Army in Iraq Is No Paymaster

Millions of dollars in Army payments made in Iraq and nearby countries, many in cash, have gone undocumented since 2001, says the Inspector General.

A new audit report from the Inspector General of the Department of Defense estimates that $1.4 billion out of a total of $10.7 billion in payments made by the U.S. Army in Iraq, Kuwait, and Egypt between 2001 and 2006 lacked the “minimum supporting documentation” to assure they were used as intended.

The Inspector General’s office says an additional $6.3 billion in payments had sufficient documentation, but did not comply with other laws and regulations. The report, Internal Controls Over Payments Made in Iraq, Kuwait and Egypt, was issued Thursday, the same day the Senate passed a bill that included $165 billion in funds for military operations in Iraq and Afghanistan meant to last through next spring. The bill has not yet been approved by the House.

According to the Inspector General’s report, the Army made 183,486 commercial and miscellaneous payments, totaling $10.7 billion, from seven disbursing stations in Iraq, Kuwait, and Egypt between April 2001 and June 2006. The Inspector General’s office examined 789 payments totaling $3.5 billion, and extrapolated from that to conclude that $1.4 billion of those payments lacked the documentation needed to show that the funds had not been subject to “fraud, waste, or abuse.”

“We do not agree with the methodology used by the Office of the Inspector General, Department of Defense to estimate the projected dollar amount of payments lacking missing information or supporting documentation,” wrote Undersecretary of Defense Deputy CFO James E. Short in a response. “We believe that the projections are misleading and invalid.”

In 23 cases, the Inspector General’s report says it found no proof that the Army had received the goods or services for which it had paid. One payment of $11.1 million was missing both the receiving report and invoice. “This payment was to a U.S. company; however, we could not identify the goods or services purchased,” the report says, adding that, as a result, “The legitimacy of the payment is questionable.” Similarly, a voucher for a $963,750 cash payment was missing both the invoice and receiving report, preventing the Inspector General from determining “whether the vendor was legally entitled to payment.”

In 5 cases, the report alleges, Army finance personnel paid vouchers that were not signed as required by an authorized officer. Three of those vouchers exceeded $8 million. In 15 cases, Army finance personnel made cash payments totaling $5.1 million to vendors without documentation showing payee signatures that the vendors actually received the cash, according to the report. Three of the 15 vouchers were for more than $500,000, and were made to a U.S. company and two Iraqi companies for security services, trailers, and renovations. “Without the payee’s signature,” the report notes, “a disbursing officer may be unable to prove that proper payment was made and could be required to make the payment again.” The report also says that in 31 cases, including one $3.3 million payment to a Jordanian company for bottled water, payment vouchers were missing contract numbers, making it difficult to match the payment to the contract. Two other vouchers, including one for $303,716, were missing entirely, the report claims.

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