• Um, I Told You So: Inspector Shows State Dept Mishandled Iraq Money

    October 30, 2012

    Tags: , ,
    Posted in: Embassy/State, Iraq

    So, I, um, like, told you so. And even though I lost my job for telling you so, and even though a related Inspector General opened an investigation into me for telling you so, it’s still nice to learn that what I told you was correct.

    The Special Inspector General for Iraq Reconstruction (SIGIR) released a final report on the State Department’s handling of Quick Response Funds (QRF), money that was handed out in Iraq by Provincial Reconstruction Teams (PRTs), two of which I lead in Iraq. Those experiences formed the fodder of my book, We Meant Well. The State Department and its USAID colleagues “managed” about $258 million in QRF funds.

    So taxpayers and patriots, here’s the highlights, in the Inspector’s own words:

    — From the available records, we could generally determine how funds were intended to be used, but we could not assess whether all of the goods and services were actually purchased, received, or transferred to beneficiaries.

    — We reported that DOS’ recordkeeping on fund-use and project-results/outcomes for micropurchases made in 2007 and 2008 was poor, and that documentation in seven project files suggested possible fraud. We recommended that DoS improve its recordkeeping and review all micropurchases initiated in 2007-2008 to determine if other examples of possible fraud, waste, and abuse exist. DoS officials stated that they located almost all documentation that SIGIR found missing from the official files, and that their review of payment vouchers did not indicate that any fraudulent transactions had occurred. However, the officials did not directly address the seven instances of possible fraudulent activities that SIGIR had found.

    — Because there was no evidence that DoS had reviewed and assessed the identified cases of possible fraud, SIGIR initiated this review. Seven of the reviewed assessments re-confirmed our concerns that fraud may have occurred.

    — The QRF Tracking Database shows that of the $125.1 million allocated to the DoS, $24.5 million was used to pay overhead costs for a third party to implement large QRF projects, costs of managing the QRF database, and costs for monitoring and evaluating the QRF program.

    — Project results (also referred to as award results in DoS’s QRF Tracking Database) are important in that they confirm whether or not items or services intended to be purchased were indeed purchased, received, and transferred to beneficiaries. In our review, we found that 90 of the 185 micropurchases (or about 49%) lacked such information. As a consequence, we cannot be certain that individuals used the cash they received to purchase goods and services and that the intended beneficiaries of these goods and services actually received them.

    — Of course, some results were conclusive in a negative way: “this project was probably way ahead of its time and probably should not have been originally funded. Not in use, never used.” (to describe $22,150 in tanks, tools, and supplies purchased for fish hatchery)

    — Another read “the contractor never completed the soccer field. Dirt was added to the field but turf was never laid.” The project file did not have any other documentation that showed actions taken, if any, to address the problems found.

    — Specifically, DoS may never know what it got out of those micropurchases made in the early years because of the lack of documentation showing that the goods or services were delivered. Consequently, it is highly possible that some portions of QRF funds were not used as intended.

    The SIGIR included the State Department’s comments on the report:

    Officials from the Office of Iraq Affairs, Bureau of Near Eastern Affairs stated that they improved their processes for documenting QRF projects and agreed with SIGIR that cash transactions in conflict and post-conflict environments can be susceptible to fraud and abuse. However, they did not comment further on the possible fraud we found in seven projects we first identified in April 2011, and which served as the basis for this current review.

    An important caveat: SIGIR basically only assessed whether or not the money State thought it spent on widgets actually got spent on widgets, and whether those widgets made it into the right hands. SIGIR made no assessment of the effectiveness of any of State’s spending.

    One hopes that if we ever begin “nation building” here at home, someone other than the thieves, pirates and thugs State hired to eat the money abroad is put in charge.

    Oh, and SIGIR released another report on Friday, that one showing how the Army Corps of Engineers spent money on energy and infrastructure programs in Iraq, but its recordkeeping was so poor that the Corps cannot prove it actually received goods for about $1 billion of the money it spent. The total amount of funds unaccounted for has now reached a staggering $7 billion. But that’s for another book to deal with.

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  • Recent Comments

    • Rich Bauer said...


      Close but no SIGIR:

      The special inspector general for Iraq reconstruction summarized the financial controls succinctly. The system was characterized by:

      (1) the absence of reconciliation procedures for transfers between ministries and for bank accounts;
      (2) inadequate accounting records;
      (3) deviations from the tendering procedures designed to ensure competitive bidding; and
      (4) insufficient payroll records.” Feb. 6, 2007

      KPMG was the required external auditing firm. It found and reported problems but little, if anything, was done.

      Of the $19.6 billion disbursed, much of the money supposedly went to salaries. Some of these were for what was described as “ghost” employees. Substantial funds went to Iraqi government agencies but there were no controls to track the money. A whopping $8.8 billion was never accounted for, even by the generous standards employed in tracking money. It simply disappeared without a trace.

      10/30/12 12:51 PM | Comment Link

    • John Poole said...


      Thieves, pirates and thugs.. and add perhaps, gypsies. It’s the new American Foreign Legion- the same guys who appear at your door and offer to restore your driveway’s surface integrity by squeegeeing 60 weight spent gear oil on it.

      10/30/12 1:13 PM | Comment Link

    • Lafcadio said...


