U.S. Officials Suspected of Embezzlement in Iraq

WASHINGTON — The U.S. government has opened a criminal inquiry into suspected embezzlement by officials who failed to account for almost $100 million they disbursed for Iraqi reconstruction projects, federal investigators said Wednesday.

Auditors have been unable to fully document how the money was allocated to Iraqi workers by a small group of officials working from a U.S. outpost in Hillah, according to an audit report released Wednesday by Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction.

The auditors found "significant" problems in the Hillah office, including one case in which an official fired for mishandling funds was allowed to continue disbursing money nearly a month after his termination.

The case is the first time U.S. government officials have been investigated for a suspected major corruption scheme involving the Iraq reconstruction. The rebuilding effort has been marred by allegations against Iraqis as well as contractors from the United States and elsewhere.