Audit Finds U.S. Hid Actual Cost of Iraq Projects

NYT

BAGHDAD, Iraq, July 29 — 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 in Iraq 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 and the Pentagon.

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

The report by the inspector general’s office does not give a full accounting of all projects financed by the agency’s $1.4 billion budget, but cites several examples.

The findings appeared in an audit of a children’s hospital in Basra, but they referred to the wider reconstruction activities of the development agency in Iraq. American and Iraqi officials reported this week that the State Department planned to drop Bechtel, its contractor on that project, as signs of budget and scheduling problems began to surface.