Audit: $9 Billion Unaccounted for in Iraq

By LARRY MARGASAK
Associated Press Writer

January 31, 2005, 4:35 PM EST

WASHINGTON -- The U.S. occupation authority in Iraq was unable to keep track of nearly $9 billion it transferred to government ministries, which lacked financial controls, security, communications and adequate staff, an inspector general has found.

The U.S. 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 special U.S. inspector general.

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

The official who led the CPA, L. Paul Bremer III, submitted a blistering, written reply to the findings, saying the report had "many misconceptions and inaccuracies," and lacked professional judgment.

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 $8.8 billion to Iraqi ministries "without assurance the moneys were properly accounted for."

U.S. officials, the report said, "did not establish or implement sufficient managerial, financial and contractural controls." There was no way to verify that the money was used for its intended purposes of financing humanitarian needs, economic reconstruction, repair of facilities, disarmament and civil administration.

Pentagon spokesman Bryan Whitman said Sunday 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," Whitman 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. At another ministry, U.S. officials found 1,417 guards on the payroll but could only confirm 642.

When staff members of the U.S. occupation government recommended that payrolls be verified before salary payments, CPA financial officials "stated the CPA would rather overpay salaries than risk not paying employees and inciting violence," the inspector general said.

Bremer attacked many of the specific findings. Among his rebuttal points:

* With more than a million Iraqi families depending on government salaries, there would have been an increased security threat if civil servants had not been paid until modern pay records were developed.

* U.S. policy was to build up the Iraqi force guarding government facilities, and it was better to accept an imperfect payroll system than "to stop paying armed young men" providing security.

* The report was suggesting the CPA "should have placed hundreds of CPA auditors" in Iraqi ministries, contrary to United States and United Nations policy of giving Iraqi ministers responsibility for their budgets.

* The CPA established a program review board, an independent judiciary and inspector generals in each agency to fight corruption.

The inspector general's report rejected Bremer's criticism. It concluded that despite the war, "We believe the CPA management of Iraq's national budget process and oversight of Iraqi funds was burdened by severe inefficiencies and poor management."
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Fuckin' a. Another audit with missing billions! WTF. Where is the outrage regarding all of our money just vanishing?! Bullshit.

Where did it go?

Apparently, only the shadow knows.....

Where the missing $9 billion went
By Emad Mekay

WASHINGTON - The US-run administration in Baghdad failed to keep track of nearly US$9 billion of money it transferred to various Iraqi ministries, according to an official audit released Sunday.

The report by the US Special Inspector General for Iraq Reconstruction says that the now defunct US-lead Coalition Provisional Authority (CPA) did not exercise adequate managerial control over funds paid to Iraqi government ministries, which employ hundreds of experts from the US. This resulted in potentially widespread corruption, including paying salaries to "ghost" employees, and led to the eventual disappearance of $8.8 billion between early 2003 and mid-2004.

The CPA was phased out last July to make way for the interim Iraqi government, which will be replaced by an elected body later this year. The report said that although the CPA published reports on the Internet of total disbursements to the Iraqi ministries, it failed to specify what the funds were used for.

The inspector general, Stuart Bowen Jr, who was appointed in January last year, accused the CPA of not exercising enough oversight over the contracting procedures at the Iraqi ministries. In his 53-page report, Bowen acknowledged the difficulties of working under war conditions, but concluded that "we believe the CPA management of Iraq's national budget process and oversight of Iraqi funds was burdened by severe inefficiencies and poor management".

The CPA's Inspector General's office evaluates the effectiveness of CPA management in areas including ministry financial controls, and uses of seized and donated funds in Iraq. It reports directly to the US secretary of state and the secretary of defense.

The Defense Department and the former CPA administrator, L Paul Bremer, both disagreed with the findings. In a statement included in the report itself, Bremer said the audit did not acknowledge the difficult context in which the CPA was operating, and that it contained "many misconceptions and inaccuracies". He said that the report did not recognize the actions taken to improve the weaknesses in Iraqi budgeting and financial management.

