- The Washington Times - Thursday, May 5, 2005

ASSOCIATED PRESS

U.S. government mismanagement of assets in Iraq — from the lack of proper documentation on nearly $100 million in cash to millions of dollars worth of unaccounted-for equipment — are setting back efforts to fight corruption in the fledgling democracy, auditors and critics say.

Iraq became awash in billions of dollars in cash after the U.S. invasion two years ago, often with few or no controls over how that money was spent and overseen. From the $8.8 billion provided to Iraq’s interim government to millions provided to U.S. contractors, investigations have detailed a system ripe for abuse.

The latest indication of that came Wednesday when investigators released a report saying $96.6 million in cash could not be properly accounted for. The total included more than $7 million that was simply gone, according to the report from the Special Inspector General for Iraq Reconstruction.

It said $89.4 million in cash payments in south-central Iraq were made without the necessary supporting documentation. Indications of fraud and other wrongdoing are the subject of separate, continuing probes.

Wednesday’s report accused civilian contract managers of “simply washing accounts” to try to make the books balance. Staffing shortages and the quick turnover of those responsible for the cash contributed to the problems, the report said, echoing the findings in previous reports.

Examples of possible misspending in Iraq revealed in recent months include:

• “Less than adequate controls” over $8.8 billion given to the interim Iraqi government between the March 2003 invasion and the transfer of power to Iraqis on June 28.

• Projected totals of nearly $20 million in missing or unaccounted-for equipment in Baghdad and Kuwait.

• A lack of proper rules governing about $600 million in cash handed out by U.S. authorities.

Critics say the freewheeling postwar spending in Iraq is, at best, providing a poor example for the new Iraqi government to follow.

“A normal citizen couldn’t live this way,” said Danielle Brian of the Project on Government Oversight, an independent watchdog group. “Until there are serious penalties imposed on agencies that are sloppy with their spending, we’re just going to see more of the same.”

A congressional critic of U.S. reconstruction spending in Iraq went further.

“The U.S. risks fostering a culture of corruption in Iraq,” said Sen. Russell D. Feingold, Wisconsin Democrat.

Officials of the U.S. civilian and military administrations in Iraq say they’re doing the best they can under the circumstances. The organization now overseeing cash payments in Iraq has clamped down on documentation, Col. Thomas Stefanko, the official in charge of that office, told auditors.

Col. Stefanko said his office had corrected or was in the process of fixing or investigating the problems.

The money at issue in the latest report is from proceeds from Iraqi oil sales and seizures from the regime of deposed Iraqi President Saddam Hussein.

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