPA), the US occupation government that ruled Iraq from June 2003 to June 2004.

But the official who led the CPA, Paul Bremer, made a blistering, written reply to the findings, saying the report had “many misconceptions and inaccuracies” and lacked professional judgment.

Mr Bremer complained the report “assumes that western-style budgeting and accounting procedures could be immediately and fully implemented in the midst of a war.”

The inspector general said the occupying agency disbursed the money to Iraqi ministries “without assurance the monies were properly accounted for.”

There was no way to verify the money was used for its intended purposes.

Pentagon spokesman Bryan Whitman said the authority was hamstrung by “extraordinary conditions” under which it worked throughout its mission.

“We simply disagree with the audit’s conclusion that the CPA provided less than adequate controls,” he said.

Turning over the money “was in keeping with the CPA’s responsibility to transfer these funds and administrative responsibilities to the Iraqi ministries as an essential part of restoring Iraqi governance.”

The inspector general cited an International Monetary Fund assessment in October 2003 on the poor state of Iraqi government offices.

The assessment found ministries suffered from staff shortages, poor security, disruptions in communications, damage and looting of government buildings, and lack of financial policies.

Some of the transferred funds may have paid “ghost” employees, the inspector general found.

CPA staff learned that 8,206 guards were on the payroll at one ministry, but only 602 could be accounted for, the report said.