Millions of dollars wasted in Iraq reconstruction aid — investigators

WASHINGTON (AP) — The US government wasted tens of millions of dollars in Iraq reconstruction aid, including scores of unaccounted-for weapons and a never-used camp for housing police trainers with an Olympic-size swimming pool, investigators say.

The quarterly audit by Stuart Bowen Jr., the special inspector general for Iraq reconstruction, is the latest to paint a grim picture of waste, fraud and frustration in an Iraq war and reconstruction effort that has cost taxpayers more than $300 billion and left the region near civil war.

“The security situation in Iraq continues to deteriorate, hindering progress in all reconstruction sectors and threatening the overall reconstruction effort,” according to the 579-page report, which was being released Wednesday.

Calling Iraq’s sectarian violence the greatest challenge, Bowen said in a telephone interview that billions in US aid spent on strengthening security has had limited effect.

Reconstruction now will fall largely on Iraqis to manage, and they are nowhere near ready for the task.

The audit comes as President George W. Bush presses Congress to approve $1.2 billion in new reconstruction aid as part of his broader plan to stabilise Iraq by sending 21,500 more US troops to Baghdad and Anbar province.

Democrats in Congress have been sceptical. Sen. Jim Webb has suggested that the United States is spending too much on Iraq reconstruction at the expense of rebuilding New Orleans, Louisiana, from the devastation that Hurricane Katrina wrought 17 months ago. Rep. Henry Waxman plans in-depth hearings next week into charges of waste and fraud in Iraq.

According to the report, the State Department paid $43.8 million to contractor DynCorp International for the residential camp for police training personnel outside of Baghdad’s Adnan Palace grounds, which has stood empty for months. About $4.2 million of the money was spent improperly on 20 trailers for important visitors and an Olympic-size pool all ordered by the Iraqi ministry of interior but never authorised by the United States.

US officials spent another $36.4 million for weapons such as armored vehicles, body armor and communications equipment that cannot be accounted for.

DynCorp also may have prematurely billed $18 million in other potentially unjustified costs, the report said.

Responding, the State Department said in the report that it was working to improve controls. Already, it has developed a review process that rejected a $1.1 million DynCorp bill this month on a separate contract because the billed rate was incorrect.

A spokesman for DynCorp, Greg Lagana, did not immediately return a telephone message seeking comment.

Bowen, whose office was almost eliminated last month by administration-friendly Republicans in Congress, called spending waste in Iraq a continuing problem. Corruption is high among Iraqi officials, while US contract management remains somewhat weak.

With America’s $21 billion rebuilding effort largely finished, it will be up to the international community and the Iraqis to step up with dollars to sustain reconstruction, Bowen said in the interview. “That will be a long-term and very expensive process,” he said.

According to the report:

— Major US contractors in Iraq, including Bechtel National and Kellogg, Brown and Root Services Inc., said they devoted an average 12.5 per cent of their expenses for security.

— Bowen’s office opened 27 new criminal probes in the last quarter, bringing the total number of active cases to 78.

Twenty-three are awaiting prosecutorial action by the Justice Department, most centering on charges of bribery and kickbacks.

Still, “fraud has not been a significant component of the US experience in Iraq,” Bowen said.

As of the end of 2006, contracts had been let for all of the $21 billion Congress put into the Iraq Relief and Reconstruction Fund it created in 2003. Some 80 per cent of the money has been paid out, the report said.

Since 2003, use of the reconstruction aid changed several times as US officials shifted priorities to spend more on security or programmes critical to supporting elections or developing an Iraqi government.

For example, money was cut from what had been planned originally for electricity, water, oil projects and transportation and communication so it could be used to help pay for healthcare, elections, democracy programmes, training Iraqi security forces.

Overall, the largest single expense was security. The total outlays were spent like this:

— 34 per cent for security and justice.

— 23 per cent to try to generate and distribute electricity.

Still, the report noted, output in the last quarter averaged below prewar levels.

— 12 per cent for water.

— 12 per cent for economic and societal development.

— 9 per cent for oil and gas.

— 4 per cent for transportation and communications.

— 4 per cent for healthcare.

Auditors had “significant concern” about the way ahead, partly because of the Iraqi government’s bad track record on budgeting for such projects, the report said. It said the Iraqi government had “billions of budgeted dollars (that) remained unspent at the end of 2006.” Unemployment remains high, contributing to the insurgency because it sours the population and leaves idle young men to their own devices, according to the report.

The government’s “most significant challenge continues to be strengthening rule-of-law institutions — the judiciary, prisons and the police,” the report said. “The United States has spent billions of dollars in this area, with limited success to date.”