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IRAQ: Rebuilding Lags, Security Eats Precious Funds, Evidence of Corruption

Asked if rebuilding funds were being spent as Congress intended, the special inspector general said "No," Money had been diverted to security, forcing projects to be scaled back. There has also been evidence of corruption in some U.S.-funded deals.

by Sue PlemingReuters
May 10th, 2005

WASHINGTON - Major reconstruction has not yet got off the ground in Iraq and security costs can eat up half the funding in some areas, the top official auditing $18.4 billion in U.S.-funded projects said on Tuesday.

U.S. Special Inspector General for Iraq Reconstruction Stuart Bowen sees himself as a "taxpayer watchdog" entrusted to verify whether money appropriated by Congress to rebuild Iraq is spent wisely.

Asked whether he thought rebuilding was properly under way and funds were being spent as Congress intended, the former White House lawyer said: "No," largely because so much money had been diverted to security, forcing projects to be scaled back.

There has also been evidence of corruption in some U.S.-funded deals. As of April 11, his office had received 131 potential criminal cases, and of these 62 have been closed, 35 referred to other agencies and 34 remain open.

"The big ones are yet to unfold ... We are talking tens of millions of dollars and not just thousands," he said in an interview with Reuters, declining to provide further details of ongoing investigations.

One of the problems in Iraq was the lack of an "electronic trail" to track down corruption, such as bank transfers. "You have to find people who are willing to rat on others," he said.

Bowen, who has been at the job since January 2004, has visited Iraq seven times and returns next week to Baghdad where he lives in a modest trailer inside the Green Zone and eats meals provided by military contractors.

SECURITY COSTS SOAR

Since his first visit, security has become an even bigger issue for contractors. Initially, he said, the U.S. government put security costs at about 6 percent of the overall price of a project but this has soared to about half in some areas and 30 percent in others.

"That means 30 to 45 percent of the money supposed to build bricks and mortar is instead being used to guard the builders," he said.

Bowen said his audits have raised strong concern that the structures set up by the U.S. government to manage its projects in Iraq are unable to accurately track and predict costs.

"I have concerns about the reliability of the data provided to me" by U.S. government agencies handling rebuilding, he said.

"Right now there is no central clearing house to see how the money is being spent."

At least 12 offices spread across six U.S. government agencies have responsibility for some portion of the $18.4 billion set aside by Congress in 2003 to help rebuild Iraq.

The State Department is in charge of setting policy for how the money is spent and the Defense Department's Iraq Project and Contracting Office manages 70 percent of the funds while the U.S. Agency for International Development controls about 15 percent of it.

Bowen's office has gathered data from the various agencies involved in reconstruction, some of which was provided reluctantly, he said.

An initial look at this data pointed to contractors being paid twice or more for their work, files were missing and others incomplete, data sets overlapped and accounting standards were inconsistent, said Bowen.

"This is a huge issue and cuts to how we can understand what is going on here," he said.

Other concerns include whether contract officials can properly verify that work has been completed satisfactorily.





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