Pentagon can't account for nearly $2 billion in Iraqi funds

Peter Dejong/AP

A federal audit that found the Defense Department cannot account for nearly $2 billion in Iraqi funds is likely to fuel Baghdad's interest in pursuing a claim against Washington for failing to handle its money responsibly, the special inspector-general for Iraq reconstruction Stuart Bowen told National Journal.

An audit published on Sunday investigated the roughly $3 billion the Iraqi government gave the Defense Department to pay bills for contracts the Coalition Provisional Authority awarded before it dissolved in 2004. Most of these funds were deposited into an account at the Federal Reserve Bank of New York.  Even though DOD was responsible for maintaining the proper documentation, it could only account for $1 billion of the money. 

"Its systematic of the poor record keeping that was rife throughout the early stages of the reconstruction effort," Bowen, who has conducted three other major audits into the original pot of roughly $21 billion in Iraqi funds the U.S. managed in 2003 and 2004, said.

The latest audit, released weeks after the last U.S. troops pulled out of the country, could stoke tensions between Washington and Baghdad.  "There have been threats in the past by the Iraqi government that they may seek recompense in the form of filing against the United States for what they view as an abuse of fiduciary duty," Bowen said.

"I expect this latest report will simply increase interest on their side in filing such a claim... [and] fuel the continued concern on the part of the government of Iraq about the failure of the reconstruction program managers to maintain adequate records regarding the use of Iraqi funds."

Bowen traveled to Iraq in November to brief a special commission created by Iraqi Prime Minister Nuri al-Maliki, formed last year to obtain a complete accounting for all Iraqi funds deposited in the accounts at the Federal Reserve Bank of New York. The committee aims to return any unspent funds still under U.S. control to Iraq.  Iraq's Justice Minister, during a private meeting, indicated the Iraqis continue to explore the possibility of filing a claim, Bowen said.

In recent weeks, Baghdad has begun hassling Western contractors, many of them hired to train and assist Iraqi security forces, even temporarily detaining dozens on the pretense their visas are invalid.  This has disrupted the movement of supplies and personnel around the country. Bowen says his own staff in-country has had some challenges with food supplies and he's heard accounts of "meager offerings" at the American embassy because of interference with convoys that have been held up due to instability.

All that's just an "inconvenience," Bowen said. The bigger worry amid the turmoil and violence ongoing in the country is for the success of the State Department's police development program in Iraq, which has had difficulty moving personnel around the country to train Iraqis. "That of course means that the program is not succeeding certainly at the levels hoped for yet," he said.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

    Download
  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

    Download
  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

    Download
  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

    Download
  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security

    Download

When you download a report, your information may be shared with the underwriters of that document.