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Project on Government Oversight




Amber Alert Needed for $8.7 Billion in Iraq Reconstruction Funds

July 28, 2010 


A new report by the Special Inspector General for Iraq Reconstruction (SIGIR) details how the U.S. Army’s poor financial and management systems are unable to account for $8.7 billion of the $9.1 billion in Iraqi money that was allegedly spent on reconstruction and humanitarian needs. That means 96% of those funds are unsupported and more than likely impossible to track to ensure that they were spent on their intended programs or projects.

Based on the lack of government information, it’s nearly impossible to determine if the money was spent properly or was subject to waste, fraud, or even funneled to the insurgency. Most shocking is that the government failed to learn its lesson when similar deficiencies were identified by SIGIR in 2005. In the 2005 report, SIGIR found that the Army didn’t have appropriate controls to account for approximately $97 million. The latest SIGIR report follows up on that case, stating that it “resulted in 8 convictions of CPA [Coalition Provisional Authority] and DoD [Department of Defense] officials for bribery, fraud, and money laundering, and $7.8 million in fines, forfeitures, and restitution payments.”

The current accounting blunders also resulted because Defense Department components failed to follow Department of Treasury accounting rules for handling non-U.S. government funds. According to SIGIR, only one DoD office—Army Central Command—followed the proper procedures and was able to account for approximately $400 million dollars in Development Fund for Iraq (DFI) funds.

Last week, the President signed the Improper Payments Elimination and Recovery Act of 2010, but how can we eliminate such payments if the government doesn’t have a proper accounting of how the money was spent? What would the IRS say if tax filers only kept track of and supported only 4% of their revenues and expenditures?

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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