16 thoughts on “USA: Halliburton’s Iraq deals contract abuse

  1. Audits find flaws in U.S. handling of Iraq deals

    WASHINGTON (Reuters) – The United States has carelessly, and possibly
    fraudulently, handled some Iraqi money meant for rebuilding and poorly
    managed billions of dollars of U.S.-funded contracts, said U.S. audits
    released on Wednesday.

    In one area of Iraq alone, nearly $100 million in cash used for
    rebuilding was unaccounted for. Incompetence by U.S. procurement staff
    ranged from contractors being paid twice to files being misplaced.

    Two audits by the U.S. Special Inspector General for Iraq Reconstruction
    found flaws in how U.S. government and military officials ran contracts
    paid for by the Development Fund for Iraq, Iraqi money entrusted to the
    United States after the 2003 invasion.

    A third audit looked at a small sample of U.S.-funded projects paid for
    with $18.4 billion appropriated by Congress to rebuild Iraq and found
    sloppy and disorganized administration of some of those deals.

    “There was no assurance that fraud, waste and abuse did not occur,” all
    three audits said.

    The most scathing criticism was in audits of the development fund, made
    up of proceeds from Iraqi oil sales, frozen assets from foreign
    governments and surplus from the U.N. Oil for Food program. Handling of
    that fund has already come under fire by previous U.S.- and
    U.N.-mandated audits.

    An audit released by the Iraq reconstruction inspector in January
    concluded the U.S. had not properly safeguarded about $8.8 billion of
    Iraq’s own money in the development fund.

    Of concern in the new audits was poor oversight of hundreds of millions
    of dollars of cash used to pay contractors.

    One audit looking at about $119.9 million in DFI cash paid out in
    south-central Iraq, the account manager could not properly account for
    over $96.6 million in cash.

    FRAUD SUSPECTED

    “During this audit we found indications of potential fraud and referred
    these matters to the Assistant Inspector General for Investigations (for
    reconstruction),” the report said.

    Examples of sloppiness included 645 transfers of more than $23 million
    in cash using the wrong form; one contractor being paid twice for the
    same work, and 10 payments amounting to $324,500 were submitted for
    canceled contracts.

    Two payment officers with cash account balances of $777,050 and $715,000
    left Iraq without clearing their balances with the account manager. An
    attempt was made to remove the outstanding balances by “simply washing
    accounts,” the report said.

    Democratic Sen. Russ Feingold (news, bio, voting record) of Wisconsin
    criticized the “disorganized, sloppy management” of Iraq rebuilding deals.

    “Billions of dollars, the success of the stabilization mission and U.S.
    credibility are at stake,” Feingold said.

    The military agreed with most of the recommendations made in the cash
    audit, and Col. Thomas Stefanko said in a written response that
    “extensive corrective actions” have been taken in the past four months
    to resolve problems raised by the audit.

    Another audit looked at how DFI contracts were administered by the Iraq
    Project and Contracting Office, which is responsible for most of the
    contracts paid for by $18.4 billion.

    Auditors said they could not identify the total value of contracts
    financed by the fund and said the contracting office lacked the
    necessary controls and adequate documentation to effectively perform its
    responsibilities.

    In its written response, the contracting office acknowledged confusion
    in the early management of DFI contracts but said new controls were now
    in place.

    “We have taken many corrective actions and will continue to do so,” said
    Maj. Gen. Daniel Long, head of the office.

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