Army Corps Can’t Show Delivery of $1 Billion in Iraq Fuel

The U.S. Army Corps of Engineers didn’t properly document more than $1 billion in Iraqi money used to buy fuel and other supplies for Iraq reconstruction, according to an audit.

In a review of 12 major payments through the Development Fund for Iraq, one of three documents needed to properly verify delivery -- a “receiving report” -- was missing from more than 95 percent of the files, according to the audit issued yesterday by the Special Inspector General for Iraq Reconstruction.

The development fund was Iraqi money managed by the U.S. as part of reconstruction after the war that ousted Saddam Hussein. It consisted of revenue from Iraqi oil and gas sales and leftover revenue from the United Nations oil-for-food program, which allowed Iraq to sell a certain amount of crude and spend the proceeds on humanitarian goods.

Special Inspector General for Iraq Reconstruction Stuart Bowen said in the audit that his office “has not concluded that fraud or theft occurred, but the absence of receiving reports raises questions.”

The missing receiving reports would have documented “the government’s inspection and acceptance of products delivered or services performed,” Bowen wrote. “Missing receiving reports involved commodities vulnerable to fraud and theft.”

The Army Corps said the likelihood that fuel was stolen was limited because it “was delivered by military-escorted convoys,” according to the audit. The audit covered payment records from July 2003 through November 2006, according to the inspector general.

Conducting a final accounting -- including whether the U.S. must reimburse some money to Iraq’s government -- “has been delayed pending completion of financial audits and contract closeouts,” according to the audit.

“Such uncertainty puts the U.S. in a politically sensitive position and calls for the concerted efforts of all involved to resolve,” Bowen said.

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