Senate Committee Seeks Audit of Iraq Oil Money

By JAMES GLANZ

Two senior members of the Senate Armed Services Committee have requested a full accounting of how Iraq is spending its soaring oil revenue, amid starkly conflicting estimates of how much the country has invested in rebuilding its broken infrastructure and providing basic services to its citizens.

The request, sent Friday to David M. Walker, the top official at the United States Government Accountability Office, estimates that Iraqi oil revenue could skyrocket above $56 billion in 2008, largely because of the rising price of oil.

That enormous influx of cash comes as the United States has been reducing spending on the reconstruction effort. Since the invasion in 2003, the United States has invested close to $50 billion in reconstruction, but the effort has achieved at best mixed results when measured by improvements in the lives of Iraqi citizens.

Still, the American military and State Department continue to finance a wide range of relatively small reconstruction projects as well as training and equipment for Iraqi military forces.

Despite the dire need for better health care, more electricity and clean water, a functioning sewage system and other services, the accountability office has previously estimated that Iraq spent only 22 percent of the oil money set aside for reconstruction in 2006. And in January, the office, which is charged with overseeing the Iraqi government’s finances, reported that Iraq had spent a meager 4.4 percent of its 2007 reconstruction budget by August of that year, the most recent figures available at the time.

As a result, the letter from the Armed Services Committee says, “we believe that it has been overwhelmingly U.S. taxpayer money that has funded Iraq reconstruction over the last five years, despite Iraq earning billions of dollars in oil revenue over that time period that have ended up in non-Iraqi banks.”

The letter was signed by Senator Carl Levin, the Michigan Democrat who is the committee chairman, and Senator John W. Warner, a Virginia Republican who is a former chairman. Senator John McCain of Arizona, the ranking Republican on the committee and the presumptive Republican nominee for president, did not sign the letter.

Iraqi officials say they face many obstacles in what might seem to be a straightforward task: spending their plentiful money. Workers are attacked, engineers and contracting experts have fled government ministries, construction companies refuse to take jobs in risky areas and building materials are not available.

And if all of those factors were not daunting enough, the various Iraqi and American government entities involved cannot even agree on how much the notoriously opaque Iraqi bureaucracy has in fact spent on reconstruction.

Last fall, as Gen. David H. Petraeus, the top American commander in Iraq, and Ryan C. Crocker, the American ambassador to Iraq, reported to Congress on the state of the war, the Bush administration provided figures that contrasted sharply with those of the accountability office. The administration reported that by July 2007, Iraq had spent 24 percent of the $10 billion in oil revenue set aside for reconstruction that year.

The accountability office disputed those figures, saying they were based in part on projections that proved inaccurate. But in a recent phone interview, a senior Iraqi official gave even more bullish estimates of the expenditures. Citing official Iraqi Finance Ministry figures, the official, who spoke on condition of anonymity in order to provide information that had not yet been publicly released, said by the end of last year, Iraq had spent 63 percent of its capital budget, a leap over the previous year that would indicate rapid progress in governmental efficiency.

“It’s totally unacceptable that there’s no decent accounting for their money,” Senator Levin said in a telephone interview Saturday. “But the problem is our money. Why are we spending our money five years later when they have a surplus? That’s just extraordinary.”

In order to resolve some of these discrepancies and track down where the oil money has gone, the letter by Senators Levin and Warner asks the accountability office to answer a series of basic questions.

The senators requested detailed information on the amount of Iraqi oil revenue from 2003 to 2007, how much of that money has gone unspent, and “how much money does the Iraqi government have deposited, in which banks, and in what countries?”

Finally, Senators Levin and Warner ask the question looming over the entire rebuilding effort: “Why has the Iraqi government not spent more of its oil revenue on reconstruction, economic development and providing essential services for the Iraqi people?”

Also on Friday, Iraqi security forces discovered a mass grave containing the remains of about 100 people in Diyala Province, said Maj. Winfield Danielson, a spokesman for Multinational Forces-Iraq.

GAO Seeks Review of Spy Agencies

The Outgoing Chief Auditor Makes a Pitch on Capitol Hill

By Paul Kane
Washington Post Staff Writer
Friday, March 7, 2008; A15

As he leaves his post as the nation's top auditor, David M. Walker is again asking Congress to give the Government Accountability Office the power to review the finances of the CIA and other intelligence agencies.

Walker, whose 10-year term as comptroller general concludes Wednesday, is supporting legislation that would give the GAO access to the last major area of the federal government not subject to its audits and investigations.

With some support on Capitol Hill, Walker said he is fighting powerful legislative patrons of intelligence agencies, especially the CIA, who have resisted examinations of how taxpayer dollars are spent.

"Everybody's for accountability in Washington until they're the ones subjected to it," Walker said in an interview. "There are a lot of forces that are vested in the status quo."

The GAO, Congress's investigative arm, has the power to review the finances and management of most government agencies. But the Justice Department issued a ruling in the early 1990s that restricted oversight of the CIA to House and Senate select committees on intelligence.

That authority has been a sensitive topic since the Sept. 11, 2001, attacks, when information sharing between the CIA and law enforcement agencies that might have revealed the plot was bungled. More recently, the corruption scandal involving former congressman Randy "Duke" Cunningham (R-Calif.), who used his influence to steer intelligence contracts in return for bribes, has added to calls for more oversight.

Prompted by recommendations from the 9/11 Commission, the House and Senate in 2004 reorganized the way their committees oversee intelligence and homeland security issues. But the lawmakers have never pushed to allow the GAO to examine CIA spending. They have questioned whether the GAO is too closely aligned with the congressional majority and whether its investigators have the proper clearances to handle classified intelligence matters.

"You can't just sort of wander in and do this stuff like you're investigating FAA weather stations," said Sen. John D. Rockefeller IV (D-W.Va.), chairman of the Senate intelligence committee. Rockefeller called GAO investigations of the intelligence world a "rather bad idea" and suggested his committee should have more oversight authority, including the power to appropriate funds to intelligence agencies.

"The GAO does precisely what the majority [in Congress] asks them to do. It follows what the majority asks," said Sen. Pat Roberts (R-Kan.), who chaired the intelligence committee before Rockefeller. "I don't want any further politicization of intelligence."

Walker, however, said he is not asking to look into the "sources and methods" used by spy agencies. Instead, he wants the GAO to look into "basic management transformation challenges" such as how the CIA recruits and retains top talent and, more important, how the agency has allocated its multibillion-dollar budget.

The GAO is already empowered to examine the finances of the Defense Intelligence Agency, and it has highlighted many examples of waste, fraud and abuse. Walker said. "I have little doubt that those challenges exist within the intelligence community," he said.

The CIA disagrees. Mark Mansfield, a spokesman for the agency, said that in 2007, CIA officers testified at more than 60 hearings on Capitol Hill, gave more than 500 briefings, delivered 100 "congressional notifications about our most sensitive programs" and answered more than 1,200 on-the-record questions posed by members of Congress.

"That's hardly a culture of rejecting oversight. It's a recognition of the importance of it," Mansfield said. He said CIA critics have no basis for alleging that the agency is littered with waste.

Sen. Daniel K. Akaka (D-Hawaii), sponsor of the bill that would give the GAO access to the intelligence community, said there is no way to know about problems unless the GAO can wade into CIA finances and management strategies. But in a brief interview, Akaka said he doubts the bill can clear the chamber given the bipartisan questioning it faces.