Payments without records

Pentagon finds $8.2 billion spent in Iraq can't be accounted for

May 23, 2008|By New York Times News Service

A Pentagon audit of $8.2 billion in American taxpayer money spent by the U.S. Army on contractors in Iraq has found that almost none of the payments followed federal rules and that in some cases, contracts worth millions of dollars were paid for despite little or no record of what, if anything, was received.

The audit also found a sometimes stunning lack of accountability in the way the U.S. military spent some $1.8 billion in seized or frozen Iraqi assets, which in the early phases of the conflict were often doled out in stacks or pallets of cash. The audit was released yesterday in tandem with a congressional hearing on the payments.

In one case, according to documents displayed by Pentagon auditors at the hearing before the House Committee on Oversight and Government Reform, a cash payment of $320.8 million in Iraqi money was authorized on the basis of a single signature and the words "Iraqi Salary Payment" on an invoice. In another, $11.1 million of taxpayer money was paid to IAP, an American contractor, on the basis of a voucher with no indication of what was delivered.

Mary L. Ugone, the Pentagon's deputy inspector general for auditing, told members of the committee that the absence of anything beyond a voucher meant that "we were giving or providing a payment without any basis for the payment."

"We don't know what we got," Ugone said in response to questions by the committee chairman, Henry A. Waxman, a California Democrat.

The new report is especially significant because while other federal auditors have severely criticized the way the United States has handled payments to contractors in Iraq, this is the first time that the Pentagon itself has acknowledged the mismanagement on anything resembling this scale.

The disclosure that $1.8 billion in Iraqi assets was mishandled comes on top of an earlier finding by an independent federal oversight agency, the Special Inspector General for Iraq Reconstruction, that U.S. occupation authorities early in the conflict could not account for the disbursement of $8.8 billion in Iraqi oil money and seized assets.

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