On the day that Iraqis went to the polls for their first democratic election after Saddam Hussein’s fall, U.S. auditors released a report that detailed how $8.8 billion in Iraqi cash was funneled from U.S. authorities to Iraqi ministries without proper financial controls.
The cash, disbursed during the particularly intense period of October 2003 to June 2004, came from Iraq’s oil sales and was to be used to fund Iraq’s government, reconstruction projects and humanitarian relief.
The revelation of accounting sloppiness was contained in the audit overseen by Stuart Bowen, Jr., special inspector general for Iraq reconstruction. The auditors didn’t contend the Iraqi cash was lost, but they did find there was no effective system in place to account for the money that was quickly disbursed to the Iraqis. Billions went to pay for Iraqi government salaries, and operating and capital expenditures, but no one was quite sure how the cash was spent.
The most egregious examples involved payments to Iraqi government employees. The report noted that CPA officials authorized payments to 74,000 members of the Facilities Protection Force, but the real number of employees was not verified. At one ministry, there were 8,206 guards on the payroll, but only 602 of them were verified.
It appears that salaries were paid to guys with guns in an Iraqi version of political “street money,” unleashing cash to get quick results, in this case, stopping the bullets from flying.
L. Paul Bremer, the former head of the occupation team, the Coalition Provisional Authority, has disparaged the findings. He claimed the auditors failed to understand the “context” in which the CPA operated, overseeing a country where the economy was “dead in the water,” the government didn’t function and dangers abounded. “There was a war going on in Iraq, and it would have been dangerous for security–ours and Iraq’s–to stop paying armed young men,” Bremer wrote in an official reply to the report. In an essay on today’s Commentary page, former House Speaker Newt Gingrich largely supports Bremer’s view.
Granted, it was a chaotic time in the months that followed Hussein’s toppling. Iraq was still reeling from the effects of war and its aftermath, when looters stole from most government ministries, and what they couldn’t take away, they set ablaze or destroyed.
The auditors, though, were more than aware of the problems and perils facing authorities and contractors. The auditors, after all, then and now, operate in Iraq. Recently, one auditor was only one office away from a location where two people were killed during a rocket attack inside Baghdad’s protected compound, the Green Zone.
“Even under the most favorable of conditions, rebuilding Iraq would be a job of daunting proportions,” Bowen, the special inspector general, recently wrote. “One cannot spend a day in Iraq without quickly gaining a profound respect for all engaged in this endeavor. Their work and sacrifice to rebuild Iraq make all the more crucial our success in promoting economy, efficiency, and effectiveness and in preventing fraud, waste and abuse.”
And that’s the lesson in this audit. Even under the most difficult circumstances in Iraq, there has to be some accountability for the distribution of Iraqi revenues. That’s essential for the credibility of the fledgling Iraqi government and its supporters in the U.S. government.
