Where Did the Billions of Dollars Go in Iraq's Reconstruction Effort?

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In summary, the US spent $36 billion of its own money on reconstruction in Iraq, and $22 billion of Iraqi cash. There is suspicion that this money went missing, and that the Iraqi government is corrupt. The US auditor for reconstruction has said that Iraq is facing a second insurgency of corruption and mismanagement costing $4 billion a year.
  • #1
Staff Emeritus
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$Billions go Unaccounted in Iraq

Baghdad's 'missing' billions
By Mark Gregory
International business reporter, BBC World Service
When Saddam Hussein's regime was toppled in April 2003, Iraq was in a mess, despite its oil wealth.

Decades of conflict and sanctions had wrecked the infrastructure of roads, power stations, schools and hospitals.

When US President George W Bush announced the war had ended, he promised the US would help to rebuild Iraq, saying: "Now that the dictator's gone we and our coalition partners are helping Iraqis to lay the foundations of a free economy."

Since then, huge sums have gone towards reconstruction. The US has spent $36bn of its own money. More controversially it has also spent $22bn of Iraqi cash.

These Iraqi funds were controlled by the Americans during the year-long occupation that followed the war.

They consisted mainly of Iraqi oil revenues and leftover cash from the oil-for-food programme - the pre-war sanctions regime run by the United Nations. The money was in the Development Fund for Iraq, set up by the UN as the war ended.

'A huge scandal'

In hearings on Capitol Hill in Washington, Democratic congressman Henry Waxman has emerged as the most vocal critic of the US' record on reconstruction.

In particular, Mr Waxman says proper accounting procedures were ignored when large sums of Iraqi cash were handed over by the Coalition Provisional Authority (CPA) - the US-led body that ran Iraq immediately after the war - to get Iraqi ministries functioning again.

"I think we're looking at a huge scandal. The CPA handed over $8.8bn in cash to the Iraqi government even though that new government had no security or accounting system.

"No one can account for it. We don't know who got that money," Mr Waxman said.

Iraq corruption 'costs billions'
Corruption within the Iraqi government is costing the country billions of dollars, the US official monitoring reconstruction in Iraq has said.

Stuart Bowen told the BBC that Iraq was facing a second insurgency of corruption and mismanagement.

He said Iraqi government corruption could amount to $4bn (£2.1bn) a year, over 10% of the national income, with some money going to the insurgency.

Many government workers also lack the skills to manage funds, Mr Bowen said.

"This money that's stolen doesn't merely enrich criminals," Mr Bowen said.

"(It) frequently goes out to fund criminal militias or insurgents. That means lost lives for US troops."

Missing weapons

A clause in a military spending bill signed by President George W Bush three weeks ago will terminate the work of the auditor on 1 October next year.

Democratic and Republican Senators have said they will fight to have the term of the Office of the Special Inspector-General for Iraq Reconstruction extended.

Mr Bowen has been critical in the past of how US money earmarked for reconstruction has been spent.

Lack of skills among government workers is another problem hampering reconstruction, Mr Bowen said.

SIGIR: Independent & Objective Oversight
Welcome to the Office of the Special Inspector General for Iraq Reconstruction (SIGIR), a temporary federal agency serving the American public as a watchdog for fraud, waste, and abuse of funds intended for Iraq reconstruction programs.

SIGIR, the successor to the Coalition Provisional Authority Inspector General (CPA-IG), was created by Congress to provide oversight of the Iraq Relief and Reconstruction Fund (IRRF) and all obligations, expenditures, and revenues associated with reconstruction and rehabilitation activities in Iraq. SIGIR oversight is accomplished via independent audits, field inspections, and criminal investigations into potential fraud, waste, and abuse of funds.

More Halliburton - Iraq allegations ...
The Pentagon is investigating claims made by a top Army contracting official. Bunnatine Greenhouse contends Halliburton subsidiary KBR unfairly won no-bid contracts worth billions for work in Iraq and the Balkans. Host David Brown speaks with Marketplace's John Dimsdale about the allegations.

http://reform.house.gov/ Chair Tom Davis (R, VA - 11) has been relected.
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  • #2
Will be interesting to see what was going on and what is going on right now in Iraq. After six years, I think it is well past time for Congress to get busy with some oversight.
  • #3
Astronuc said:
Baghdad's 'missing' billions...
I heard on the radio, a while ago that the person heading the Iraq Budget team (the Coalition Financial Advisor?) was a fresh political science graduate (from one of those Schools of Government that churns out Conservatives by the boatload) with no background in economics or accounting. One of the tests he had to pass asked questions like "where do you stand on Roe v Wade?"

<<The name stuck in my head is Jim O'something but I haven't found anything on the net yet>>
  • #4
That has to suck.

Well, um... the idiot who handed the money to the idiot is the bigger idiot!
  • #5
JasonRox said:
That has to suck.

Well, um... the idiot who handed the money to the idiot is the bigger idiot!
Especially if the money ended up supporting the insurgency.
  • #6
I may have posted this in another thread - but it's relevant to this one.

