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Missing Money in Iraq


In my creed, waste of public money is like the sin against the Holy Ghost. – John, Viscount Morley of Blackburn, Recollections (1917)

A recent Congressional hearing on spending in Iraq put things in a whole new light. And a better light it is.

At a hearing with the catchy title of “Accountability Lapses in Multiple Funds” before the U.S. House Committee on Oversight and Government Reform all sorts of interesting examples were offered by the representative from the Department of Defense Inspector General’s office that made earlier disclosures as to misspent funds in Iraq seem benign.
“Accountability” refers to the fact that the U.S. government spent an estimated $8.2 billion on Iraqi affairs and either forgot to get receipts or, when it got receipts, forgot put detailed descriptions of how the money was spent on those receipts. The reference to “multiple funds” means that it wasn’t only U.S. taxpayer dollars that were the victims of “accountability lapses.” Monies belonging to the Iraqi government known as “Seized and Vested Assets” were also subject to these lapses. The audit found that $1.8 billion in Iraqi assets over which the United States had authority was paid out in cash with no record of who got the money.

DOD Deputy Inspector General for Auditing Mary L. Ugone (that is her last name – it is not a government pseudonym given someone looking for missing funds) explained the audit was started when the DOD’s Criminal Investigative Service found that there were inadequate controls over disbursement of U.S. taxpayer dollars. Funds belonging to Iraq that were disbursed by U.S. authorities, disbursals the U.S. was able to make because of the very close relationship the U.S. enjoys with Iraq’s money (and leaders) were also not adequately monitored.

Ms. Ugone told the committee that the Defense Department had appropriated $492 billion to support Operation Iraqi Freedom and that $2.8 billion of seized and vested Assets were to be returned to Iraq to “help rebuild its infrastructure and economy.” Ms. Ugone said that $1.4 billion in contract and vendor payments and $6.3 billion in commercial payments lacked minimum supporting documentation and information for proper payment.

Ms. Ugone’s testimony was 29 pages in length. At page 16 she describes the payment of $320 million in cash “to an Iraqi representative for Iraqi salary payments” that carried no indication of to whom the funds were provided or how many people were to receive salary payments. It seems appropriate that Iraqi funds be used to pay Iraqi salaries. It would probably have been helpful to indicate who got the salaries.

An exhibit attached to the hearing showed that David Dial, of Irmo, S.C. (home of the Okra Strut food festival) received a U.S Treasury check for an entity called IAP for $11,122,582.80 with no indication what it was for other than “Public Voucher for Purchases and Services Other Than Personal.” SFC Alderson Williams certified that the “voucher is correct and proper for payment,” according to documents accompanying Ugone’s testimony. Another exhibit: A U.S. Treasury check for $5,674,075 went to Al Kasid Specialized Vehicles Trading Company c/o Federal Reserve Bank in Baghdad without a description of what it was for. Anyone wanting more examples can go to the Washington Post or the New York Times.

The difference between disclosures at the May hearing and earlier disclosures is that there was less embarrassment associated with the earlier disclosures.

We know from earlier reports that Parsons, a Texas construction company had a $243 million contract to build 150 health clinics in Iraq, paid itself $60 million of that amount for administration and management and, using the remainder, completed 20 of the 150 clinics. We know Parsons had a contract for $99.1 million to build the Khan Bani Saad Correctional Facility North of Baghdad that was to be completed by June 2006. When that date rolled around, Parsons said it could not complete it before September 2008 and it would cost an addition $13.5 million to complete. Pocketing what it had been paid Parsons went off to look in the classified ads or the White House for other work. The contract was cancelled.

KBR overcharged for meals served troops in Iraq and delivered unsafe drinking water to those troops. (It has just entered into a new contract enabling it to share in a $150 billion contract to provide services to American soldiers in Iraq.)

The earlier reports were uplifting since they showed that a fiscally responsible Bush administration knew exactly to whom and for what monies were disbursed. Its only failure was insuring that the work for which payment was made was completed. By not tracking the purposes of the disbursements there is no risk of embarrassing anyone because of the failure of the recipient to complete the work for which it was paid.

As any teenager would say, if asked, “That is SO Iraq.”

Share  Posted by Christopher Brauchli at 10:12 PM | Permalink

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