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Millions of dollars missing in Iraq: US begins investigation

July 30, 2005

WASHINGTON, July 29: A special auditor tracking billions of dollars spent by the United States to rebuild Iraq said on Thursday he has found millions of dollars worth of fraud by US officials and companies. Stuart Bowen, special inspector general for Iraq reconstruction, said the Justice Department had launched a criminal investigation into the fraud.

Giving details of his latest report, which is to be released on Saturday, Bowen told National Public Radio (NPR) that US-backed reconstruction projects in Iraq are speeding ahead.

“The reconstruction for Iraq is peaking, 1,000 projects are completed and 1,000 more are ongoing,” he said while highlighting the need to monitor the 23 billion dollars that the United States has allocated for new infrastructure and security. His previous reports have already highlighted huge sums of missing money.

Mr Bowen said his latest report looked at four water projects where “the results are all over the map”. He also told how seven million dollars intended for works such as a police station and a library in the troubled Hilla region south of Baghdad had disappeared. The money came from the Development Fund for Iraq, receipts from oil sales that the US-run former Coalition Provisional Authority used for development projects.

“There was no accountability, no records,” Bowen said. “Unfortunately there were possible fraudulent activities occurring.” Mr Bowen said US officials and contractors were involved but would not identify them because of the criminal investigation.

The so-called “rapid response construction dollars” were intended for projects that were hurriedly started in the months before the United States handed over sovereignty to an Iraqi government in June last year. Mr Bowen said that in Hilla, “We found out that not only were the projects not completed but the money that was allocated for these projects was missing.”

The special auditor said that when the contractors were asked “they didn’t have much to say as the lack of records spoke volumes.” The United States has promised 23 billion dollars of the 60 billion dollars that the World Bank has said will be needed to build functioning infrastructure in Iraq.

“Our mission in Iraq is to make a significant step towards rebuilding the country, but it is not the rebuilding of Iraq — it had been left in such a state of decay. We have made a good strong step towards bringing oil, water and electricity online,” he said. When asked if US taxpayers were getting value for money, Bowen said security had cost more than expected and the project priorities have changed three times.

“I don’t think anyone could have anticipated the level of insurgency and the diversity of its sources. The number one drag on this entire project has been the security problem.”—AFP