BAGHDAD » A U.S. audit has found that the Pentagon cannot account for more than 95 percent of $9.1 billion in Iraq reconstruction money, spotlighting Iraqi complaints that there is little to show for the massive funds pumped into their cash-strapped, war-ravaged nation.
The $8.7 billion in question was Iraqi money managed by the Pentagon, not part of the $53 billion that Congress has allocated for rebuilding. It is cash that Iraq, which relies on volatile oil revenues to fuel its spending, can ill afford to lose.
"Iraq should take legal action to get back this huge amount of money," said Sabah al-Saedi, chairman of the Parliamentary Integrity Committee. The money "should be spent for rebuilding the country and providing services for this poor nation."
The report by the Special Inspector General for Iraq Reconstruction accused the Defense Department of lax oversight and weak controls, though not fraud.
"The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss," the audit said.
The Pentagon has repeatedly come under fire for apparent mismanagement of the reconstruction effort — as have Iraqi officials themselves.
Seven years after the U.S.-led invasion, electricity service is spotty, with generation capacity falling far short of demand. Fuel shortages are common and unemployment remains high, a testament to the country’s inability to create new jobs or attract foreign investors.
Complaints surfaced from the start of the war in 2003, when soldiers failed to secure banks, armories and other facilities against looters.
Since then the allegations have only multiplied, including investigations of fraud, awarding of contracts without the required government bidding process and allowing contractors to charge exorbitant fees with little oversight, or oversight that came too late.
But the latest report comes at a particularly critical time for Iraq.
Four months after inconclusive elections, a new government has yet to be formed, raising fears that insurgents will tap into the political vacuum to stir sectarian unrest.
Iraqi lawmakers met yesterday but, for the second time this month, failed to convene a parliament session, leaving wide open the question of when the new government will take shape.
Underscoring its financial challenges, the International Monetary Fund approved a $3.6 billion loan in March to help Iraq meet its obligations. Iraq is projected to run a deficit through 2011, according to analysts, with a possibility of a surplus following that hinging on oil prices.
The Defense Department, in responses attached to the audit, said it agreed with the report’s recommendations to establish better guidelines for monitoring such funds, including appointing an oversight organization most likely by November.