US unable to account for $8.7 bn in Iraqi funds

July 28th, 2010 - 6:30 am ICT by IANS  

Washington, July 28 (IANS) US Defence Department is unable to account for $8.7 billion of the $9.1-billion fund earmarked for reconstruction of Iraq between 2004 and 2007, an audit report has said.
According to Los Angeles Times, the reconstruction money was from oil revenue the Pentagon was entrusted with and the report underscores a pattern of poor record-keeping during the period.

The military failed to provide any record for $2.6 billion in purported reconstruction expenditure, said the report by the Special Inspector General for Iraq Reconstruction, which is responsible for monitoring US spending in Iraq.

The rest of the money was not properly deposited in special accounts as required under Treasury Department rules, making it difficult to trace how it was spent.

Though there is no apparent evidence of fraud, the improper accounting practices add to the pattern of mismanagement, reckless spending and, in some instances, corruption uncovered by the agency since 2004, when it was created to oversee the total of $53 billion in US taxpayer money appropriated by Congress for the reconstruction effort.

“The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss,” noted the report, a copy of which was obtained Monday by the Los Angeles Times.

Special Inspector General Stuart Bowen said repeated investigations have shown that “weak oversight is directly correlated to increased numbers of cases of theft and abuse.”

The report comes as Iraqis are increasingly frustrated with their own government’s inability to provide basic services, or to explain how tens of billions of dollars’ worth of oil revenue has been spent since 2007.

Iraqis are still angry about the failure to account for a separate $8.8 billion in Iraqi oil revenue spent by the US-led Coalition Provisional Authority in 2003 and 2004.

If more money is found to be missing, “Iraq will definitely try to get it back,” said Ali Musawi, a media advisor to Prime Minister Nouri Maliki.

Most of the money covered in the latest audit has been spent, but the study found $34.3 million should legally have been returned to Iraq in 2007, when Iraq’s government assumed responsibility for its finances.

In response to the audit findings, the Pentagon concurred with recommendations that it established better guidelines for managing such funds. But a letter from US Central Command emphasised that failure to establish deposit accounts for the $8.7 billion does not mean it all cannot be accounted for.

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