Page last updated at 10:15 GMT, Friday, 23 May 2008 11:15 UK

US spending in Iraq ignored rules

US Army handout photo of US troops (file image)
The payments were for goods such as trucks and bottled water for troops

An audit of some $8bn (4bn) paid to US and Iraqi contractors has found that almost every payment failed to comply with US laws aimed at preventing fraud.

In one instance, $11m was paid to a US company without any record of what goods or services were provided, the US defence department audit said.

US spending of another $1.8bn in seized Iraqi assets was also poorly handled.

The findings, covering the period from 2001 to 2006, will fuel anti-war Democrats' claims of mismanagement.

They accuse the Bush administration of relying too heavily on contractors to run the Iraq war and paying too little attention to problems of corruption and fraud.

'Very wrong'

The review by the defence department's inspector general estimates that the US Army made more than 180,000 commercial payments from bases in Iraq, Egypt and Kuwait from 2001 to 2006.

The $8bn spending of US taxpayers' money involved purchases of goods and services ranging from bottled water, mattresses and food to trucks and phones.

Without a receiving report and invoice, we don't know what we paid for
Mary Ugone
Pentagon auditor

In some cases, contracts worth millions of dollars were paid for in cash with little or no documentation to show what was delivered.

In one example, investigators found a copy of a $5.6m cheque paid by the US Treasury to an Iraqi contractor, but no records to show what had been purchased.

"Payments that are not properly supported do not provide the necessary assurance that funds were used as intended," the inspector general concluded.

The Pentagon auditors' review was released at a hearing of the US House of Representatives' Committee on Oversight and Government reform on Wednesday.

Democratic committee chairman Henry Waxman said: "There is something very wrong when our wounded troops have to fill out forms in triplicate for meal money while billions of dollars are handed out in Iraq with no accountability."

Mary Ugone, the Pentagon's deputy inspector general for auditing, told the committee: "Without a receiving report and invoice, we don't know what we paid for."


The hearing came on the same day as legislation introduced by Mr Waxman with the aim of strengthening anti-fraud measures and boosting transparency was passed by the House.

The review was seen as significant because, unlike previous critical audits of US spending in Iraq, it was the first time the Pentagon itself had revealed mismanagement on such a scale.

In April, a separate audit of US-funded reconstruction projects for Iraq found that millions of dollars had been wasted because hundreds of schemes were never completed.

Last year, congressional investigators said as much as $10bn (5bn) charged by US contractors for Iraq reconstruction had been questionable.

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