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$38 Million Computerized Accounting System Proving Useless in Iraq

By Walter Pincus
Washington Post Staff Writer
Thursday, October 25, 2007

A $38 million U.S. effort to create a computerized accounting system for the Iraqi government has been suspended because the Ministry of Finance there has continued to use a paper system, according to the latest report of Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction.

"Nobody noticed" when the computerized Iraq Financial Management Information System was inoperable for a month, and no one relies on it to produce reports, Bowen said in a report released by his office yesterday.

Bowen's statement follows a disclosure earlier this month by the Government Accountability Office that $8 million was spent to train about 500 Iraqi government employees in various ministries to use the computerized system, but the Finance Ministry refused to drop its paper spreadsheets.

Installation of the new accounting system was halted last May when a British contractor and his security team were kidnapped from the Ministry of Finance office, located outside the protected Green Zone where many international officials live and work.

Bowen reported that despite the substantial U.S. investment in the system, the U.S. Embassy in Baghdad "does not have a firm plan or strategy for addressing the next steps in the development of the system."

The experience is not unique, according to the GAO. Despite U.S. spending of $300 million the past two years to improve the capacity of Iraq's ministries -- and with $255 million more sought for next year -- a recent GAO report said progress has been stalled not only by poor security but also by pervasive corruption, a shortage of competent personnel, and sectarian and political control of appointments.

Almost half of all Iraqi government employees fail to turn up for work each day, and many who do put in only two to three hours daily "for security reasons," according to the report. It also notes that a U.S. Embassy assessment found that one-third of civilian ministries surveyed had problems with "ghost employees" -- people on the payroll who never come to work.

Lack of security has also prompted many Iraqi professionals and educated bureaucrats to flee the country for Syria and Jordan. A November 2006 United Nations report estimated that 40 percent of Iraqi professionals had left the country since 2003.

"Iraqi ministries have significant shortages of competent personnel with the skills necessary to formulate budgets, procure goods and services, and perform other vital ministry tasks," the GAO found. A September 2006 U.S. assessment concluded that "the majority of staff at all but one of the ministries surveyed were inadequately trained for their positions and a quarter of them relied heavily on foreign support."

The problem, said GAO Director of International Affairs and Trade Joseph A. Christoff, is partly that "Iraqi words for 'allocation,' 'commitment' and 'expenditure' don't mean the money is actually spent." There is no way to track the "effectiveness of what is spent," he said.

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