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U.S. Spends Only Small Part of Funds to Help Rebuild Iraq

By Jonathan Weisman
Washington Post Staff Writer
Monday, November 1, 2004; Page A17

After more than a year of difficulties, the pace of contracting for Iraqi reconstruction projects picked up substantially over the past three months, but U.S. authorities have still spent only a fraction of the rebuilding money allocated by Congress, according to a new report.

The inspector general monitoring Iraq's rebuilding also said in his latest quarterly report, released today, that reconstruction aid promised by international lenders and other countries has only trickled into Iraq. Of the $13.5 billion pledged at a donors conference last year in Madrid, contributions and firm commitments total $2.7 billion, the report said.

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Inspector General Stuart W. Bowen paints a picture of lawlessness and corruption hampering a reconstruction program that once promised Iraqis a significant boost from their pre-war standards of living. Allegations have surfaced of large-scale embezzlement, robberies perpetrated by Iraqi police, even payoffs to U.S. military personnel who aided in theft.

"Iraq is largely a cash-based economy, and daily life there remains volatile and hazardous," Bowen wrote.

Of the $24.1 billion that Congress has allocated for Iraq's reconstruction over the past two years, $13.4 billion has now been obligated to rebuilding contracts, the report said. Three months ago, 30.6 percent of the reconstruction funds had been earmarked for specific projects. Now, that total has risen to 40.7 percent, the report said.

But only about $5.2 billion has been spent. In the quarterly report released three months ago, about $3 billion had been spent. Congress's high-profile allocation of $18.4 billion, approved in October 2003, is still largely untapped. About $1.6 billion of that has been spent, up from $400 million three months ago, according to the inspector general's office.

Other reconstruction projects have come out of various smaller accounts or have been financed with Iraqi oil money.

"Demanding and frequently dangerous conditions . . . have challenged the pace of reconstruction," Bowen wrote in an opening message for the report.

The inspector general has managed or coordinated 113 criminal investigations, and opened cases on 272 reports of fraud, waste or other problems reported on the agency's hotline.

In one case, Iraqi construction companies were accused of stealing construction equipment from the Iraqi interim government. U.S. military personnel allegedly helped transport the materials and accepted payment for the assistance. Some of the equipment has been recovered, but the case remains under investigation by the military and the Iraqi government, according to the report.

In another case, an Iraqi government official was suspected of embezzling $500,000 of funds allocated to help local governance, and possibly funneling some of that to insurgents. The investigation found that the official had actually spent only $70,000 on legitimate projects. He returned the other $430,000.

A U.S. contractor also reported an alleged theft by Iraqi police officers, who threatened one of the company's Iraqi employees. The investigation led to the arrest of five Iraqis -- including two police officers -- who were charged with robbery.

The inspector general's investigations have been hampered by confusion, since the U.S. occupation government was disbanded June 28, the report said. Since the inspector general's office was established to keep an eye on the Coalition Provisional Authority, it was unclear whether it would continue to exist. The audit staff has declined by 42 percent since then, Bowen said.

Last month, Congress extended the inspector general's mandate until 10 months after 80 percent of Iraqi reconstruction funds are obligated to contracts.


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