Auditors say billions likely wasted in Iraq work

ROBERT BURNS

AP National Secu­rity Writer

WASHINGTON — After years of fol­low­ing the paper trail of $51 bil­lion in U.S. tax­payer dol­lars pro­vided to rebuild a bro­ken Iraq, the U.S. gov­ern­ment can say with cer­tainty that too much was wasted. But it can’t say how much.

In what it called its final audit report, the Office of the Spe­cial Inspec­tor Gen­eral for Iraq Recon­struc­tion Funds on Fri­day spelled out a range of account­ing weak­nesses that put “bil­lions of Amer­i­can tax­payer dol­lars at risk of waste and mis­ap­pro­pri­a­tion” in the largest recon­struc­tion project of its kind in U.S. history.

“The pre­cise amount lost to fraud and waste can never be known,” the report said.

The audi­tors found huge prob­lems account­ing for the huge sums, but one small exam­ple of fail­ure stood out: A con­trac­tor got away with charg­ing $80 for a pipe fit­ting that its com­peti­tor was sell­ing for $1.41. Why? The company’s billing doc­u­ments were reviewed slop­pily by U.S. con­tract­ing offi­cers or were not reviewed at all.

With dry under­state­ment, the inspec­tor gen­eral said that while he couldn’t pin­point the amount wasted, it “could be substantial.”

Asked why the exact amount squan­dered can never be deter­mined, the inspec­tor general’s office referred The Asso­ci­ated Press to a report it did in Feb­ru­ary 2009 titled “Hard Lessons,” in which it said the audi­tors — much like the recon­struc­tion man­agers them­selves — faced per­son­nel short­ages and other hazards.

“Given the vicis­si­tudes of the recon­struc­tion effort — which was dogged from the start by per­sis­tent vio­lence, shift­ing goals, con­stantly chang­ing con­tract­ing prac­tices and under­mined by a lack of unity of effort — a com­plete account­ing of all recon­struc­tion expen­di­tures is impos­si­ble to achieve,” the report concluded.

In that same report, the inspec­tor gen­eral, Stu­art Bowen, recalled what then-Defense Sec­re­tary Don­ald H. Rums­feld asked when they met shortly after Bowen started in Jan­u­ary 2004: “Why did you take this job? It’s an impos­si­ble task.”

By law, Bowen’s office reports to both the sec­re­tary of defense and the sec­re­tary of state. It goes out of busi­ness in 2013.

Bowen’s office has spent more than $200 mil­lion track­ing the recon­struc­tion funds, and in addi­tion to pro­duc­ing numer­ous reports, his office has inves­ti­gated crim­i­nal fraud that has resulted in 87 indict­ments, 71 con­vic­tions and $176 mil­lion in fines and other penal­ties. These include civil­ians and mil­i­tary mem­bers accused of kick­backs, bribery, bid-rigging, fraud, embez­zle­ment and out­right theft of gov­ern­ment prop­erty and funds.

Much, how­ever, appar­ently got over­looked. Exam­ple: A $35 mil­lion Pen­ta­gon project was started in Decem­ber 2006 to estab­lish the Bagh­dad air­port as an inter­na­tional eco­nomic gate­way, and the inspec­tor gen­eral found that by the end of 2010 about half the money was “at risk of being wasted” unless some­one else com­pleted the work.

Of the $51 bil­lion that Con­gress approved for Iraq recon­struc­tion, about $20 bil­lion was for rebuild­ing Iraqi secu­rity forces and about $20 bil­lion was for rebuild­ing the country’s basic infra­struc­ture. The pro­grams were run mainly by the Defense Depart­ment, the State Depart­ment and the U.S. Agency for Inter­na­tional Development.

A key weak­ness found by Bowen’s inspec­tors was inad­e­quate review­ing of con­trac­tors’ invoices.

In some cases invoices were checked months after they had been paid because there were too few gov­ern­ment con­tract­ing offi­cers. Bowen found a case in which the State Depart­ment had only one con­tract­ing offi­cer in Iraq to val­i­date more than $2.5 bil­lion in spend­ing on a Dyn­Corp con­tract for Iraqi police training.

“As a result, invoices were not prop­erly reviewed, and the $2.5 bil­lion in U.S. funds were vul­ner­a­ble to fraud and waste,” the report said. “We found this lack of con­trol to be espe­cially dis­turb­ing since ear­lier reviews of the Dyn­Corp con­tract had found sim­i­lar weaknesses.”

In that case, the State Depart­ment even­tu­ally rec­on­ciled all of the old invoices and as of July 2009 had recov­ered more than $60 million.

The report touched on a prob­lem that cropped up in vir­tu­ally every major aspect of the U.S. war effort in Iraq, namely, the con­se­quences of fight­ing an insur­gency that proved more resilient than the Pen­ta­gon had fore­seen. That not only made recon­struc­tion more dif­fi­cult, dan­ger­ous and costly, but also left the U.S. mil­i­tary unpre­pared for the grind of mul­ti­ple troop deploy­ments, the tac­tics of an adapt­able insur­gency and the com­plex­ity of bat­tle­field wounds. It also left the U.S. gov­ern­ment short of the exper­tise it needed to mon­i­tor contractors.

Although the audit was labeled as final, a spokesman for Bowen’s office, Christo­pher M. Grif­fith, said sev­eral more will be done to pro­vide addi­tional details on what the U.S. got for its recon­struc­tion dol­lars and what was wasted.