'Millions missing' from Iraq fund
December 7, 2007

A $5.2bn (£2.6bn) fund used to train and equip Iraqi security forces cannot be shown to have been used properly, US military auditors say in a new report.

Sloppy accounting by the US army command meant there was no paper trail for much of the spending, they say.

The report, based on a visit from March to May this year, said high levels of violence made it hard to oversee management of the fund.

However, it also said commanders had begun implementing recommended changes.


The report said the Multi-National Security Transition Command-Iraq was unable to provide "reasonable assurance" that money was not wasted and that the intended results had been achieved.

And it could not always show that equipment, services and construction had been delivered properly.

In the report, the Inspector-General's office called for improvements to the way the command kept track of money.

The report highlighted a number of shortcomings including:

  • a paper trail available for only 12.9% of arms, ammunition and other purchases worth $643m
  • a paper trail available for only 1% of a separate series of purchases worth $82.8
  • only 13 of 31 heavy-tracked recovery vehicles worth $10.2m could be accounted for
  • only 12 of 18 rubbish trucks worth $700,000 could be accounted for
  • no proof that 2,126 of 2,943 generators worth $7m had been received by Iraqi security forces

But the report was happier with the way the command had purchased services. It said there was documentation for 95.5% of $1.2bn spent on food preparation, maintenance, sanitation, freight, lodging and security.

'No intentional fraud'

This is the latest in a series of reports criticising economic performance in Iraq.

In October, the US State Department said a $1.2bn contract for training Iraqi police was so badly managed that auditors did not know how the money was spent. The private US company running the programme, DynCorp, said there had been no intentional fraud.

In July, the head of the US agency overseeing reconstruction in Iraq, Stuart Bowen, told the BBC that economic mismanagement and corruption were equivalent to a second insurgency.

At the same time Oxfam and a coalition of Iraqi NGOs said nearly a third of the population was in need of immediate emergency aid.

And in January, Mr Bowen said in a report to the US Congress that millions of dollars of US reconstruction funds were being wasted.

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