Stuart W. Bowen Jr. looks for controversy. As special inspector general for Iraq reconstruction, Bowen is in charge of finding fraud, embezzlement and misappropriation of funds to rebuild Iraq, the largest U.S. foreign aid project since the Marshall Plan was launched to rebuild Europe after World War II.

And Bowen has found plenty of problems. In a recent interview, he detailed the discoveries, the missing millions and the failures identified in his latest quarterly report sent to Congress last week. One aspect of his investigation is expected to develop into criminal cases soon.

Bowen, a Texas lawyer, worked for then-Gov. George W. Bush as deputy general counsel, and spent 35 days in Florida during the 2000 presidential recount. Bowen went to the White House as an associate counsel. He was briefly in private practice before taking the congressionally created post in October 2004.

Bowen said 1,887 reconstruction projects have been completed of 2,784 that have been started; 897 projects are ongoing.

-- Robin Wright


What were the headlines of your latest report into fraud in U.S. reconstruction of Iraq?


We are making progress on the reconstruction front in Iraq. I have 10 audits and 12 inspections and acknowledged 54 investigations [that] address significant issues in Iraq. . . . The World Bank reported a couple of years ago that it would take approximately $54 billion to restore Iraq's infrastructure. . . . We have allocated approximately $22 billion in Iraq relief and reconstruction funds. A large portion of that money is going to security though. . . .

How many pennies on the dollar actually end up for reconstruction rather than security?

About eight to 10 billion dollars of the Iraq relief and reconstruction fund will ultimately go to bricks and mortar infrastructure, and the balance of that goes to security issues or non-construction spending.

Is that the reconstruction gap?

The reconstruction gap is really driven by reality that we are going to end up building fewer projects than we had originally planned. . . . Money was moved out of water and electricity, obviously meaning that there will be fewer water and electricity projects that get accomplished than were envisioned. . . .

What surprises or shortfalls have you discovered?

In southern Iraq two of the projects -- the Karbala library and the Babylon Police Academy had significant problems. . . .

In Karbala, we found that a large [$500,000] contract to purchase books was simply not carried out and a [$1 million] grant that was supposed to fund training of librarians, the money was never delivered. They were supposed to have upholstered metal chairs, but they just had used plastic chairs in the library. . . . It was going to serve as repository for the great books about Mesopotamian culture.

On the academy, can you describe what you saw?

What we found was a police academy that was half constructed; the work was very shoddy. . . . There was $7.3 million that was awarded in contracts and grants for the academy. We found that the managers of that money entered into an unauthorized land grant with the contractor, that they circumvented contracting requirements by awarding contracts just below the level that required reporting, that they never visited the site. . . . There were $2 million in grant funds for which there was no accounting. . . . There are simply missing funds.

Was this an American company?

Yes, it was. . . . We have investigations ongoing related to this.

Which company was it?

I can't go into that because of the sensitivity of the investigation.

So it looks like deliberate fraud?

That is what it looks like. . . . And it made me determined to investigate these matters vigorously.

Any other examples illustrate the challenges?

We visited five electrical substations in southern Iraq near Basra. There were quality workmanship, but there had not been feeder lines included in the contracts to provide the electricity to the immediate region. We brought that to the attention of the Iraq reconstruction managers, and they are addressing that issue.

They built the facility, but they weren't providing electricity to anyone?

The contract only provided for the facility; there was not any provision for the provision of electricity out of those facilities.

What does this indicate about management of reconstruction?

What it tells you is that during the CPA [Coalition Provisional Authority], the managers that were hired to oversee contracts and grants in south-central Iraq were guilty of malfeasance on the audit and potential criminal wrongdoing. . . . One of the challenges in working in the CPA environment was that all the transactions were in cash. That is an environment where it was fairly easy to abscond with fairly large sums of money. . . .

Is there a lot of money missing?

The [Iraqi] Commission on Public Integrity has announced investigations into $1.5 billion in the ministry of defense that they believe is missing.

This is U.S. taxpayer dollars?

No. It is Iraqi money.

Did [CPA administrator L. Paul] Jerry Bremer play a role?

I don't think he's responsible for the fact that someone in southern Iraq decided to act out of pure self-interest. But somewhere along the line, someone made a decision to hire this person, and in retrospect, it was clearly the wrong decision.

How bad is fraud today?

It is not as bad as it was during the CPA days. We have a variety of cases ongoing, but I don't have any evidence that we have a serious fraud problem in the current U.S. reconstruction.

How typical is the problem with the Karbala library and the Babylon Police Academy?

Those are atypical examples. Our inspections over the last six months have indicated for the most part reasonably good workmanship, quality sites, quality projects.

What is next?

One of the issues we continue to focus on and encourage Ambassador [Zalmay] Khalilzad to address is the anti-Iraq corruption effort. My organization has played an important role in the stand-up of the Iraqi inspector general system, and we continue to work in coordination with the Commission on Public Integrity, which is the Iraqi FBI.

How bad a problem is corruption?

Within the Iraqi government, it is a serious problem. . . . It deprives Iraqi citizens of the benefits of the national revenue, which should be used to help stand up the government and rebuild the infrastructure.

What kind of obstacles do you face in terms of the security environment?

The insurgency, certainly in the Sunni Triangle, makes travel to and from reconstruction sites a very difficult proposition, and the ever-present danger inhibits planning and slows down progress. To date we have had 412 deaths in Iraq. Of those, 147 are U.S. civilians.

Is reconstruction way behind?

I wouldn't say that it is way behind. It really got under way in earnest at the turn of the year, and we have made substantial progress.

Inspector General Stuart W. Bowen Jr.: Fraud today "is not as bad as it was."