Saturday, July 29, 2006

Iraq Reconstruction and Creative Accounting

Congress and any number of Bush Administration agencies are far from investigating where all the money went in the infamous Iraq reconstruction projects (even the Halliburton contracts remain largely uninvestigated). Here's a story from The New York Times:
The State Department agency in charge of $1.4 billion in reconstruction money in Iraq used an accounting shell game to hide ballooning cost overruns on its projects there and knowingly withheld information on schedule delays from Congress, a federal audit released late Friday has found.

The agency hid construction overruns by listing them as overhead or administrative costs, according to the audit, written by the Special Inspector General for Iraq Reconstruction, an independent office that reports to Congress, the Pentagon and the State Department.

Called the United States Agency for International Development, or A.I.D., the agency administers foreign aid projects around the world. It has been working in Iraq on reconstruction since shortly after the 2003 invasion.


The hospital’s construction budget was $50 million. By April of this year, Bechtel had told the aid agency that because of escalating costs for security and other problems, the project would actually cost $98 million to complete. But in an official report to Congress that month, the agency “was reporting the hospital project cost as $50 million,” the inspector general wrote in his report.

The rest was reclassified as overhead, or “indirect costs.” According to a contracting officer at the agency who was cited in the report, the agency “did not report these costs so it could stay within the $50 million authorization.”

“We find the entire agreement unclear,” the inspector general wrote of the U.S.A.I.D. request approved by the embassy. “The document states that hospital project cost increases would be offset by reducing contractor overhead allocated to the project, but project reports for the period show no effort to reduce overhead.”

I can't see the difference between the games being played on Iraq reconstruction projects and a Bush signing statement. The 'law' is whatever Bush or a Bush appointee says it is. I'm sure at any moment Bush will be recognizing 'signing statements' by any corporation that contributes sufficient funds to the Republican Party. No doubt the current problems with U.S.A.I.D. can be traced to the same kind of problems that FEMA has: Bush Administration cronyism.


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