Spending On Iraq Poorly Tracked

By Dana Hedgpeth
Washington Post Staff Writer
Friday, May 23, 2008; D01

The inspector general for the Defense Department said yesterday that the Pentagon cannot account for almost $15 billion worth of goods and services ranging from trucks, bottled water and mattresses to rocket-propelled grenades and machine guns that were bought from contractors in the Iraq reconstruction effort.

The Pentagon did not have the proper documentation, including receipts, vouchers, signatures, invoices or other paperwork, for $7.8 billion that American and Iraqi contractors were paid for phones, folders, paint, blankets, Nissan trucks, laundry services and other items, according to a 69-page audit released to the House Committee on Oversight and Government Reform.

An earlier audit by the inspector general found deficiencies in accounting for $5.2 billion of U.S. payments to buy weapons, trucks, generators and other equipment for Iraq's security forces. In addition, the Defense Department spent $1.8 billion of seized Iraqi assets with "absolutely no accountability," according to Rep. Henry A. Waxman (D-Calif.), who chairs the oversight committee. The Pentagon also kept poor records on $135 million that it paid to its partners in the multinational military force in Iraq, auditors said.

The Army disagreed with some of the auditors' findings, saying that it is difficult to maintain an adequate paper trail in a war zone and that it has improved its record-keeping and accountability efforts. Robert L. Wilkie, assistant secretary of defense for legislative affairs, declined an invitation to testify before from Waxman's committee.

Of the $7.8 billion in payments detailed in the audit released yesterday, about $1.4 billion did not meet the most minimal requirements for documentation, making it highly possible that waste, fraud or abuse had occurred, according to auditors. In one case, there is a copy of a $5.6 million check from the U.S. Treasury paid to an Iraqi contractor but no documents saying what was purchased. In another, a South Carolina contractor was paid $11 million, according to a voucher, but auditors said they could not tell what goods or services were received.

"Without a receiving report and invoice, we don't know what we paid for," said Mary Ugone, the Defense Department's deputy inspector general for auditing. She said internal controls and paper trails were inadequate and that the Army's "finance personnel were not adequately trained" in overseeing the billions of dollars paid.

Auditors referred more than two dozen vouchers, totaling $35 million, to criminal investigators at the Pentagon.

Waxman said the poorly documented expenditures of seized Iraqi assets included a $320 million cash payment for employing 1,000 people that was handed over to the Iraqi Finance Ministry with "little more than a signature in exchange."

"Investigators looked at 53 payment vouchers and couldn't find even one that adequately explained where the money went," Waxman said.

The money paid to military coalition partners, including Britain, Poland and South Korea, was intended to help local reconstruction and humanitarian projects. Auditors said that none of the files reviewed "contained sufficient supporting documentation to provide reasonable assurance that these funds were used for their intended purpose." In one case, the Defense Department made an $8 million payment to Polish forces with minimal documentation, according to the audit.

An audit report issued in November found that $5.2 billion of U.S. payments to buy weapons, trucks, generators and other equipment to support Iraqi security forces had major deficiencies in how items were accounted for, saying that the Defense Department did not know "what equipment is due in, due out, issued and on hand." The inspector general found that the Defense Department could not account for 12,712 of 13,508 weapons, including assault rifles, machine guns and grenade launchers for Iraqi forces.

"When we turned them over to the Iraqis, they weren't properly accounted for," said Gary Comerford, a spokesman for the Defense Department's inspector general, saying serial numbers were not consistently recorded. "The paper trail is not complete."

The November audit also described how the Pentagon paid $32 million for the construction of an Iraqi military facility in Anbar province that was never built. Defense Department officials told staff members of the oversight committee that "this is embarrassing" because "not a spade of dirt was turned."