What Happened to $8.7 Billion in Lost Iraqi Reconstruction Funding?

It gets worse

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The Pentagon cannot account for over 95 percent of $9.1 billion in Iraq reconstruction money, according to an internal audit. The lost $8.7 billion, handled by the U.S. Department of Defense between 2004 and 2007 for reconstruction work, was raised from Iraqi oil revenues by that country's government. Of that amount, the military has no records at all for $2.6 billion in funds. Here's what observers have to say about the misplaced money.

  • Unclear Picture on Possibility of Fraud  The L.A. Times' Liz Sly writes, "Though there is no apparent evidence of fraud, the improper accounting practices add to the pattern of mismanagement, reckless spending and, in some instances, corruption uncovered by [the Special Inspector General for Iraq Reconstruction] since 2004, when it was created to oversee the total of $53 billion in U.S. taxpayer money appropriated by Congress for the reconstruction effort."
  • Iraqi Official Advises Lawsuit  The Associated Press' Tarek el-Tablawy reports the angry reaction. "'Iraq should take legal action to get back this huge amount of money,' said Sabah al-Saedi, chairman of the Parliamentary Integrity Committee. The money 'should be spent for rebuilding the country and providing services for this poor nation.' The report by the Special Inspector General for Iraq Reconstruction accused the Defense Department of lax oversight and weak controls, though not fraud."
  • How This Began With 2003 Invasion  Middle East expert Juan Cole explains, "in the chaotic days after the fall of the Baath government and the collapse of the old economy, [Coalition Provisional Authority chief] Paul Bremer & Co. attempted to jump-start the Iraq market economy by giving out large sums in brown paper bags with no questions asked. They did not understand that the Iraqi market had been killed by decades of government control and that no magic hand any longer existed, so they might as well have taken that money and buried it in the ground."
  • Disproves Fundamental Premise of Invasion  Blogger Steven Taylor sighs, "One of the claims that was made going into this conflict was that we would be able to efficiently reconstruct the country post-Saddam (not to mention that oil revenue was going to pay for the war). However, these claims have proven to have been incorrect, to be kind."
  • Questionable Reconstruction Projects  Liberal blogger Duncan 'Atrios' Black quips, "Not especially shocked that no one has any idea what we did with all the money, but it does remind me of that multi-year period where it seemed that we invaded Iraq in order to free Iraqi schoolchildren from the tyranny of peeling paint."
  • Pentagon Still Has $34M It Was Supposed to Return  Think Progress's Zaid Jilani notes, "[the Special Inspector General for Iraq Reconstruction] also notes that the 'U.S. military continues to hold at least $34.3 million of the fund, even though it was required to return it to the Iraqi government in December 2007.' The 'Department of Defense comptroller promised to report back to the inspector general’s office by November on progress made.'"
This article is from the archive of our partner The Wire.