      We only got this much because they created (over State’s objections) a Special Inspector General was appointed. The most useless (lot of competition here) institution in the USG is the State Department Inspector General. WARNING: I once availed myself of their “hotline.” Very shortly thereafter, former Assistant Secretary of Consular Affairs Mary Ryan included me on her 360 review evaluation. I later found out from another friend who went to the OIG on a separate issue that Ms. ryan had also put him on her 360 review.

      So much for confidentiallity at State’s OIG. For those who are non-USG, the State department OIG uses retired foreign service officer’s to do inspections. So it’s a jobs program for retired officers and the inspection is carried out by people invested in the system who will hush up any problems.

      We’re lucky we found out this much about Iraq, because there were effrtos to sabotage the Iraq OIG.

      10/30/12 3:07 PM | Comment Link

    • Rich Bauer said...


      Of course, sane people understand every dollar we spent in the Iraq War was a waste of money.

      10/30/12 4:21 PM | Comment Link

    • pitchfork said...


      quote: “Of course, sane people understand every dollar we spent in the Iraq War was a waste of money.” quote

      Ummm..it didn’t get wasted…remember?



      What got wasted were lives. 100,000’s of them. But what’s a few lives here and there..after all..we are exceptional.. right? Wrong. WE are despicable.

      Let me say something here. There are no words to express the contempt I have for all the US Gov sub-human excrement who are responsible for this depraved act of savagery against other human beings on this planet. They will not escape, nor will they be forgotten. History will be their executioner. But my God will be their judge. They know who they are, and they know at some point..they will pay the consequence of their actions…for all eternity. I just wish I could rub each of their faces in the blood of their victims…like these….


      However..let me be blindingly clear. The responsibility for this grotesque assault on mankind, falls squarely on the shoulders of the citizens of this nation. WE are the torturers. WE are the murderers. And WE are to blame for the death of 100’s of thousands of innocent human lives, and I’m ashamed to be part of the of the citizenry of this nation, who to this day, are so brainwashed, cowardly, and despicably debased to allow all the politicians involved to remain in office, if not protest en-mass for the repudiation and indictment of our past and current leaders war crimes. If anything, Obama’s continuation, if not expansion of Bush’s war crime regime should alert this nation to the path we are on. However, at some point..if WE do not stop it..the world WILL stop it for us…….what ever it takes. PERIOD.

      10/30/12 5:57 PM | Comment Link

    • Kyzl Orda said...


      This corrupted firing and hiring process in the government — needs to be remedied. Anymore of that and Americans might think the higher ups in the bureacracy might favour robots at the desks. How utterly stupid to give the door to people who know their jobs. No more winking and nodding

      10/30/12 8:13 PM | Comment Link

    • Rich Bauer said...


      “If this country has been misled, if this committee, this Congress, has been misled by pretext into a (Vietnam) war in which thousands of young men have died, and many more thousands have been crippled for life, and out of which their country has lost prestige, moral position in the world, the consequences are very great.”

      IF?? And then forgotten.

      10/30/12 10:07 PM | Comment Link

    • jhoover said...


      In sum, to those who say international law does not exist, or who say the occupation of Iraq was somehow extra-legal, I invite them to scrutinize the legal work of my former office, where international law was lived, breathed, and debated, with real world consequences, twenty-four hours a day. Attorneys in Baghdad worked within a complicated web of international authorities, and were among the first to gain practical experience operating within the framework of traditional occupation law – a framework that had existed largely as a debating point, never voluntarily implemented by an occupying authority. The limitations and defects of that framework became readily apparent to many of us. For where the purpose of an occupation is enabling and transformative, a legal framework that effectively locks-in the laws and institutions of a repressive, ousted regime does not make sense, nor does much good, for anyone. The international community, therefore, should consider updating the Hague Regulations and the Geneva Convention, to reflect the realities of modern military interventions, and to permit fundamental change where transformation (from dictatorship to elections, for example) is a desirable international objective.

      A Lawyer in Baghdad
      Brett H. McGurk

      Brett McGurk served for fi ve months as Associate General Counsel to the Coalition Provisional Authority in
      Baghdad, and for three months as a legal advisor to the U.S. Embassy in Baghdad. A version of this essay was
      presented on June 4, 2004, to a conference of international attorneys held in Barcelona, Spain.

      10/31/12 7:06 AM | Comment Link

    • jim hruska said...


      The SSA has not adjudicated the 10740$ over payment of my account. This has been going on since Mar/2011.
      My congressman has been on it since 11/2011 to no avail.
      If we can’t manage a SS account then how can we build a nation??
      It’s all a rather sad joke.
      jim hruska

      10/31/12 3:34 PM | Comment Link

    • Eric Hodgdon said...


      Peter, these pictures of ‘her’ … I have to block the screen so I don’t turn into a pillar of salt.

      On a lighter note:
      Nation building is for the people in the nation being built to decide and spend their own funds / money on and for themselves.

      How can people, already crippled by inside the beltway disease, ever have the insane idea of knowing what’s best for people nearly on the other side of the globe?

      Even at its best, New World thinking can never solve Old World habits / tendencies / etc.

      I do see an actual disconnection between those who were born and raised West of the Continental Divide with those on the other side of said divide, specifically those from the original 13 states, in problem solving via methods of.

      While not universal, I see it often, but this is one of many other differences between Americans.

      11/1/12 10:12 PM | Comment Link

    • Rich Bauer said...


      11/2/12 4:13 PM | Comment Link

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