Inspectors: Millions in Iraq aid wasted

Inspectors: Millions in Iraq aid wasted
By HOPE YEN and PAULINE JELINEK, Associated Press Writers
January 31, 2007
http://news.yahoo.com/s/ap/20070131/ap_on_go_ca_st_pe/iraq_reconstruction_waste

WASHINGTON - Major U.S. companies with multimillion-dollar contracts for
Iraq reconstruction are being forced to devote 12.5 percent of their expenses for security due to spiraling violence in the region, investigators said Wednesday.

Meanwhile, tens of millions of U.S. dollars have been wasted elsewhere in Iraq reconstruction aid, some of it on an Olympic-size swimming pool ordered up by Iraqi officials for a police academy that has yet to be used.

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 U.S. taxpayers more than $300 billion and left the region near civil war.

According to the report, nine of the largest U.S. contractors in Iraq reported paying significant amounts of money for personal security for their workers, protection against violence at their construction sites and elsewhere.

Contractor security costs ranged from 7.6 percent to 16.7 percent, or an average of 12.5 percent, the report said.

"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.

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

Former Rep. Lee Hamilton, co-chairman of the Iraq Study Group, said Wednesday that the report shows the uphill battle for the United States and the international community in their efforts to bring stability in Iraq.

"There are very, very few things that hurt our effort more in trying to succeed in Iraq than that kind of performance, because it turns all people off," Hamilton during testimony before the Senate Judiciary Committee.

The audit comes as President 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. Sen. Jim Webb, D-Va., has suggested 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 (news, bio, voting record) 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 camp for police training personnel 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 the United States' $21 billion rebuilding effort largely finished, it will be up to the international community and the Iraqis to pitch in to sustain reconstruction, Bowen said in the interview. "That will be a long-term and very expensive process," he said.

According to the inspector general:

_Shoddy construction was widespread at the $73 million Baghdad Police College, including plumbing problems that posed health risks to Iraqi recruits.

_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 that 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 prewar 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."
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On the Net:

Special Inspector General for Iraq Reconstruction:
http://www.sigir.mil/Default.aspx

Quarterly Report: http://www.sigir.mil/reports/quarterlyreports/default.aspx

DynCorp audit: http://us.rd.yahoo.com/dailynews/ap/ap_on_go_ca_st_pe/storytext/iraq_reconstruction_waste/21769803/SIG=11k0hejp2/*http://www.sigir.mil/reports/pdf/audits/06-029.pdf