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Corruption costing Iraq billions of dollars each year

* US auditor calls for American-Iraqi summit to battle corruption

WASHINGTON: Corruption continues to cost Iraq billions of dollars each year, and Washington and Baghdad should be doing far more to stop it, the top US auditor for Iraq’s reconstruction said in a report released on Sunday.

Stuart Bowen, special inspector general for Iraq reconstruction, said US efforts to help Iraq build strong anti-corruption institutions were urgently needed and called for an American-Iraqi summit to battle a legacy of corruption.

“Creating an effective anti-corruption structure within Iraq’s government is essential to the long-term success of Iraq’s fledgling democracy,” Bowen wrote in his seventh quarterly report to Congress. It was released days after the United Nations concluded that 2,200 companies including DaimlerChrysler, Siemens and Volvo made illicit payments totaling $1.8 billion to Saddam Hussein’s government under the UN oil-for-food programme.

Bowen’s office, which has 20 auditors and 10 investigators in Iraq plus staffers in the United States, has made significant progress on cases charging fraud, bribery and kickbacks involving US citizens - government officials and contractors - in Iraq, he said.

The report said investigators had gathered “an enormous amount of evidence” in these investigations but gave no details on any possible indictments.

Bowen said his office, created by Congress in November 2003 to oversee the Iraq Reconstruction and Relief Fund, recently transferred $2 million to the Justice Department to fund prosecution efforts, and four prosecutors were now working full-time on Iraq reconstruction cases.

He said it was crucial for the United States to strengthen Iraq’s new domestic anti-corruption agencies, noting that Iraq lost more than $2 billion each year in stolen gasoline and diesel fuel supplies.

The report said Iraq’s Bureau of Supreme Audit charged that up to $1.27 billion from some 90 contracts was lost from June 2004 to February 2005 because deals were given to “favored suppliers” and cash was given to third-party firms to work out contracts.

On Oct. 10, Iraqi authorities issued warrants for the arrest of five former ministers and 22 former ministry of Defence officials on criminal corruption charges, it said.

Overall, the report said the United States had made steady progress in its $30 billion drive to rebuild Iraq, billed as the biggest US foreign aid operation since the post-World War Two reconstruction of Europe.

Of the 2,784 projects started, 1,887 were completed and 897 were ongoing, it said.

But it noted that oil production remained low, insurgent attacks on Iraqi pipelines continued to disrupt oil exports, fuel shortages were still common, and the electricity supply remained limited for Iraq’s citizens. In July a report by Congress’ investigative arm, the Government Accountability Office, said that as of May 2005, power generation in Iraq was at a lower level than before the US invasion of Iraq in March 2003. reuters

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