Audit faults controls on Iraq reconstruction

Tuesday, October 19, 2004 10:51 AM CDT

Back in July the inspector general of the U.S.-led coalition authority running Iraq issued a report criticizing the lack of controls over Iraqi reconstruction spending.

Those warnings loomed large last week when a United Nation's audit gave some hint of the size of that problem. According to the audit, in the first half of this year alone, there is little or no accounting for half of the $5 billion the U.S. government disbursed from the Development Fund for Iraq, the pool of money that comes from Iraq's oil revenues and from international aid to Iraq.

The biggest chunk - $1.4 billion - was deposited in a bank by Kurdish leaders in northern Iraq. Auditors said they were shown proof that the money was deposited, but they do not know if it is still there, if it has been disbursed or what it might have been used for.

The U.N. auditors reported that there were no contracts on file, no purchase invoices, payment vouchers or evidence of competitive bidding on more than $100 million worth of projects under a program that gave U.S. military officers the ability to quickly fund small projects.

It found checks made payable to the coalition authority's senior adviser to the Ministry of Health when they should have been made out to suppliers and no contract or evidence of work done on a project for the Ministry of Oil - although a disbursement of $2.6 million was made.

No doubt paperwork suffers when there is a war on, but the notion that half of the disbursements made from the Iraqi reconstruction work is essentially unaccounted for at this point demands some answers from the Bush administration.

The U.N. auditors were told by U.S. officials that questions were under investigation, although it was unclear exactly which agencies were doing the probes.

The State Department was reportedly dealing with the inquiry into the Ministry of Oil disbursement, but since the "coalition authority" has now been dissolved, it may be a cold day in Iraq before missing reconstruction money is fully accounted for.

What's bothersome is that the $5 billion represented only the amounts raised through Iraqi oil revenues and through foreign support. The United States pledged almost four times that amount $18.4 billion for Iraqi reconstruction last year.

While it's checking on the other disbursements, the administration should check the books on the U.S. allocations as well. We hope it can account for more than 50 percent of the spending.

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