Thursday, March 3, 2011

New Example Of Financial Mismanagement In Iraq

Back in September 2010 the United States Government Accountability Office (GAO) released a report on Iraq’s budget to see whether the country had a surplus or not. The GAO found that the Iraqi government’s financial records were such a wreck that it didn’t know how much it spent each year, or even how much it had in the bank. In mid-February 2011 Speaker of Parliament Osama Nujafi gave the latest example of this problem when he announced that $30-$40 billion was missing from the Development Fund for Iraq (DFI).

On February 21, 2011 Speaker Nujafi said that $40 billion from the Development Fund for Iraq (DFI) could not be found. The next day he changed the figure to $34 billion. Two parliamentary committees were going to be created to look into the matter. Nujafi stated that he didn’t know whether the money had been spent or not. A member of the Kurdistan Coalition later claimed that the funds had in fact been used by the Finance Ministry with the approval of Prime Minister Nouri al-Maliki. The DFI was created in 2003 to handle Iraq’s oil and gas revenues, which were under United Nations control since sanctions were applied in 1990 for Saddam Hussein’s invasion of Kuwait.

Some of the billions of dollars could’ve been stolen, but more likely it was just another instance of Baghdad not keeping track of its finances. As the GAO found, each fiscal year the government not only has money from the budget to spend, but additional billions of dollars in advances, which cannot be completely accounted for. The Finance Ministry also deposits its money in state run banks like the Central Bank of Iraq. Those institutions don’t have good record keeping either. That means the $30-$40 billion reported missing by Speaker Nujafi could’ve been spent or it’s sitting in a bank or a mixture of both. Hopefully most of it was expended, but there’s simply no way of telling due to the backward state of Iraq’s bureaucracy.


Agence France Presse, “$40 billion ‘missing’ from Iraq accounts,” 2/21/11

Al-Jawari, Fulaih, “Nujaifi orders investigation into $34m development fund expenditures,” AK News, 2/22/11

United States Government Accountability Office, “Iraqi-U.S. Cost-Sharing Iraq Has a Cumulative Budget Surplus, Offering the Potential for Further Cost-Sharing,” September 2010

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