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Found: Provision in Iraq bill to shield reconstruction spending from US auditors

Published: Wednesday May 10, 2006

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Congress quietly adds provision to bar inspector general from auditing spending

"The Senate last week approved $209 billion in additional spending for the wars in Iraq and Afghanistan, including $2.5 billion in added Iraq reconstruction money," the Wall Street Journal begins in a page four story Wednesday. "The administration has spent $20.9 billion to reconstruct Iraq's infrastructure and modernize its oil industry, but the effort hasn't restored the country's electricity output, water supply or sewage capabilities to prewar levels."

Writes the Journal: "A behind-the-scenes battle among legislators has made a crucial distinction between the new reconstruction money and that already spent: The new funds won't be overseen by the government watchdog charged with curbing the mismanagement that has overshadowed the reconstruction."

"Special inspector general, Stuart Bowen, who has 55 auditors on the ground in Iraq, will be barred from overseeing how the new money is spent," the Journal adds. "Instead, the funds will be overseen by the State Department's inspector general office, which has a much smaller staff in Iraq and warned in testimony to Congress in the fall that it lacked the resources to continue oversight activities in Iraq."

The move comes just two weeks after an American contractor was convicted for admitting a bribe-for-jobs scheme in Iraq.

Wrote the Washington Post in April: "As part of the plea, Philip H. Bloom admitted his part in a scheme to give more than $2 million in cash and gifts to U.S. officials in exchange for their help in getting reconstruction contracts for his companies. Bloom's firms won $8.6 million in reconstruction deals, with an average profit margin of more than 25 percent."

More arrests are likely, the Post added.

Again from the Journal: "Exactly how and why the change was made isn't clear. Republican Appropriations Committee aides say legislators shifted the Iraq money to the foreign operations accounts at the request of the White House, not to curb oversight. They say administration officials sought the change to streamline accounting so the Iraq reconstruction would be incorporated into the State Department's operations and budget rather than kept in stand-alone accounts."

The White House told the JOURNAL that requesting the new Iraq money from the government's foreign operations account is part of its "goal of normalizing our treatment of Iraq assistance."