The audit referred to an instance in which the CPA paid salaries to 74,000 security guards, although the actual number of employees could not be validated. The report says that in one case some 8,206 guards were listed on a payroll, but only 602 real individuals could be verified. At another ministry, payrolls listed 1,471 security guards when only 642 were actually working.
This is not the first time that US financial conduct in Iraq has come under fire, specifically over funds slated for reconstruction after the US-led attack in March 2003, which then went unaccounted for. Last June, the British charity Christian Aid said that at least $20 billion in oil revenues and other Iraqi funds intended to rebuild the country had disappeared from banks administered by the CPA.

Other watchdog groups have complained before about the opaque nature of the CPA's handling of Iraqi money and the lack of transparency of US and Iraqi officials, especially in dealing with reconstruction contracts, some awarded without a public tendering process.

Iraq Revenue Watch, a group funded by international financier George Soros to monitor the country's reconstruction, said last year that the CPA had engaged in a last-minute spending spree, committing billions of dollars to "ill-conceived projects just before it dissolves", in an apparent attempt to pre-impose those deals on any future Iraqi government.

In a single meeting, the US-controlled body in charge of managing Iraq's finances approved the expenditure of nearly $2 billion in Iraqi funds for reconstruction projects, the group said.

A UN Security Council resolution passed on June 8 required the new government to satisfy all outstanding obligations against the Development Fund for Iraq made before June 30, leaving the new interim Iraqi government with no choice but to honor those questionable expenditures.

Iraq Revenue Watch also says that the occupation left the Iraqis burdened with a legacy of hundreds of US "experts and advisors" working in all of Iraq's 29 ministries, as well as other government agencies.

Those advisors, who mostly hail from US market institutions, wielded enormous influence over decisions taken before the nominal handover. They are believed to maintain the real influence on economic decisions.

Washington had also initially restricted the most lucrative reconstruction contracts in Iraq to large US firms, fueling accusations that the George W Bush administration was seeking to benefit a select few US companies rather than find the best, and possibly the cheapest, options to help rebuild Iraq.

After numerous complaints, the contracting process was officially opened to firms from other nations, but many of them still insist they are not competing on a level playing field with US businesses. Halliburton, a giant US company that has been awarded $8.2 billion worth of contracts from the Defense Department to provide support services such as meals, shelter, laundry and Internet connections for US soldiers in Iraq, has been criticized for overcharging for some of those services. From 1995 to 2000, the company was headed by Dick Cheney, Bush's vice president.

And Bush wants $80 billion more?

As I become more and more of a fiscal conservative, this is angering me more and more.

This fuckin' pisses me! This and the pork barrell shit really fuckin' rub me the wrong way time and time again. FUCK! THAT'S OUR MONEY!!!

This one might either rub you the wrong way worse, or make you laugh at how pathetic of a spender Bush is.

Forgive me for using a VoiceOfReason tactic here, but it must be done:

http://www.startribune.com/stories/587/5217672.html

Bush will focus on budget reins, Social Security
Michael A. Fletcher, Washington Post
February 2, 2005 BUSH0202

WASHINGTON, D.C. -- President Bush plans to further his case for remaking Social Security during his State of the Union address tonight, in a speech also expected to touch on the need for strict budget discipline and to celebrate the spread of democracy in the elections in Afghanistan, Ukraine, the Palestinian territories and, most recently, Iraq.

Bush's televised address to a joint session of Congress will be divided evenly between domestic policy and foreign affairs, said a senior administration official. On the domestic front, the president plans to issue a call for fiscal discipline in preparation for an extremely tight federal budget.

The budget, to be unveiled Monday, will propose a virtual freeze in discretionary spending unrelated to defense or homeland security, as part of Bush's plan to cut the deficit in half by 2009 from a 2004 deficit of $521 billion. The task of cutting the deficit is complicated by the estimated $5 billion a month consumed by the U.S. military presence in Iraq and Afghanistan.

Bush also plans to rejoin the debate over Social Security by highlighting the program's long-term fiscal problems and explaining why allowing workers to divert a portion of their payroll taxes into private accounts will contribute to a "permanent fix" for the program.

"He will flesh out new details and how he views the personal retirement accounts will work," said the official, who declined to be identified. "He will talk about why ... it's necessary that we need to permanently fix the system."

