U.S. can't account for $8.7 billion in Iraqi cash

The AP reports: The U.S. Defense Department is unable to properly account for over 95 percent of $9.1 billion in Iraqi oil money tapped by the U.S. for rebuilding the war ravaged nation, according to an audit released today.

The report by the U.S. Special Investigator for Iraq Reconstruction offers a compelling look at continued laxness in how such funds are being spent in a country where people complain basic services like electricity and clean water are sharply lacking seven years after the U.S.-led invasion that toppled Saddam Hussein.

The audit found that shoddy record keeping by the Defense Department left the Pentagon unable to fully account for $8.7 billion it withdrew between 2004 and 2007 from a special fund set up by the U.N. Security Council. Of that amount, Pentagon "could not provide documentation to substantiate how it spent $2.6 billion."

The funds are separate from the $53 billion allocated by Congress for rebuilding Iraq.

The report comes at a critical time for Iraq. Despite security gains made since 2008, bombings remain near a daily occurrence that compound the frustrations and fears of Iraqis increasingly weary of the current political crisis — one many say reflects how the country's politicians are more interested in their own interests than those of the nation.

The audit cited a number of factors that contributed to the inability to account for most of the money withdrawn by the Pentagon from the Development Fund for Iraq. It said most of the Defense Department organizations that received DFI money failed to set up Treasury Department accounts, as required.

In addition, it said no Defense Department organization was designated as the main body to oversee how the funds were accounted for or spent.

"The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss," the report said.

The audit found that the U.S. continues to hold about $34.3 million of the money even though it was required to return it to the Iraqi government.

The audit did not indicate that investigators believed there were any instances of fraud involved in the spending of these funds.