$6.6 billion in lost Iraq cash now accounted for, inspector says

It's a rare day when positive news surfaces from the frontlines of Iraq's post-occupation government--or from its troubled economy. However, a U.S. Iraq inspector general report that concluded this week that $6.6 billion in shrink-wrapped cash the U.S. government previously feared had gone missing in the chaotic early days of the Iraq occupation has in fact been safely accounted for.

"The mystery of $6 billion that seemed to go missing in the early days of the Iraq war has been resolved, according to a new report," CNN national security producer Charles Keyes reported Wednesday. "New evidence shows most of that money, $6.6 billion, did not go astray in that chaotic period, but ended up where it was supposed to be, under the control of the Iraqi government, according to a report from the office of the Special Inspector General for Iraq Reconstruction or SIGIR."

Stuart Bowen, the special inspector general for Iraq reconstruction, had previously testified that as much as $6.6 billion of the $10 billion the United States shipped to Iraq had disappeared due to "weaknesses in [the Department of Defense's] financial and management controls," Keyes wrote, citing the bureaucratese from a previous SIGIR report.

The cash had in part been drawn from Iraq's own international assets, accrued during the pre-war, UN-run Oil for Food program. It was flown to Iraq in the wake of the U.S. 2003 invasion; the idea was that it would help pay for the Iraq reconstruction and development efforts under the Coalition Provisional Authority, the U.S.-led occupation outfit that dissolved in 2004. The original idea was to store most of the money in accounts in the Central Bank of Iraq; U.S. occupation authorities also apparently stored a few hundred million in a vault at one of Saddam Hussein's palaces they used as their headquarters for various cash needs.

After the Coalition Provision Authority dissolved in 2004, however, it wasn't clear where the funds had gone, the previous SIGIR report said. But apparently, the money was properly transferred to accounts held at the Central Bank of Iraq, the new SIGIR report found.

"But the inspector general's new report says almost all the $6.6 billion was properly handed over to Iraq and its Central Bank," Keyes writes. "'SIGIR was able to account for the unexpected [Development Fund of Iraq] funds remaining in DFI accounts when the [Coalition Provisional Authority] dissolved in June 2004,' the new report says. 'Sufficient evidence exists showing that almost all of the remaining $6.6 billion remaining was transferred to actual and legal [Central Bank of Iraq] control.'"

This is not to say that the mystery of all the billions and billions the U.S. spent in Iraq has been entirely resolved. The SIGIR report says that inspectors are still trying to piece together the fate of some of the few hundred million that U.S. officials stowed at one of Saddam Hussein's former palaces.

"While the bulk of the money was transferred to the Central Bank of Iraq, $217 million remained in a vault in a former presidential palace and was held by the U.S. Defense Department and most was doled out for a variety of projects and payrolls, the report says," Keyes reported. A February 2008 SIGIR audit found that $24.45 million of the $217 million stored at the palace vault remained, and was later turned over to Iraq.

The next SIGIR report on DoD spending on contracting projects in Iraq is expected in January 2012--after the formal withdrawal of the last U.S. troops from the country.

Other popular Yahoo! News stories:

Army Ranger on 14th deployment killed in Afghanistan
Iraq vet has fractured skull from 'police projectile' at Occupy Oakland: report
John Huntsman talks to Yahoo News about the tea party, the polls--and his hair
Shipwreck off Japan thought to be 13th century Kublai Khan "lost fleet"

Want more of our best national security stories? Visit The Envoy or connect with us on Facebook and on Twitter.