IRAQ - Waste & fraud In Reconstruction.

A US federal oversight agency has reported that despite about $108 bn budgeted for the reconstruction of Iraq since the 2003 invasion, the country's electrical output and oil production were still below pre-war levels and stocks of gasoline and kerosine had fallen to their lowest levels in at least two years. The US alone has accounted for nearly $38 bn of the rebuilding money, according to the Special Inspector-General for Iraq Reconstruction, Stuart Bowen.

New investigations by Bowen found that, even as the flow of reconstruction money from the US was coming to an end, the litany of big American contractors suspected of having wasted large amounts of the money had lengthened. One of the reports out on Jan. 31 found that a US firm, DynCorp, appeared to act almost independently of its contracting officers at the State Department at times, billing the US for millions of dollars of work never authorised and starting other jobs before they were requested. The findings of misconduct by the company, on a $188m job order to build living quarters and purchase weapons and equipment for the Iraqi police as part of a training programme, were serious enough Bowen's office began a fraud probe. Bowen on Jan. 31 said: "As a result of that audit, matters meriting investigation were uncovered". Bowen declined to give further details but said he was initiating a review of DynCorp's work across Iraq. The company had received major contracts to train police in Afghanistan. Gregory Lagana, a DynCorp spokesman, said the company would investigate the report's findings, adding: "We are looking into the issues raised by the inspector-general with the goal of providing as full an accounting as possible. We believe we acted responsibly and with all due concern for the expenditure of public funds".

One major investigation begun by Bowen's office came to an end on Jan. 29, when Robert Stein Jr., a former Pentagon contractor who confessed to stealing millions of dollars in a bribery and fraud scheme in the southern Iraqi city of Hilla in 2004, was sentenced to nine years in federal prison.

Bowen on Jan. 31 said his office had 80 active investigations of potential criminal activity in Iraq. He said some 23 cases had been handed over to the Justice Department "and they are making progress on those".

The latest reports by Bowen's office appear to show that it is not for lack of money that the performance of Iraq's basic infrastructure has fallen to disastrous levels in some cases. If anything, the rebuilding programme seems to have been given more money than it has been able to use to any effect.

In a sweeping break-out of financing sources, one analysis in a quarterly report released on Jan. 31 shows that Congress has passed eight bills which have provided $38.2 bn for the rebuilding effort, while Iraq itself has dedicated $50.5 bn to the effort. International donors have pledged $15.2 bn, although only a small portion of that has so far materialised. One example of problems Iraq has faced can be seen in connection with the $24.8 bn in Iraqi money the Iraqi government has appropriated for the capital budget of its ministries from 2004 to 2007 - in essence, a homegrown reconstruction budget.

Despite the threadbare state of the oil, power, water, transportation and communications infrastructure in Iraq, the ministries managed to spend as little as 15% of those appropriated funds because of problems finding companies to do the work in dangerous places, a lack of skilled contracting officers and US-sponsored anti-corruption programmes which have intimidated Iraqi bureaucrats.