October 26th, 2011
05:48 PM ET

Once thought lost and now found...$6.6 billion

By Senior National Security Producer Charley Keyes

The mystery of $6 billion that seemed to go missing in the early days of the Iraq war has been resolved, according to a new report.

New evidence shows most of that money, $6.6 billion, did not go astray in that chaotic period, but ended up where it was supposed to be, under the control of the Iraqi government, according to a report from the office of the Special Inspector General for Iraq Reconstruction or SIGIR.

The report details the transfer of cash from the U.S. to the Central Bank of Iraq. Much of it was originally assets of Iraq, some was part of the Oil for Food program imposed during the regime of former Iraqi leader Saddam Hussein and some was funneled through the United Nations for relief and reconstruction projects, according to the report.

The report focuses on money left over from shipments of more than $10 billion in U.S. currency shipped to Iraq - much of it in shrink-wrapped bricks of hundred dollars bills - and the $6.6 billion remaining when the temporary overseer of Iraq, the Coalitional Provisional Authority, went out of business in the summer of 2004 with the creation of a new Iraqi government.

Earlier, the money had seemed to be missing. The inspector general himself, Stuart Bowen, said flatly in June, "It has not been properly accounted for."

The official accounting had used more bland language. "SIGIR concluded that weaknesses in DoD's financial and management controls left it unable to properly account for and articulate the disposition of remaining DFI (Development Fund for Iraq) funds," a 2010 report said.

But the inspector general's new report says almost all the $6.6 billion was properly handed over to Iraq and its Central Bank. "SIGIR was able to account for the unexpended DFI funds remaining in DFI accounts when the CPA (Coalitional Provisional Authority) dissolved in June 2004," the new report says. "Sufficient evidence exists showing that almost all of the remaining $6.6 billion remaining was transferred to actual and legal CBI (Central Bank of Iraq) control."

While the bulk of the money was transferred to the Central Bank of Iraq, $217 million remained in a vault in a former presidential palace and was held by the U.S. Defense Department and most was doled out for a variety of projects and payrolls, the report says.

"In February 2008, SIGIR conducted a cash count at the palace vault and determined that $24.45 million remained," the report says, pointing out that the Pentagon returned this money to Iraq the next month. Now further SIGIR reports are expected in January 2012 on how the Defense Department used other money for small projects and to pay contractors.

"At the same time, SIGIR will report on about $2.8 billion more in DFI funds used by DoD agencies, including the U.S. Army Corps of Engineers, for reconstruction projects provided under a separate agreement executed with Iraq in June 2004," the report says.

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Filed under: Inspector General • Iraq
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