Report: Millions wasted on Iraq's reconstruction


Published: Wednesday, January 31, 2007 at 6:01 a.m.
Last Modified: Wednesday, January 31, 2007 at 12:00 a.m.

WASHINGTON — The U.S. government wasted tens of millions of dollars in Iraq reconstruction aid, including scores of unaccounted-for weapons and a never-used Baghdad training camp 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 today.

Calling Iraq's sectarian violence the greatest challenge, Bowen said in a telephone interview that billions in U.S. aid spent on strengthening security has had limited effect. Reconstruction now will fall largely on Iraqis to manage — and they're nowhere near ready for the task.

The audit comes as President Bush is pressing Congress to approve $1.2 billion in new reconstruction aid as part of his broader plan to stabilize Iraq by sending 21,500 more U.S. troops to Baghdad and Anbar province.

Democrats in Congress have been skeptical. Virginia Sen. Jim Webb has suggested that the U.S. is spending too much on Iraq reconstruction at the expense of Hurricane Katrina rebuilding in New Orleans, while California Rep. Henry Waxman plans in-depth hearings next week into charges of Iraq waste and fraud.

According to the report, the State Department paid $43.8 million to contractor DynCorp International for the residential training camp outside of Baghdad's Adnan Palace grounds that has stood empty for months. About $4.2 million of the money was improperly spent on 20 VIP trailers and an Olympic-size pool, all ordered by the Iraqi Ministry of Interior but never authorized by the U.S.

U.S. officials spent another $36.4 million for weapons such as armored vehicles, body armor and communications equipment that can't 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 earlier this month on a separate contract.

because the billed rate was incorrect.

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

Bowen, whose office was nearly eliminated last month by administration-friendly Republicans in Congress, called spending waste in Iraq a continuing problem. Corruption is high among Iraqi officials, while U.S. 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 its 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 U.S. contractors in Iraq, including Bechtel National and Kellogg, Brown and Root Services Inc., said they devoted an average 12.5 percent of their total 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 of them centering on charges of bribery and kickbacks.

Still, "fraud has not been a significant component of the U.S. 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 percent of the money has been paid out, the report said.

Since 2003, use of the reconstruction aid changed several times as U.S. officials shifted priorities to spend more on security problems or programs critical to supporting elections or developing the new government.

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

Overall, the largest single expense was security. The total was spent in the following way:

—34 percent for security and justice.

—23 percent to try to generate and distribute electricity. Still, the report noted, output in the last quarter averaged below pre-war levels.

—12 percent for water.

—12 percent for economic and societal development.

—9 percent for oil and gas.

—4 percent for transportation and communications.

—4 percent for health care.

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 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."

On the Net:

Special Inspector General for Iraq Reconstruction:

http://www.sigir.mil/Default.aspx

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