WASHINGTON, May 4: The United States has carelessly, and possibly fraudulently, handled some Iraqi money used for reconstruction, according to US audits that found nearly 100 million dollars in cash unaccounted for in one area of Iraq alone. Two audits by the US Special Inspector General for Iraq Reconstruction found flaws in how US government and military officials ran contracts paid for by the Development Fund for Iraq (DFI) — Iraqi money entrusted to the United States after the 2003 occupation.
Incompetence included contractors sometimes paid twice, files misplaced, cash payments unaccounted for and scant evidence that goods and services were provided.
“There was no assurance that fraud, waste and abuse did not occur in the management and administration of contracts funded by DFI,” said the auditors. The development fund is made up of proceeds from Iraqi oil sales, frozen assets from foreign governments and surplus from the UN Oil for Food program. Handling of the fund has already come under fire by previous US as well as UN-mandated audits.
The United States has also criticized the United Nations over its administration of the separate Oil for Food program.
An audit released by the Iraq reconstruction inspector in January concluded the US had not properly safeguarded about 8.8 billion dollars of Iraq’s own money in the development fund.
Of concern in the new audit was poor oversight of hundreds of millions of dollars of cash used to pay contractors. With Iraq’s banking system in tatters, cash is a common form of payment.
In one audit looking at about 119.9 million dollars in DFI cash paid out in south-central Iraq, auditors found deficiencies “of such magnitude as to require prompt attention”. The account manager could not properly account for over 96.6 million dollars in cash.
“During this audit we found indications of potential fraud and referred these matters to the Assistant Inspector General for Investigations (for Iraq reconstruction).”
INCOMPETENCE: Examples of incompetence included 645 transfers of more than 23 million dollars in cash using the wrong form; one contractor was paid twice for the same work and 10 payments amounting to 324,500 dollars were submitted for cancelled contracts. Six cash handouts for 407,420 dollars were submitted without contractor signatures.
Other problems included the fact that US staff handling large amounts of cash had not signed appointment letters that included liability language.
Two payment officers with cash account balances of 777,050 dollars and 715,000 dollars left Iraq without clearing their balances with the account manager. An attempt was made to remove these outstanding balances by “simply washing accounts”, said the audit report.—Reutes
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