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Audit: U.S.-Led Occupation Engaged In Fraud
and Squandered Aid
By JIM KRANE
Associated Press Writer
01/29/06 "AP" -- -- Iraqi money gambled away in the Philippines.
Thousands spent on a swimming pool that was never used. An
elevator repaired so poorly that it crashed, killing people.
A U.S. government audit found American-led occupation
authorities squandered tens of millions of dollars that were
supposed to be used to rebuild Iraq through undocumented
spending and outright fraud.
In some cases, auditors recommend criminal charges be filed
against the perpetrators. In others, it asks the U.S. ambassador
to Iraq to recoup the money.
Dryly written audit reports describe the Coalition Provisional
Authority's offices in the south-central city of Hillah being
awash in bricks of $100 bills taken from a central vault without
documentation.
It describes one agent who kept almost $700,000 in cash in an
unlocked footlocker and mentions a U.S. soldier who gambled away
as much as $60,000 in reconstruction funds in the Philippines.
"Tens of millions of dollars in cash had gone in and out of the
South-Central Region vault without any tracking of who deposited
or withdrew the money, and why it was taken out," says a report
by the Special Inspector General for Iraq Reconstruction, which
is in the midst of a series of audits for the Pentagon and State
Department.
Much of the first audit reports deal with contracting in
south-central Iraq, one of the country's least-hostile regions.
Audits have yet to be released for the occupation authority's
spending in the rest of Iraq.
The audits offer a window into the chaotic U.S.-led occupation
of Iraq of 2003-04, when inexperienced American officials —
including workers from President Bush's election campaign —
organized a cash-intensive "hearts and minds" mission to rebuild
Iraq's devastated economy.
But the corruption and incompetence documented in the reports
reveal that much of the effort, however well-intentioned, was
wasted.
The failure of the rebuilding effort has been borne out most
vividly by the rise of a virulent anti-American insurgency that
has claimed most of the 2,237 U.S. military lives lost since the
war began.
In some cases, auditors could find no trace of cash, much of
which came from Iraqi oil revenues overseen by the occupation
authority.
"Those deficiencies were so significant that we were precluded
from accomplishing our stated objectives," the auditors said of
U.S. officials in Hillah being unable to account for $97 million
of the $120 million in Iraqi oil revenues earmarked for
rebuilding projects.
An October 2005 audit found documentation for the spending of
just $8 million of that money.
Negligence proved deadly in at least one case. Three Iraqis
plummeted to their deaths in an elevator in the Hillah General
Hospital that was certified to have been replaced by a
contractor who received $662,800.
Also in Hillah, occupation officials spent $108,140 to replace
pumps and fix the city's Olympic swimming pool. But the
contractor merely polished the old plumbing to make it look new
and collected his money.
When the pool was filled, the water came out a murky brown and
the pool's reopening had to be canceled. The reports did not
identify the contractors involved.
Auditors have asked the U.S. ambassador to recover a total of
$571,823 that the reports describe as overpaid funds.
In some cases, cash simply disappeared.
Two occupation authority field agents responsible for paying
contractors left Iraq without accounting for more than $700,000
each. When auditors confronted their manager and asked where the
money was, the manger tried to clear one of the agents through
false paperwork.
"This appears to be an attempt to remove outstanding balances by
simply washing accounts," the auditor said. The two agents were
not identified and there was no word on whether the pair were
referred for prosecution.
One report describes mismanagement of more than 2,000 small
contracts in south-central Iraq worth $88 million. Occupation
staffers or those they supervised handed out millions to
companies that never submitted required competitive bids or that
were paid for unfinished work.
Other examples cited in the reports:
_Only a quarter of $23 million entrusted to civilian and
military project and contracting officers to pay contractors
ever found its way to those contractors.
_One contractor was paid $14,000 on four separate occasions for
the same job.
_Of $7.3 million spent on a police academy near Hillah, auditors
could account for just $4 million. They said $1.3 million was
wasted on overpriced or duplicate construction or equipment not
delivered. More than $2 million was missing.
_U.S. personnel "needlessly disbursed more than $1.8 million" of
the estimated $2.3 million spent for renovating the library in
the Shiite holy city of Karbala.
_The library contractor delivered only 18 of 68 personal
computers called for and did not install Internet wiring or
software. The computers worked only as stand-alones.
_The U.S.-led security transition command spent $945,000 for
seven armored Mercedes-Benzes that were too lightly armored for
Iraq. Auditors were able to account for only six of the cars.
_At one point, several paying agents kept cash inside the same
filing cabinet in the Hillah vault. One agent took $100,000 from
another's stack of cash to clear his own balance. "This was only
discovered because the other paying agent had to make a
disbursement that day and realized that he was short cash," the
report says.
On the Net:
Special Inspector General:
http://www.sigir.mil/audit(underscore)reports.html
Copyright © 2006 The Associated Press.
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