Possible fraud seen in Iraq contracts - U.S. report


(Gold9472: I put the word "Possible" in quotations because well... ya know.)

By Andrea Shalal-Esa
Wed Oct 26, 2005 6:22 PM ET

WASHINGTON, Oct 26 (Reuters) - U.S. officials and members of Iraq's provisional government bungled the management of $24 million in reconstruction grants in early 2004, and some cases may have involved fraud, according to a report released on Wednesday.

The U.S. Inspector General for Iraq Reconstruction, Stuart Bowen, said his office had referred several cases of potential fraud in reconstruction grants for the South-Central region for further investigation.

Those investigations were still ongoing, according to Bowen's report -- the latest in a series of detailed audits of over $30 billion in U.S. funds for Iraq reconstruction.

Bowen's spokeswoman Kristine Belisle said the Justice Department was looking at possible indictments linked to Iraqi reconstruction. She gave no details and declined to confirm if they were linked to cases in southern Iraq.

The report said personnel working for the Coalition Provisional Authority for the South-Central Region, which includes the cities of cities of Najaf and Karbala, could not account for $20.5 million in funds.

The money was provided for a program to help Iraqis or assist in reconstruction after the March 2003 U.S. invasion.

The offices disbursed almost $23.5 million through 74 grants from February to June 2004. They handed out $2.6 million more than the value of the grants awarded, for projects ranging from media work to road repair to women's rights issues.

The report recommended the U.S. ambassador Iraq initiate action to seek reimbursement for the overpaid grant amounts.

"Because we could not find documentation to support grant performance, we could not determine whether the grants met their intended goals, whether the work ... was started or satisfactorily completed, to whom the cash was actually disbursed in some grants; and what benefit, if any, the Iraqi people received as a result of the grants," the report said.

An audit of the grants showed "material internal control weaknesses," said the chief auditor for Iraqi reconstruction. These included the failure of U.S. government agents and coalition partners to comply with cash management rules or control and account for Iraqi cash assets.

"Based on our review ... there was no assurance that fraud, waste and abuse did not occur in the management and administration of grant funds," the report concluded.

It recommended tighter controls over grants such as requiring recipients to submit receipts for all expenditures and file monthly reports.

It also urged creation of a special team to determine whether other regions of Iraq had similar problems in managing reconstruction grants.

A separate audit by Bowen's office, also released on Wednesday, found that some contractors involved in over $18 billion of projects received award fees for "average" performance on reconstruction contracts, instead of for work that exceeded expectations.