On November 6th, 2003, The United States Congress authorized the creation of the Coalition Provisional Authority Office of the Inspector General. The CPA-IG was intended to provide oversight as an ”independent, objective evaluator of operations and activities of the Coalition Provisional Authority.” Congress established this temporary office to administer investigations and to perform audits determining that all appropriated funds for Iraqi relief and construction are effectively employed. A total of $24.1 Billion dollars in U.S. funds have been appropriated for Iraqi re-construction efforts. Of which, $1.3 Billion has been reportedly spent following the Inspector Generals “Third Quarterly Report to Congress” submitted in October, 2004. This report was closely observed by the International Advisory and Monitoring Board as well as the Iraqi Revenue Watch Organization anticipating that fundamental failures in this office would be revealed. Each of these bodies have investigated the CPA practices finding that there are substantial abuses that officials breached well established governmental procedures. One senior U.S. official has suggested that only 25% of U.S. reconstruction funding is reaching intended projects, while others have said the amount is less than 50%. “The CPA Inspector General faulted the CPA for its management of cash and other property seized from the former regime during and after combat operations. The assets included jewelry, gems, artwork, vehicles, furniture, carpets, and other valuables.”
The Inspector General found that only $21 million dollars of the $120.1 seized and vested assets spent by the CPA has any form of documentation. The Inspector General further found that of this $21 million, $17.2 million had inadequate documentation. Stating that “the validity and the purpose of disbursements for $116.3 million could not be determined.” “In fact, recent audits bring to light that the award of lucrative contracts to well-connected companies, such as Halliburton, did not stop with US funds. The bulk of contracts paid for with Iraqi oil money went to Halliburton subsidiary Kellogg, Brown, & Root with no competition. The Iraqi interim government appears to be following the poor example set by the CPA, making public next to no information about the Development Fund for Iraq since the transfer of power.” To date, the CPA-IG has initiated twenty-three audits and have aided in 113 criminal investigations. “An analysis of the data suggests that of $1.5 billion in contracts, the CPA awarded U.S. firms 74 percent of the value of all contracts paid for with Iraqi funds. Together with its British allies, U.S. and U.K. companies received 85 percent of the value of all such contracts. Iraqi firms, by contrast, received just 2 percent of the value of contracts paid for with Iraqi funds.” The report uncovers that “60 percent of the value of all contracts paid with Iraqi funds went to Kellogg, Brown & Root (KBR)-the same company that Pentagon auditors in December 2003 found had overcharged the U.S. government for as much as $61 million for fuel imports into Iraq“. A criminal investigation of KBR was launched by the Department of Defense in February 2004. The CPA-IG audits confirm the “findings of previous ones. A report released in July 2004 by the International Advisory and Monitoring Board, the watchdog body set up by the United Nations, found numerous problems in the CPA's control and use of Iraqi oil assets during the occupation. These include the absence of oil metering to control theft, poor record-keeping on oil sales, an absence of oversight of spending by the Iraqi ministries, the use of noncompetitive bidding procedures for some contracts, and the CPA's refusal to transmit crucial information to the UN-mandated body”.
“Custer Battles, a nine-month-old company founded by two former Army Rangers, won a sub-contract from Washington Group International that was awarded by the Department of Defense. Tasked with providing 700 security guards, Custer Battles charged the Pentagon $20 million for six months of work. Yet its guards, hired by a Kurdish sub-contractor, received less than $200 per month, which adds up to $840,000 over six months. This means that, adjusting for other overhead costs, the company pocketed roughly $19 million—95 percent of the contract value—in profit for itself.” Set to cease its operations by December 28th 2004, the CPA-IG received a provision in October as Congress passed the Ronald Reagan National Defense Authorization Act of 2005 which included a provision to re-designate the CPA-IG as a new office. The Special Inspector General for Iraq Re-construction (SIGIR). This mandate extends the Inspector Generals office until “10 months from the date that the Secretary of State determines that 80 percent of congressionally-appropriated Iraq Relief and Reconstruction funds have been spent.” The House version of the FY2005 Foreign Operations Appropriations Act also re-designates the CPA-IG, and extends its mandate until September 30, 2007.
See Jonathan Weisman and Robin Wright, “Funds to Rebuild Iraq Are Drifting Away From Target,” Washington Post , October 6, 2004, p. A18; Paul Richter, “Costs Whittle Funds to Iraqis,” Los Angeles Times, September 26, 2004, p. A1.
Coalition Provisional Authority Control of Seized and Vested Assets (Report Number 04-008)
Office of the Inspector General, Coalition Provisional Authority, “Third Quarterly Report to Congress,” October 30, 2004, http://www.cpa-ig.com/pdf/cp aig_october_30_report.pdf.
