Iraq Reconstruction Watchdog Issues Final Report

By NEIL GORDON

After nearly eight years of tracking the $51.4 billion Congress appropriated for the reconstruction of Iraq, the federal office charged with overseeing that money has concluded that much of it was wasted. But it doesn’t know how much.

On Friday, the Office of the Special Inspector General for Iraq Reconstruction (SIGIR) released its Final Forensic Audit Report of Iraq Reconstruction Funds, a summary of past audits and investigations. SIGIR, which will wrap up its operations in the next fiscal year, identified internal control problems that put “billions of American taxpayer dollars at risk of waste and misappropriation.” The $51.4 billion spent on Iraq reconstruction (about 80 percent of which went toward rebuilding Iraq’s security forces and basic infrastructure) was implemented and managed by the Defense Department, the State Department, and the U.S. Agency for International Development (USAID).

“The precise amount lost to fraud and waste can never be known,” according to the report, “but SIGIR believes it is significant.” (For what it’s worth, the Commission on Wartime Contracting in Iraq and Afghanistan last year estimated the fraud and waste in those two countries combined is between $31 billion and $60 billion.)

The various internal control weaknesses responsible for the fraud and waste include inadequate reviews of contractors’ invoices, insufficient numbers of or inadequately trained oversight staff, poor inventory controls, high staff turnover, poor recordkeeping, insufficient price competition by subcontractors, and weak oversight of cash disbursements. As of June 30, SIGIR has questioned over $635 million in Iraq reconstruction costs.

SIGIR’s final audit isn’t all doom-and-gloom, however. It found few problems in the government’s invoice payment processes. Payments were essentially processed correctly and to valid vendors. Of course, because of the aforementioned internal control weaknesses, the government cannot be certain that the payments were for goods and services that were received, met contractual specifications, were in accordance with the contract price, or were competitively priced. SIGIR also found relatively few payments made to vendors listed in the Excluded Parties List System database of suspended and debarred contractors.

SIGIR’s numerous reports and investigations have led to 87 indictments, 71 convictions, and nearly $177 million in fines, penalties, and forfeitures for fraudulent activities including bribery, kickbacks, theft of government funds and property, inflated invoices, delivery of insufficient or inferior goods, and bid rigging. At a cost of approximately $225 million since its inception in 2004, SIGIR is estimated to have saved taxpayers more than $1 billion.

Neil Gordon is an investigator with the Project On Government Oversight. Image by Office of the Special Inspector General for Iraq Reconstruction.

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