Audit: U.S. lost track of $9 billion in Iraq funds (back in 2005 and referring to 2004)
Pentagon, Bremer dispute inspector general's report

WASHINGTON (CNN) -- Nearly $9 billion of money spent on Iraqi reconstruction is unaccounted for because of inefficiencies and bad management, according to a watchdog report published Sunday.

An inspector general's report said the U.S.-led administration that ran Iraq until June 2004 is unable to account for the funds.

"Severe inefficiencies and poor management" by the Coalition Provisional Authority has left auditors with no guarantee the money was properly used," the report said.

"The CPA did not establish or implement sufficient managerial, financial and contractual controls to ensure that [Development Fund for Iraq] funds were used in a transparent manner," said Stuart W. Bowen Jr., director of the Office of the Special Inspector General for Iraq Reconstruction.

The $8.8 billion was reported to have been spent on salaries, operating and capital expenditures, and reconstruction projects between October 2003 and June 2004, Bowen's report concluded.

Iraq is becoming 'free fraud' zone (2005)

The Spoils of War

U.S. Indicts Five in Iraq Fraud (2007)

Republicans Try To Outflank Waxman On Iraq Probe
By Chitra Ragavan

Judge Clears Contractor of Fraud in Iraq
Custer Battles Handled Baghdad Airport Security

But now -
WASHINGTON - About $10 billion has been squandered by the U.S. government on Iraq reconstruction aid because of contractor overcharges and unsupported expenses, and federal investigators warned Thursday that significantly more taxpayer money is at risk.

The three top auditors overseeing work in Iraq told a House committee their review of $57 billion in Iraq contracts found that Defense and State department officials condoned or allowed repeated work delays, bloated expenses and payments for shoddy work or work never done.

More than one in six dollars charged by U.S. contractors were questionable or unsupported, nearly triple the amount of waste the Government Accountability Office estimated last fall.

"There is no accountability," said David M. Walker, who heads the auditing arm of Congress. "Organizations charged with overseeing contracts are not held accountable. Contractors are not held accountable. The individuals responsible are not held accountable."

Do the Republicans/conservatives know how to run government or what?

One has to wonder how much is being diverted back to people in the administration, perhaps even Congress - and parked in off-shore bank accounts.
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  • #7
I can not believe that we sent billions of dollars cash in one hundred dollar bills to Iraq. Had ta make the payroll I guess.:rolleyes:

Pallets of U.S. cash sent to Baghdad before handover. Bills weighing a total of 363 tons were loaded onto military aircraft in the largest cash shipments ever made by the Federal Reserve, said Rep. Henry Waxman, chairman of the House of Representatives Committee on Oversight and Government Reform.

"Who in their right mind would send 363 tons of cash into a war zone? But that's exactly what our government did," the California Democrat said during a hearing reviewing possible waste, fraud and abuse of funds in Iraq.

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  • #8
Haven't they been doing this since the war started anyway? What's the difference between actual paper money and tax payers money?:smile:
  • #9
Schrodinger's Dog said:
Haven't they been doing this since the war started anyway? What's the difference between actual paper money and tax payers money?:smile:

We have been spending tax payer funds since the war started. This was not enough money to pay for the war, so we resorted to using the revenues we received from selling Treasury bills to countries like China. This particular transfer was the single largest cash shipment ever made by the Federal Reserve.

It is much more probable that cash will end up in the wrong hands than say a bulldozer or tank, especially when there was no system in place to account for where the cash would end up.

Sending 363 tons of one hundred dollar bills to a war zone was stupid stupid stupid.

Related to Where Did the Billions of Dollars Go in Iraq's Reconstruction Effort?

1. Where did the billions of dollars go in Iraq?

The billions of dollars that went unaccounted in Iraq were mostly allocated for reconstruction and development projects, as well as salaries for Iraqi security forces and other government employees. However, due to corruption and lack of oversight, a significant portion of the funds were misused or lost.

2. Who is responsible for the loss of these funds?

There is no clear answer to this question as the loss of funds in Iraq can be attributed to a combination of factors including corruption, inadequate oversight, and mismanagement by both US and Iraqi officials.

3. How much money is estimated to have been lost in Iraq?

According to a report by the Special Inspector General for Iraq Reconstruction (SIGIR), an estimated $60 billion of US funds and $8 billion of Iraqi funds went unaccounted in Iraq between 2003 and 2011.

4. What steps have been taken to address the issue of unaccounted funds in Iraq?

The US government has implemented various measures to improve accountability and oversight in Iraq, including the establishment of the Special Inspector General for Iraq Reconstruction (SIGIR) and the Iraq Relief and Reconstruction Fund (IRRF). The Iraqi government has also taken steps to combat corruption and increase transparency in government spending.

5. Is there any hope of recovering the lost funds in Iraq?

While it is unlikely that all of the lost funds will be recovered, efforts are still ongoing to identify and reclaim any misused or stolen funds. Additionally, measures have been put in place to prevent future losses and increase accountability in the use of foreign aid in Iraq.

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