Q&A Friday: What Happened To The “Missing” 9 Billion Dollars In Iraq

Question: “John – Have you got any good ideas what happened to the 9 Billion dollars that went missing in Iraq while Paul Bremer was in charge of the “Iraq Provisional Coalition”? — Rduke

Answer: This is an old story, but, yes, I can tell you what happened. The money was spent on, “salaries, operating and capital expenditures, and reconstruction projects between October 2003 and June 2004.”

More info on what this is about from CNN:

“Nearly $9 billion of money spent on Iraqi reconstruction is unaccounted for because of inefficiencies and bad management, according to a watchdog report published Sunday.

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An inspector general’s report said the U.S.-led administration that ran Iraq until June 2004 is unable to account for the funds.

“Severe inefficiencies and poor management” by the Coalition Provisional Authority has left auditors with no guarantee the money was properly used,” the report said.

“The CPA did not establish or implement sufficient managerial, financial and contractual controls to ensure that [Development Fund for Iraq] funds were used in a transparent manner,” said Stuart W. Bowen Jr., director of the Office of the Special Inspector General for Iraq Reconstruction.

The $8.8 billion was reported to have been spent on salaries, operating and capital expenditures, and reconstruction projects between October 2003 and June 2004, Bowen’s report concluded.

…Auditors were unable to verify that the Iraqi money was spent for its intended purpose. In one case, they raised the possibility that thousands of “ghost employees” were on an unnamed ministry’s payroll.

….The Defense Department, which was in charge of the reconstruction effort, and former Iraq civil administrator Paul Bremer have disputed the findings.

Pentagon spokesman Bryan Whitman told CNN that the provisional authority was operating under “extraordinary conditions” and relied on Iraqi ministries to manage development money that was transferred to them.

“We simply disagree with the audit’s conclusion that the CPA provided less-than-adequate controls over Iraqi funds that were provided to Iraqi ministries through the national budget process for hundreds of projects, essential services, Iraqi salaries and security forces,” Whitman said.

The occupation government established “major reforms” in Iraq’s budgeting system, setting up a transparent mechanism for decision-making and beginning efforts to fight corruption, Whitman said.

…Bremer, in a written response included in the report, said Bowen’s report failed to recognize the difficulties of operating in wartime.

“The IG auditors presume that the coalition could achieve a standard of budgetary transparency and execution that even peaceful Western nations would have trouble meeting within a year, especially in the midst of a war,” Bremer wrote.”

As you can see, this is not really about “missing” money; it’s a spat about accounting controls.

You have Bremer and Company saying: “X amount of dollars was given cabinet minister Y to spend on security” and the Office of the Inspector General saying: “Maybe the cabinet minister spent the money for that purpose, maybe he didn’t. Prove it.”

Was some of the money stolen by corrupt members of the Iraqi government? Undoubtedly. That isn’t a good thing, but it’s not unusual either. For example, you think there are no government officials skimming off the top of the foreign aid that we give to Egypt, Jordan, and the Palestinians? Heck, do you think no one in the Iraqi government today is stealing money? Of course, they are.

Unfortunately, when it comes to foreign aid, a certain amount of graft just goes with the territory. Again, that’s not a good thing, but if we’re going to declare every dollar given to a foreign government “missing” just because we can’t prove they spent it exactly where they were supposed to, then we might as well stop giving out foreign aid.

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