How the US lost billions over nine years in Iraq

David Francis

Since the start of the Iraq War, the United States has sent tens of billions of dollars in assistance to Iraq, a large portion of which has been squandered or simply disappeared.

Government auditors say some $61 billion was spent on reconstruction projects in Iraq from 2003 to 2012. At least 10 percent of the money cannot be accounted for. Some 15 percent of the money spent, or roughly $8 billion, was wasted.

The audit also found that much of the money spent in Iraq was ineffective. Many development projects are still unfinished, and the futility of the money spent on training Iraqi troops has been on full display during the recent ISIS advance.

In this file photo, a man stands in a sewage-filled street in Fallujah, Iraq, 40 miles (65 kilometers) west of Baghdad. Ten years and $60 billion in taxpayer funds later, Iraq is still so unstable and broken that even its leaders question whether U.S. efforts to rebuild it were worth the cost.

American money began to disappear almost as soon as the Iraq War began. In 2004, $19 billion in reconstruction assistance was provided to Iraq. From 2005 to 2009, $26 billion was sent to Iraq for the same purpose.

A Congressional Research Service (CRS) report published in 2009 said much of this money was lost to waste, fraud and abuse. Stuart W. Bowen, Jr., then Special Inspector General for Iraq Reconstruction (SIGIR), testified to Congress in 2009 that 15 to 20 percent of this money was wasted.

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"The overuse of cost-plus contracts, high contractor overhead expenses, excessive contractor award fees, and unacceptable program and project delays all contributed to a significant waste of taxpayer dollars," Bowen told Congress back in 2009.

The CRS report outlined many of the poor accounting practices that have led to widespread waste in Iraq.

"A January 2005 SIGIR audit found that the CPA [Coalition Provisional Authority, the American governing body that controlled Iraq at the time] 'provided less than adequate controls' for $8.8 billion of [reconstruction] resources it moved through Iraqi ministries. An April 2005 audit concluded that CPA managers of [reconstruction] funds distributed in the South-Central region of Iraq could not account for more than $96.6 million in cash and receipts. An October 2005 audit found that South-Central personnel could not account for more than $20.5 million in Rapid Regional Response Program funds and made $2.6 million in excessive payments."

US flying 24/7 recon missions over Iraq: NBC
US flying 24/7 recon missions over Iraq: NBC

Waste was not limited to mismanagement, however. Sometimes it was criminal, the report found.

"In late 2005, several U.S. citizens were criminally charged with respect to the handling of these funds—and have since pled guilty. In February 2007, five more were indicted, of whom four were convicted and one pled guilty," CRS reported.

Doesn't End with the End of War

The U.S. began disengagement with Iraq two years before the official withdrawal in 2011. However, money has not stopped flowing to the country.

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According to foreignassistance.gov, $3.1 billion in foreign assistance has gone to Iraq since 2009. The peak year was 2011, when the U.S. sent $1.2 billion; the lowest year was 2014, when $48 million was sent.

SIGIR closed shop in 2013, but not before conducting one final audit of Iraq reconstruction spending. The audit found that $220.2 billion had been provided to Iraq for reconstruction and development projects and the Iraqi military – with the United States providing $61 billion (the rest came from international assistance and $146 billion through the Iraqi capital budget).

The final review of how this money was spent is damning. The findings show that the United States was unable to adequately track where and how money was spent because of gaps in reporting. This led to numerous instances of missing money.

For instance, SIGIR simply couldn't find $3.2 billion meant for development projects. The military was only able to track "$7.1 billion of the $19.6 billion obligated by DoD," SIGIR found.

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The money DOD managed to track went to an array of different programs, including police stations, training, ammunition, and weapons. The collapse of the Iraqi military seems to indicate that this money was misspent.

Overall, SIGIR found that "about 10 percent of the $60.6 billion spent on U.S. funded Iraq reconstruction" cannot be accounted for. It estimated that at least an additional 15 percent of that - $8 billion - was wasted.

"We found that incomplete and unstandardized databases left us unable to identify the specific use of billions of dollars spent on projects, because the U.S. government agencies involved were not required to manage project data in a uniform and comprehensive manner," the report concluded.

—By David Francis of The Fiscal Times