$8.7 Billion Iraq Oil-For-Aid Cash ‘missing’

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ALMOST 96 per cent of oil and petrol money earmarked for humanitarian needs and reconstruction in Iraq after the 2003 invasion has gone missing, an official audit has found.

The US Department of Defence has been unable to account properly for $8.7 billion of the $9.1 billion the Pentagon received from the Development Fund for Iraq (DFI), said the report from the US Special Inspector General for Iraq Reconstruction (SIGIR).

‘Iraq should take legal action to get back this huge amount of money,’ said Sabah al-Saedi, chairman of the Parliamentary Integrity Committee.

The oil money ‘should be spent for rebuilding the country and providing services for this poor nation’.

The government of Iraq ordered the Pentagon to return DFI funds at the end of 2007. But the audit found Department of Defence organisations that were still holding and, in some cases, spending DFI funds.

The SIGIR audit said: ‘The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss.’

The DFI was established by the Coalition Provisional Authority (CPA), the US-run body put in charge of Iraq after the invasion.

The SIGIR report painted a picture of lax management of some of the billions of dollars designated for rebuilding war-shattered Iraq, where residents still suffer electricity shortages and lack basic services more than seven years after the invasion.

The UN Security Council approved the creation of the DFI fund which was supposed to take control of the money from export sales of oil, petroleum products and natural gas, as well as frozen Iraqi assets and surplus funds from the UN oil for food programme, and spend it for the benefit of Iraqis.

The funds are separate from the $53 billion allocated by Congress for rebuilding Iraq.

The SIGIR report said: ‘Weaknesses in DoD’s financial and management controls left it unable to properly account for $8.7 billion of the $9.1 billion in DFI funds it received for reconstruction activities in Iraq.’

The report cited poor record-keeping and said most of the organisations at the Pentagon that received DFI funds failed to establish required Treasury Department accounts.

It said: ‘Our selective review shows the records were not always complete. For example, DoD could not provide documentation to substantiate how it spent $2.6-billion.’

Iraq is almost completely reliant on oil revenues to rebuild infrastructure and housing stock devastated by years of war and economic sanctions. More than 95 per cent of the federal budget comes from the oil sector.

The audit report said the Pentagon had agreed to adopt and implement by November the inspector general’s recommendations to tighten up financial controls.

This is not the first time allegations of missing billions have surfaced in relation to the Iraq war and its aftermath.

In its April report SIGIR said its investigators ‘focus on programmes that afford easy access to cash and have weak controls over expenditures.

‘This initiative continues to identify instances of questionable activity. Since our last report in January 2010, SIGIR has opened an additional 13 criminal investigations involving 18 subjects.

‘This brings the total number of criminal investigations opened resulting from this initiative to 45, involving a total of 60 subjects.’