A new Pentagon audit resolves a lingering Iraq-war mystery, concluding that $6.6bn of US-controlled reconstruction money was transferred to the Central Bank of Iraq, not lost or stolen.
The Coalition Provisional Authority, created by the US to run Iraq after the invasion, controlled more than $20.7bn during its 14-month life, including $6.6bn held when it was dissolved on June 28, 2004.
“That money is not missing,” said Inspector General Stuart Bowen in a telephone interview.
A 2010 Bowen audit couldn’t account for the money. Today’s report says “sufficient evidence exists showing almost all” the $6.6bn was transferred to the central bank.
The inability to account for the money led to suspicion in Iraq that the funds had been stolen. The Iraqi parliament’s Integrity Committee wrote the United Nations in June that “all indications are that the institutions of the United States of America committed financial corruption by stealing money.”
“That’s not true,” Bowen said. “This report answers the question about the $6.6bn. We conclude it properly was accounted for by the Federal Reserve Board Bank of New York and Central Bank of Iraq.”
Any doubts about how the money was handled after it left US control is an Iraqi - not US government - question, Bowen said.
The Los Angeles Times in June fuelled concern about the money when it quoted Bowen as calling the then-unaccounted-for $6.6bn, “the largest theft of funds in national history,” a phrase Bowen later said was taken out of context.
Still, the audit raised questions about the CPA’s financial management. It identified three instances when about $4.3bn of US currency was deposited in the Iraqi bank “in a manner that varied” from that interim government’s written policies and procedures.
The inspector general was unable to locate all required documents needed to show how and when the money was transferred - a problem that Bowen found to be “of concern, given the massive amounts of money involved,” the report said.
Bowen’s report also questions what authority the US Defense Department had when it took control over $217.7m stashed at a presidential palace vault.
A pending audit scheduled for release in January will account for that money and about $2.8bn used by Defense Department agencies, including the US Army Corps of Engineers, for reconstruction projects.
Pentagon Comptroller Robert Hale accepted Bowen’s report while raising several technical questions.
“I am hopeful that the results of this independent validation will support a more productive dialogue that will preclude any misunderstandings by the government of Iraq related to the control” of reconstruction money, Hale wrote in an Oct 21 letter to Bowen.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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