Still, Bush is unlikely to use the prime-time address to lay out specific proposals regarding the cuts in promised Social Security payments likely to accompany private accounts, despite calls from some lawmakers for him to do so.

Senate Democrats said Tuesday that they have more than enough votes to block a bid by Bush to allow private accounts, increasing pressure on the president to offer enough compromises or incentives to win over at least a handful of Democrats. Senate Minority Leader Harry Reid, D-Nev., said, "I don't know of a single Democratic senator" who will back the plan.

Senate rules require 60 votes in the 100-member chamber to overcome delaying tactics.

Everyone's favorite Feingold's thoughts:

Feingold Comments on Report Revealing U.S. Mismanagement of Almost $9 Billion of Iraqi Money
Feingold Amendment Created Special Inspector General for Iraq Reconstruction

February 1, 2005
Washington D.C. -- U.S. Senator Russ Feingold has released the following statement on this week's announcement by the Special Inspector General for Iraq Reconstruction (SIGIR). SIGIR released an audit indicating that the Coalition Provisional Authority (CPA) failed to impose adequate controls on nearly $9 billion that was distributed to various Iraqi ministries during the period prior to the transfer of sovereignty late last June. The $8.8 billion in question was Iraqi money -- proceeds from oil sales and repatriated funds -- that the U.S., as the occupying authority, was responsible for administering. But today, the U.S. cannot account for what happened to these funds. A Feingold amendment to the $87 billion supplemental in 2003 created the Office of the Inspector General (IG). Feingold's amendment to the DOD authorization bill in 2004 allowed the IG to continue to exist, as the SIGIR, after the dissolution of the CPA.

"The latest audit is extraordinarily disturbing. The kind of mismanagement that the audit identifies will only increase resentment and cynicism about U.S. motives in Iraq. This isn't just an oversight failure; it is a policy failure with the potential to help the very forces that wish to do us harm.

The CPA's failure to provide adequate controls for the spending of Iraqi money does not inspire much confidence in the mechanisms that have been in place to ensure that over $18 billion in U.S. taxpayer dollars intended for Iraq's reconstruction will not be lost to waste, fraud, or abuse. As the Administration prepares to ask Congress for additional billions of taxpayer dollars, this report underscores our need for real accountability and better performance when it comes to the reconstruction effort.

Ongoing instability is clearly one of the problems we face in Iraq. The SIGIR's most recent report to Congress notes that the number of death claims filed by reconstruction contractors working in Iraq has increased by over 93%.

Failing to get reconstruction right will cost even more American dollars, and the resulting insecurity could also cost American lives. We are all inspired by the courage of the Iraqi people who participated in Sunday's elections. And we are awed by the bravery and skill of the American troops on the ground. But U.S. policy remains adrift without real accountability, and with no clear end to this venture in sight. We must do better."

HOLYFUCKINSHIT!

Well, it's not like we need smart people, food, or bridges to not collapse, right?

Here's a two-year old BUMP, but that's only because teh Republican Congress refused to investigate this matter for the past two years.

http://www.tpmmuckraker.com/archives/002492.php

Reconstruction Official on Iraqi Billions: "What Difference Does It Make?"
By Paul Kiel - February 6, 2007, 2:06 PM

What happened to billions in Iraqi funds that were overseen by the Coalition Provisional Authority? That's not "important," according to David Oliver, the former Director of Management and Budget of the agency.

A recording of the unfortunately candid remarks, previously made by Oliver to the BBC, were played during this morning's oversight hearing by Rep. Diane Watson (D-CA). The hearing has focused on the CPA's administration of nearly $9 billion in Iraqi funds in 2003 and 2004 -- money that Stuart Bowen, Special Inspector General for Iraq Reconstruction, has said was inadequately accounted for.

"I have no idea, I can't tell you whether or not the money went to the right things or didn't - nor do I actually think it is important," Oliver says on the tape . "Billions of dollars of their money disappeared, yes I understand, I'm saying what difference does it make?"


At the hearing this morning, Oliver was more circumspect in his remarks:

Hehe.

Whatever happened to that cat?