Missing Iraq money may have been stolen
Monday, June 13, 2011
Missing Iraq money may have been stolen, auditors say
U.S. Defense officials still cannot say what happened to $6.6
billion, sent by the planeload in cash and intended for Iraq's
reconstruction after the start of the war.
By: Paul Richter, Los Angeles Times
After the U.S.-led invasion of Iraq in March 2003, the George W.
Bush administration flooded the conquered country with so much cash
to pay for reconstruction and other projects in the first year that
a new unit of measurement was born.
Pentagon officials determined that one giant C-130 Hercules cargo
plane could carry $2.4 billion in shrink-wrapped bricks of $100
bills. They sent an initial full planeload of cash, followed by 20
other flights to Iraq by May 2004 in a $12-billion haul that U.S.
officials believe to be the biggest international cash airlift of
all time.
This month, the Pentagon and the Iraqi government are finally
closing the books on the program that handled all those Benjamins.
But despite years of audits and investigations, U.S. Defense
officials still cannot say what happened to $6.6 billion in cash -
enough to run the Los Angeles Unified School District or the
Chicago Public Schools for a year, among many other things.
For the first time, federal auditors are suggesting that some or
all of the cash may have been stolen, not just mislaid in an
accounting error. Stuart Bowen, special inspector general for Iraq
reconstruction, an office created by Congress, said the missing
$6.6 billion may be "the largest theft of funds in national
history."
The mystery is a growing embarrassment to the Pentagon, and an
irritant to Washington's relations with Baghdad. Iraqi officials
are threatening to go to court to reclaim the money, which came
from Iraqi oil sales, seized Iraqi assets and surplus funds from
the United Nations' oil-for-food program.
It's fair to say that Congress, which has already shelled out $61
billion of U.S. taxpayer money for similar reconstruction and
development projects in Iraq, is none too thrilled either.
"Congress is not looking forward to having to spend billions of our
money to make up for billions of their money that we can't account
for, and can't seem to find," said Rep. Henry A. Waxman (D-Beverly
Hills), who presided over hearings on waste, fraud and abuse in
Iraq six years ago when he headed the House Government Reform
Committee.
Theft of such a staggering sum might seem unlikely, but U.S.
officials aren't ruling it out. Some U.S. contractors were accused
of siphoning off tens of millions in kickbacks and graft during the
post-invasion period, especially in its chaotic early days. But
Iraqi officials were viewed as prime offenders.
The U.S. cash airlift was a desperation measure, organized when the
Bush administration was eager to restore government services and a
shattered economy to give Iraqis confidence that the new order
would be a drastic improvement on Saddam Hussein's Iraq.
The White House decided to use the money in the so-called
Development Fund for Iraq, which was created by the Federal Reserve
Bank of New York to hold money amassed during the years when
Hussein's regime was under crippling economic and trade
sanctions.
The cash was carried by tractor-trailer trucks from the
fortress-like Federal Reserve currency repository in East
Rutherford, N.J., to Andrews Air Force Base in Maryland, then flown
to Baghdad. U.S. officials there stored the hoard in a basement
vault at one of Hussein's former palaces, and at U.S. military
bases, and eventually distributed the money to Iraqi ministries and
contractors.
But U.S. officials often didn't have time or staff to keep strict
financial controls. Millions of dollars were stuffed in gunnysacks
and hauled on pickups to Iraqi agencies or contractors, officials
have testified.
House Government Reform Committee investigators charged in 2005
that U.S. officials "used virtually no financial controls to
account for these enormous cash withdrawals once they arrived in
Iraq, and there is evidence of substantial waste, fraud and abuse
in the actual spending and disbursement of the Iraqi funds."
Pentagon officials have contended for the last six years that they
could account for the money if given enough time to track down the
records. But repeated attempts to find the documentation, or better
yet the cash, were fruitless.
Iraqi officials argue that the U.S. government was supposed to
safeguard the stash under a 2004 legal agreement it signed with
Iraq. That makes Washington responsible, they say.
Abdul Basit Turki Saeed, Iraq's chief auditor and president of the
Iraqi Board of Supreme Audit, has warned U.S. officials that his
government will go to court if necessary to recoup the missing
money.
"Clearly Iraq has an interest in looking after its assets and
protecting them," said Samir Sumaidaie, Iraq's ambassador to the
United States.