March 16 (Bloomberg) -- As much as $4 billion of the $21 billion Congress approved since 2003 for Iraq reconstruction has been wasted on excessive payments to contractors and poorly designed facilities, the special inspector for Iraq reconstruction said.

“Waste is the chief problem in Iraq,” Stuart Bowen said today at the National Press Club in Washington, two days before the sixth anniversary of the Iraq war.

Even though “fraud is egregious,” Bowen said, “the big loss has been waste” on large programs. Most of the $21 billion approved by Congress for Iraq reconstruction has been spent, according to his office.

Bowen said his estimate that $4 billion of the money was wasted is conservative and is based on his assessment from almost 250 inspections of U.S. taxpayer-funded projects. Bowen first disclosed the estimate about a year ago in congressional testimony. He said today the number could go up as his office continues in-depth audits of completed projects.

Bowen’s office has detailed in a series of audits that as much as $333 million was wasted on incomplete or poorly built forts, prisons, correctional facilities, public health clinics and a police academy in Baghdad.

Bowen’s audits also documented instances where contractors were prematurely paid millions of dollars in overhead before contract work actually commenced or received award fees for sloppy work.

Regarding cases of fraud, “a number of people have been convicted, quite a few more are coming this year and the next,” Bowen said. Between 2004 and 2008, his office investigated cases that produced 19 indictments, 13 convictions, five imprisonments and $17 million in fines, forfeitures and restitution.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

Last Updated: March 16, 2009 18:54 EDT