Iraq Construction Contracts Under Scrutiny

Stuart Bowen, the special inspector general for Iraq reconstruction, tells Steve Inskeep about audits of billions of dollars worth of contracts overseen by the U.S. government. Bowen says the rebuilding work is on track, though his office continues to uncover fraud in spending.

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RENEE MONTAGNE, host:

This is MORNING EDITION from NPR News. I'm Renee Montagne, with Steve Inskeep.

A special inspector general who is reviewing reconstruction in Iraq is set to release a new report this weekend. The former member of George W. Bush's first gubernatorial campaign team talked with Steve Inskeep about rebuilding work in Iraq and whether US taxpayers are getting their money's worth.

STEVE INSKEEP, host:

Stuart Bowen's aggressive analysis has surprised both supporters and opponents. His last report on reconstruction pointed to criminal activity, waste and fraud among US contractors in Iraq. Now he's here with more reporting.

And Mr. Bowen, what's the situation now?

Mr. STUART BOWEN (Special Inspector General for Iraq Reconstruction): The reconstruction program is peaking. A thousand projects are completed. A thousand more are ongoing and thus, oversight is a necessary component now more than ever.

INSKEEP: Can you talk us through a specific project that has caught your attention and what you found in recent months?

Mr. BOWEN: In our latest report, we've looked at four water projects, and as you might expect, the results are all over the map. We did in our last quarterly report identify issues in Hillah, a town about 90 miles south of Baghdad. There were $7 million in Development Fund for Iraq money for which there was no accountability, no records.

INSKEEP: So this is $7 million of US government money.

Mr. BOWEN: No, it's Development Fund for Iraq money.

INSKEEP: Is this the UN?

Mr. BOWEN: That's right. It was the Iraqi oil revenue money that the Coalition Provisional Authority was in charge of administering. And unfortunately there were possible fraudulent activities occurring.

INSKEEP: Is this fraud on the part of US government officials or on the part of American contractors?

Mr. BOWEN: Both.

INSKEEP: Who are the contractors?

Mr. BOWEN: I'm not at liberty to identify those now. That's an ongoing case that is with the Department of Justice.

INSKEEP: Let's talk about what the contractors were supposed to be doing. What was their substantive goal here?

Mr. BOWEN: These were rapid response construction dollars. In other words, they were sent to Hillah to accomplish quick-turn projects like, for instance, a police station in Karbala or a library in Hillah, and we found out that not only were the projects not completed, the money that was allocated for these projects is missing.

INSKEEP: When you say rapid response construction, this is a situation where it's an unstable city and American officials want to spend a lot of money in the community rather quickly in order to build up good will. The lives of American soldiers and the future of the project in Iraq could be at stake here.

Mr. BOWEN: Well, that was certainly the policy spring of '04 and the summer of '04 because the turnover was coming on June 30th, and with that, the sovereignty over the Development Fund for Iraq would also turn over to the Iraqi government. And so there was a push to execute projects with Development Fund for Iraq funds.

INSKEEP: What did the US government officials and these contractors have to say for themselves when you came and asked them about this?

Mr. BOWEN: Well, they didn't have much to say because the lack of records spoke volumes, and the investigators are now talking to them and those who've worked on this and are learning much more.

INSKEEP: Billions of dollars in reconstruction funds have now been spent in Iraq, correct?

Mr. BOWEN: Yes.

INSKEEP: And I suppose you're in a unique position to tell how that money's been spent. You're not only auditing, you're traveling around Iraq. You're looking at projects.

Mr. BOWEN: That's right.

INSKEEP: Does Iraq look like billions of dollars have been spent rebuilding it over the last couple of years?

Mr. BOWEN: We need to put this in context. The World Bank did a study that said that for Iraq to be restored to a functioning level of infrastructure, $60 billion in investment was needed. The United States is investing about $23 billion in reconstruction. Donor countries are--have put in $2 billion to $3 billion. That's not even half of what's necessary to reach the World Bank's goal. Our mission in Iraq is to make a significant step towards rebuilding the country but it is not the rebuilding of Iraq. It had been left in such state of decay and we've made a good strong step towards bringing water, oil and electricity online.

INSKEEP: Are we getting our money's worth for the $23 billion?

Mr. BOWEN: I think that it's too early to answer that question fully. We've had significant problems. We've had security which has increased costs much more than anticipated. We've had three reprogrammings of construction priorities. I think that reconstruction is moving rapidly along, but we are by no means close to being finished.

INSKEEP: You mentioned, in fairness, some extenuating circumstances here, but are those really extenuating circumstances? Aren't those really indications of the lack of planning and foresight that went into this reconstruction?

Mr. BOWEN: No. I don't think anyone could have anticipated the level of insurgency and the diversity of its sources. The number-one drag on this entire process has been the security problem. It was just extremely difficult to anticipate.

INSKEEP: Stuart Bowen, the special inspector general for Iraq reconstruction, thanks very much.

Mr. BOWEN: Thank you.

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