TIMELINE OF KEY EVENTS April 30, 2005: Stuart Bowen, the special inspector general for Iraq reconstruction, issues a report questioning $120 million of oil proceeds spent in south-central Iraq. He recommends creating a database to match payments in all of Iraq to the officials who authorized them. Aug. 5, 2005: Robert Raggio incorporates Reviewer Management International (RMI) in Delaware, listing a residence in Babylon, N.Y., as the firm's business office. Sept. 24, 2005: RMI receives a $1 million contract to create the database. The contract eventually grows to $1.5 million. November 2005: Federal agents arrest contractor Philip Bloom and former U.S. contracting official Robert Stein, two of three people to plead guilty in connection with the scheme in south-central Iraq. June 13, 2006: Contracting officials extend RMI's eight-month contract by one month, telling the company for the first time that it should try "as time permits" to link payments to authorizing officials. Aug. 6, 2006: RMI delivers a database, but it cannot match all the payments to the officers who authorized them. August 2006: Workers in the U.S. contracting office in Baghdad begin creating a database able to link payments to authorizing officials. December 2006: U.S. contracting officials turn over the completed database and all paper records of contracts funded by oil proceeds to the Iraqi government. Jan. 29, 2007: Bowen's office issues a report detailing the problems with the RMI contract. Sources: Office of the Special Inspector General for Iraq Reconstruction; Joint Contracting Command Iraq; Delaware Division of Corporations

The result: Two years after uncovering one major fraud case, auditors still haven't determined whether there was more graft in the spending of Iraqi oil proceeds.

In April 2005, Stuart Bowen, the special inspector general for Iraq reconstruction, recommended creating a database to help review U.S. spending throughout Iraq. The recommendation followed the discovery of an $8.6 million bid-rigging scheme in south-central Iraq. Five months later, a U.S. contracting office in Baghdad hired Reviewer Management International (RMI) of New York to create a database that could link contracts with the officials who authorized them.

RMI, however, wasn't given adequate instructions until near the end of its $1.5 million contract and, as a result, didn't deliver a usable database, the inspector general's office found in a follow-up report released Jan. 29.

Employees in the Baghdad contracting office took on the project, completed the work and turned over the results to the Iraqi government in December. Bowen promised Congress that his office will investigate further.

Air Force Lt. Col. Joe Mazur of the Joint Contracting Command-Iraq said Bowen's report was accurate. He said RMI got a "sole-source contract." Such contracts are awarded without competitive bidding because only one company is considered qualified to do the work quickly enough. Mazur could not comment on the firm's qualifications because he was unable to find a copy of its proposal.

Robert Raggio, RMI's chairman and sole officer, did not respond to repeated telephone and e-mail messages seeking comment.

The United Nations gave the U.S.-led provisional Iraqi government control over the country's oil proceeds — an account called the Development Fund for Iraq (DFI) —— shortly after the 2003 invasion. U.S. agencies oversaw reconstruction projects using more than $7.3 billion of DFI money through the middle of 2006, U.N. auditors say.

In addition, Bowen's office has found U.S. officials transferred $8.8 billion in oil proceeds to interim Iraqi ministries without keeping track of the money.

Mismanagement of Iraqi money has angered some Democrats in Congress, who say it may have increased costs for the United States, which has spent $38 billion of taxpayer money on reconstruction.

"If this administration could not accomplish these (reconstruction) goals with Iraqi money, how can they be trusted to be good stewards over American taxpayer dollars?" asked Rep. William Lacy Clay, D-Mo., at a House oversight committee hearing in February.

Much of the Iraqi oil money spent by the United States was given in bundles of $100 bills to military officials and civilians to quickly pay for small-scale projects, Bowen's office has reported.

In 2004, the inspector general began investigating $120 million in cash provided to American officials at a regional reconstruction office in south-central Iraq. That probe led to the largest criminal fraud case in Iraq so far, which resulted in to three guilty pleas and charges against five others.

The military hired RMI in September 2005 to compile records of all similar cash transactions made throughout Iraq. Raggio incorporated the firm in Delaware less than seven weeks before getting the contract. State records show he listed the firm's office as a residence in Babylon, N.Y., and its principal place of business as Iraq.

Army contracting officials didn't tell RMI until granting a one-month extension to its eight-month contract that it should try "as time permits" to link payment records to the U.S. officials who authorized the spending, the report said.

Although the RMI database includes more than 300,000 entries, an unidentified military contracting official is quoted in the report as saying it is "only a collection of records that were not audited or effectively connected to one another."

Share this story:

 Digg del.icio.us Newsvine Reddit FacebookWhat's this?

Enlarge By Ali Al-Saddi, AFP Iraqi youths work at a construction site. A U.S. government audit pulled no punches in a report last month in which it said reconstruction efforts are hampered by widespread violence, corruption and bureaucratic snarls.