Seattle Post Intelligencer

Their article written by Gerald Nadler, which the IC Wales article seems to be based on, is here.

NY Times article

A NY Times article about the latest info is here. It's mostly just a rehash, but it does point out a very important change to the terms of the audit, mentioned in the IAMBs summary report below.

The board said that its efforts to conduct separate audits of the sole-source contracts had been delayed by an unwillingness of the United States Defense Department to produce requested documents on time.

It finally received documents, censored "to safeguard proprietary information of the concerned parties," for five such orders totaling $812 million that it said highlighted many shortcomings, among them inadequate technical evaluations and overstated costs.

Delays

I won't be able to get to this until the weekend, however, it would seem that the promised "damning report" won't be released after all. Here are the links.

The press release is here. Amongst other things it says

The IAMB previously announced its concern about the use of non-competitive contracting using DFI resources. The IAMB agreed to the terms of reference for a special audit of sole-sourced contracts proposed by the U.S. Government, to be completed by an independent auditor. The audit, which will cover the period up to the dissolution of the Coalition Provisional Authority (CPA), is expected to be completed by April 2005. The results of the audit are to be made public.

Am I misreading this? What happened between the weekend and now that saw that report shelved? Maybe I'm being too conspiratorial.

The summary to which it refers is here. It's particularly useful for putting all of these reports that I've haphazardly noted in some kind of order. I should now have plenty of time between now and April 2005 to do that.

As an amusing side-note, the IAMB has now taken to italicising the word known in the phrase "the IAMB concluded that proceeds of known oil sales were deposited in the DFI and that disbursements from the account were properly authorized and recorded. However ...". I guess that's a hint for all the slack-arse journalists who actually get paid to inform us about this.

UN report due tomorrow

From IC Wales:

A UN panel critical of how the US-led coalition authority in Iraq spent billions of dollars from the UN oil-for-food program and other sales of Iraqi oil will issue its report on Monday, an official with the world body said.

I predict a subdued response to the report. There has been a concerted effort in some quarters over the past half a year or so to ensure that the mind-share of the average person, when presented with the key words "UN + oil-for-food + iraq", is taken up with thoughts of shady deals between Kofi's son and Saddam. We'll see.

Inspector General's report -- 30 July, 2004

Coalition Provisional Authority Control Over Seized and Vested Assets Report Number 04-008 July 30, 2004

Examined 20 Program Review Board requests for 60 disbursements totalling $120.1 million. They found:

• 25 disbursements had only the signature of the recipient, totalling $17.2 million
• 5 disbursements had no documentation, totalling $99.1 million
• 1 disbursement request did not have approval documents from the PRB or CPA on file

So $116.3 million had not been properly accounted for. ``However, during final discussions with the CPA Comptroller's office at the conclusion of the audit, comptroller personnel produced the disbursement documentation and the approval documentation that we had identified as missing.

Non-cash assets:

Described as ``ranged from carpets and furniture to vases and wine glasses'', the FMO allowed personnel to sign-out non-cash assets for use in offices and villas. The audit states that ``FMO personnel did not adequately manage, secure, and safeguard non-cash assets in complieance with CPA established policied and procedures''.

• Only the inventory of Uday Hussein's personal items was investigated.
• Of 24 available sign-out sheets, 7 were incorrectly filled out.
• A chain of custody was not established for the jewelry, which was not listed by item (e.g. ``box of jewels''),
• tours were given for groups of personnel, who were encouraged to take souvenir photographs with the items.

Is this related to the theft of 12 Iraqi paintings and 40 bonds by Fox News Channel employee Benjamin James Johnson? According to CNN,

The charges against Johnson say he had accompanied the U.S. Army troops to the "New Presidential Palace," which Johnson told authorities was the former residence of Uday Hussein, son of the now deposed Iraqi president.

The document says Johnson first claimed he was given the items by Iraqi citizens on the street, but later admitted to federal agents that he had removed the paintings from a palace.

The audit report section concludes by noting that the Iraq Ministry of Culture has taken posession of these items, which will be sold and the proceeds put ``into an education fund for Iraqi schools''.

Seized and vested cash assets:

As summarised above, ``the validity and the purpose of disbursements for $116.3 million could not be determined''.

The response to the report is as follows:

• Similar to the KPMG audit, FMO responded that asset management was accorded lower priority due to limited resources being taken up by combat operations.
• FMO has turned over all seized assets to the Ministry of Culture, which should be finalised by 29 October, 2004

Inspector General's report -- 28 July, 2004

Coalition Provisional Authority Comptroller Cash Management Controls Over the Development Fund for Iraq 28 July, 2004

$600 million in funds were held in the DFI. Of this, $400 million was disbursed to the field and handled by agents with limited visibility, whose appointments were not adequately documented, and who did not adequately document and take receipts for the disbursements. The report finds that

1. proper cash accountability was not maintained
   • Of the $400 million disbursed on the field, $50 million was cleared without a reciept, and the remainder were often cleared with limited explanation, and for services ``contradictory to the allowable expenses''.
   • North Star Consultants were hired at $1.4 million to review internal controls. When they failed to do this, the comptroller ``verbally modified the contract and employed the contractor to primarily perform accounting tasks in the Comptroller's office''. (Incidentally, this the same consultancy noted by KPMG that thought that a single employee with a spread-sheet would be adequate to account for the entire DFI To do: who are North Star?).
2. physical security was inadequate
   • Keys to the safe were kept in the disbursing officers backpack
   • As far as I can tell, at some point the officer actually left the room with the safe open and (at least) the auditors present
3. fund agent records were not complete
4. fund managers' responsibilities and liabilities were not properly assigned.