Up to $1 billion plundered from Iraqi funds

LONDON - Large-scale corruption in Iraq's ministries, particularly the defence ministry, has led to one of the biggest thefts in history with more than $1 billion going missing, Iraq's finance minister said in an interview.

"Huge amounts of money have disappeared. In return we got nothing but scraps of metal," Finance Minister Ali Allawi told British newspaper The Independent in a report published on Monday. "It is possibly one of the largest thefts in history."

Corruption, both in the bidding for and the awarding of contracts, and in the administration of public offices, is one of the most frequent accusations made by Iraqis against their government and foreign firms operating in the country.

Some of the worst allegations of impropriety concern the purchasing of military equipment by the defence ministry under the previous government, including more than $230 million spent on 28-year-old second-hand Polish helicopters.

"If you compare the amount that was allegedly stolen of about $1 billion compared with the budget of the ministry of defence, it is nearly 100 per cent of the ministry's (procurement) budget that has gone (missing)," Allawi said.

Most of the questionable contracts are said to have been signed under the previous government, headed by Iyad Allawi, which served from June 28, 2004 until late February this year.

The former defence minister, Hazim Shaalan, is now living as a private citizen in Jordan. He has denied any wrongdoing.

Allawi, the finance minister, was also quoted by the newspaper as saying $500-$600 million had vanished from the electricity, transport, interior and other ministries.

The newspaper reported that the total amount missing from all the ministries could be as much as $2 billion.

Iraq's Board of Supreme Audit, set up in 2004 by the US administration then running the country, said in February it would investigate all government contracts signed since the 2003 war after repeated allegations of corruption. It gave a report to the government in May.

Parts of the board's findings were quoted last month by Knight Ridder newspapers as showing that upwards of $1 billion had gone missing or was unaccounted for.

Knight Ridder said that in some cases contracts had been signed on scrap pieces of paper with unnamed intermediaries and that it was not always clear what products were supposed to be supplied for the vast sums of money quoted.

The Independent said that one contract involved purchasing armored cars that were so poorly made that their armor could be pierced by a single shot from an AK-47 assault rifle.

An Iraqi politician on Sunday accused the ministries of mass corruption and incompetence and quoted from the Board of Supreme Audit's report, which has not been made public.

"Our funds are under the control of ignorant people," Hadi al-Amiri, the head of parliament's integrity commission, told lawmakers in an angry address.

"There have been many violations of the bidding process that have led to huge losses of public funds. Many bids weren't properly conducted and were awarded by ministers without any input from committees set up to assess the bids," he said.

- REUTERS