Rooted in Reason: Nurturing the Seeds of Liberty

The Iraqi Special Fund? by grassroothawaii
August 2, 2010, 8:53 am
Filed under: Uncategorized

By David Jaress

A recent report released by the Special Inspector General for Iraq Reconstruction has detailed shocking mismanagement and waste by the Department of Defense that has left billions of dollars in reconstruction funds essentially missing.  The SIGIR, a temporary federal position, issued a scathing internal audit of the DOD’s handling of its finances, and discovered that the military could not properly account for over 95% of the $9.1 billion it appropriated from a United Nations fund; even worse, the military has no record whatsoever of what happened to an entire $2.6 billion of these dollars.  To put these astronomical figures into perspective, the $8.7 billion that vanished represents a sum greater than two-thirds of the State of Hawaii’s annual budget.  It would take the median household in Hawaii over 130,000 years, even without taxes, to earn this much in income.

The fund in question, known as the Development Fund for Iraq, was established by the UN Security Council in 2003 as a resource that the Iraqi government could draw upon for reconstruction and humanitarian purposes.  By consolidating revenues form Iraqi oil and gas exports, frozen Iraqi assets, and leftover funds from the Oil-for-Food program, the United Nations was able to put aside $20 billion to aid in rebuilding Iraq’s shattered infrastructure.  The $9.1 billion in question was spent by the Pentagon between 2004, when the Iraqi government allowed the US military to access the money, and 2007, when that approval was withdrawn.  Ultimately, the audit by the SIGIR finds that the US Department of Defense is unable to “readily account for its obligations, expenditures, [or] remaining balances associated” with the fund.

While the report stopped short of accusing the Pentagon of outright fraud, such gross mismanagement of finances in a time of both economic hardship and war is unacceptable.  The essence of any large Democracy rests upon the transparency and efficiency of its bureaucratic institutions, an important part of which are the appropriate financial oversight practices that would at least help to explain where these billions of dollars were spent.


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