An official United States audit provided evidence yesterday of widespread corruption in postwar Iraq, finding that US’s occupation authority failed to keep track of nearly $9bn in reconstruction funds.
The scathing report by Stuart Bowen Jr, the inspector general for reconstruction, said that while the Coalition Provisional Authority (CPA) was careful to monitor the spending of US taxpayers’ money in Iraq, it failed to provide proper oversight of projects paid for with Iraq’s own funds.
The critique added to warnings from US and international auditors about weak financial controls in Iraq, and growing evidence of cronyism and fraud.
It blamed the CPA for failing to keep track of the disbursement of development funds from Iraq’s oil revenues, the oil for food programme and seized assets. Before it wound down last June, the authority approved hundreds of millions of dollars in development contracts without seeking detailed budget plans from Iraqi ministries.
The CPA also covered the payrolls for Iraqi ministries, but ”there was no assurance the funds were used for the purposes mandated,” the report said.
At one Iraqi ministry, financial controls of a $435-million budget were left open to ”fraud, kickbacks and misappropriation of funds,” the report said.
It also cited, as an example, an Iraqi ministry which inflated its payroll to receive excess funds, claiming to employ 8,206 guards when there were in fact barely 600.
”It is clear that the monitoring and accounting systems were dysfunctional, and set a precedent for corruption that continues to this day,” said David Phillips, a former state department adviser on Iraq.
”The number is staggering but the pattern of cutting corners has been well known from the beginning, and there has been an awful lot of cash floating around.”
The report was bitterly criticised by the former CPA chief Paul Bremer, who said it was unfair to expect proper accounting practices at a time of unrest in Iraq. He added that for security reasons it would not have been prudent to challenge the number of guards on a ministry payroll. – Guardian Unlimited Â