October 22, 2008 in Nation/World

U.S. contractor loses cash in Iraq

Report says money was listed as ‘expense’
By PAULINE JELINEK Associated Press

WASHINGTON – Say you lost $185,481 somewhere. Just expense it – Iraq style!

A U.S. contractor hired to teach Iraqis about good government lost that amount in cash, then claimed the loss as “an expense.”

And the U.S. government not only covered the loss, but paid the contractor tens of thousands of dollars more in special fees for overhead, according to a report by the Special Inspector General for Iraq Reconstruction.

“SIGIR questions this decision,” said the report, released Tuesday.

At issue is an admittedly small portion of money committed in a deal with the nonprofit Research Triangle Institute of North Carolina.

The institute was awarded two contracts in 2003 and 2005 valued at $598 million to help Iraqis work on building local government and representative councils across the country’s 18 provinces, said inspector general Stuart Bowen.

For one thing, Bowen said in Tuesday’s report, his auditors couldn’t figure out whether the U.S. government got what it paid for in the two huge contracts, partly because no process was put in place for laying out objectives and assessing success over the first four years of the contract. In other words, auditors tend to think that the contractor – and Iraqis – are making progress with the governance program, they just can’t prove it. Oversight of the contracts has been improved, Bowen said.

But then, there also was that matter of the missing cash.

During its work, the institute “lost $185,481 in cash,” Bowen’s report said. And with the agreement of the contracting agency – the State Department’s U.S. Agency for International Development – the institute “claimed the loss as an expense.”

In addition to getting the lost money back from the U.S. government, the institute also got an extra $57,000 – something USAID says is standard practice – in fees for administering contracts.

“On August 19, 2004, Research Triangle Institute physically lost $185,481 in Local Governance Project cash,” the report said. “It reported the loss to USAID, and on October 3, 2004, the USAID Iraq contracting officer issued a letter” stating the loss was “unforeseen” and not the institute’s fault.

Bowen’s office said it had no details on how or where the money was lost, and the institute and USAID didn’t immediately provide an explanation on Tuesday. RTI spokesman Patrick Gibbons said the money had been stored in safes in several offices around the country.

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