So, Robbie, you don't like NBC either?
What happened to Iraq's oil money?
Former U.S. official
says billions of dollars
were `squandered'
By Lisa Myers & the NBC investigative unit
NBC News
Updated: 7:21 p.m. ET Nov. 30, 2004After the U.S. invasion of Iraq,
the United States took control of all of the Iraqi government's bank
accounts, including the income from oil sales. The United Nations
approved the financial takeover, and President Bush vowed to spend
Iraq's money wisely. But now critics are raising serious questions
about how well the United States handled billions of dollars in
Iraqi oil funds.
Iraq's oil resources generate billions of dollars money the United
States promised to protect after overthrowing Saddam Hussein.
Now, Frank Willis, a former senior American official in Iraq, tells
NBC News the United States failed to safeguard the oil money known
as the Development Fund for Iraq.
"There was, in my mind, pervasive leakage in assets of Iraq, and to
some extent, those assets were squandered," says Willis.
Willis helped run Iraq's Transportation Ministry. He says government
agencies and private contractors had to be paid in cash because
Iraq's banking system was decimated.
"A lot of money did get to the Iraqi people at the grass-roots
level, and a lot of it got into the wrong hands," he says.
In one photograph, Willis and colleagues showed off a $2 million
payment to a security contractor.
"It was time for payment," he remembers. "We told them to come in
and bring in a bag. It reminded me of the Wild West."
In a series of reports on U.S. management of the oil money, auditors
working for the United Nation's Iraq Advisory and Monitoring Board
and the Inspector General of the Coalition Provisional Authority
found:
Insufficient controls
Missing records
Two sets of books at Iraq's Finance Ministry, which did not match
In one example of insufficient controls, the United States stored
hundreds of millions of oil dollars in a vault in a Baghdad palace.
Government auditors found that the key to the vault was
kept "unsecured" in a U.S. official's backpack.
Iraq's U.S. administrator, Paul Bremer, pledged last year to hire a
certified public accounting firm to ensure proper controls. But the
United States gave the contract not to an accounting firm but to a
tiny consulting company, Northstar which NBC News found is
headquartered at a private home near San Diego.
"They violated the rules. They picked a contractor who didn't meet
their requirements," says Paul Light, a government contracting
expert and professor at New York University.
Northstar's president says the Pentagon knew Northstar was not a
certified public accounting firm and that four experienced employees
went to Iraq and did a good job. However, one audit notes that a
single Northstar employee maintained spreadsheets tracking billions
of dollars.
Bremer would not comment. His aides say Iraq is a war zone and their
top priority was getting money quickly where it was needed, even if
the accounting wasn't perfect.
But NBC News has learned that a draft government audit faults the
United States for "inadequate stewardship" of up to $8.8 billion in
oil money, handed over to Iraq's ministries but never fully
accounted for.