The CPA also shifted the funding source for several other contracts.
As U.S. money for Stevedoring Services of America Inc.'s contract to manage the port of Umm Qasr began to dwindle, CPA officials on March 6 authorized an infusion of Iraqi money to keep the company in place until the transfer of authority. Sometime this spring, a few months into Harris Corp.'s media contract, the CPA stopped using Defense Department money to pay Harris and began charging the Iraqi oil funds.
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Iraqi-Funded Contracts U.S. companies are being paid at least $1.9 billion in Iraqi money for reconstruction work.
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On April 24, a little over a month after complaints by a losing bidder of political favoritism and a flawed contracting process prompted the U.S. Army to cancel a $327 million contract funded by U.S. money to Nour USA Ltd. of Vienna, the CPA awarded the company a different contract from Iraqi money. The new $9.9 million contract was for supplying the Iraqi security forces with vehicles.
Two recently released audits point to numerous problems with the procedures the CPA used to account for, authorize and disburse Iraqi money.
The United Nations, in a report dated July 15, noted that metering of oil extracted from Iraq was not functioning so it was impossible to tell whether all of it had been accounted for. The U.N. report also criticized the CPA's program review board for authorizing funds in at least 10 cases when it lacked a quorum. The audit also noted that only one of the review board members was Iraqi, and he had attended only two of the 43 meetings held by December 2003. "Controls were insufficient to provide reasonable assurance . . . whether all [Iraqi oil-funded] disbursements were made for the purposes intended," the audit concluded.
The CPA's inspector general found in audits released last week that the occupation failed to establish "effective funds controls and accountability" for hundreds of millions of dollars that were held in cash. In fact, the investigative unit said, the keys to one of the safes that held the cash was "kept in the disbursing officer's unattended backpack."
It also studied 60 disbursements from assets seized from the former regime and found that no documentation existed for five of them, totaling $99.1 million in payments. Paperwork had not been properly filled out for items such as furniture, carpets and vases, meaning, the inspector general said, that the CPA was not able to ensure that the assets "would be available for the use and benefit of the Iraqi people."
Special correspondent Omar Fekeiki in Baghdad contributed to this report.
