Auditor clarifies comment about missing cash in Iraq

Stuart Bowen Jr., special inspector general for Iraq reconstruction, says an alarming statement attributed to him warning of "the largest theft of funds in national history" was taken out of context.

On Monday, the Los Angeles Times published a feature about the Defense Department and the Iraqi government "closing the books" on the U.S. infusion of reconstruction funds that began in 2003. "For the first time, federal auditors are suggesting that some or all of the cash may have been stolen, not just mislaid in an accounting error," the article said.

Bowen, whose involvement began when he was appointed inspector general for the Coalition Provisional Authority in 2004, told Government Executive that "no one has said the money was stolen."

Instead, an audit by the SIGIR and the Pentagon controller is "ongoing," according to Bowen, after SIGIR reported last July that "a lack of control created vulnerabilities" in keeping tabs on $9.1 billion allocated in 2004 to what is called the Development Fund for Iraq. Fully two thirds of that amount, some $6.6 billion, is described as "allegedly unaccounted-for funds" in a recent SIGIR report.

Bowen said, "We are persevering, still working with the Iraqis to account for the balance by gaining access to necessary bank data."

The development fund, fed by Iraqi oil sales, donations and money seized from insurgents, is administered by the Iraqi government and is used to pay for reconstruction, compensation to families of Iraqis killed in U.S. actions and public sector salaries.

SIGIR, which reports to the secretaries of State and Defense, in its April report to Congress described the situation with the Development Fund for Iraq as follows:

"Winding up the DFI has been complicated by uncertainty over $6.6 billion that allegedly remains unaccounted for nearly seven years after the Coalition Provisional Authority was dissolved in June 2004. At that time, responsibility for the DFI funds remaining in Iraq shifted to DoD. The funds represent just under one-third of the $20.7 billion drawn from DFI accounts at the Federal Reserve Bank of New York and transported -- usually in cash by military aircraft -- to CPA control to help finance the occupation during the authority's 14-month existence . . .

"However, no formal record of the transfer could be located, and a permanent DoD comptroller who arrived in Baghdad about four days after the July 11 [2004] document was written has since claimed he never took possession of the funds . . . The $4 billion in outstanding commitments is believed to have been earmarked for payment of pending reconstruction-related contracts, but to date there is no available record of the contracts in question, of the contractors who were supposed to receive the money, or that payments were ever made."