Audit Finds All UN Oil-for-Food Money Was Properly Transferred to New Iraq Fund
Audit Finds All UN Oil-for-Food Money Was Properly
Transferred to New Iraq Fund
New York -- (UNNC) December
14, 2004 – All known oil proceeds,
reported frozen assets and transfers from the now-defunct United Nations
Oil-for-Food programme have been "properly
and transparently accounted for" in the coalition-managed Development Fund for
Iraq (DFI), according to findings released today based on an audit by the firm
The announcement was made by the International Advisory and Monitoring Board
Iraq (IAMB), a body which brings together Iraq, the UN and other
international partners to ensure the appropriate use of the DFI.
Releasing a report based on the KPMG audit, the IAMB noted that the firm had
qualified its opinions of DFI statements of cash receipts and payments because
of weaknesses in control over the process of oil extraction, including the
absence of metering. In addition, there were control weaknesses in the
administration of resources handled by the Coalition Provisional Authority
(CPA), which ran the country before an interim Iraqi administration was set up
The report also identified inadequate controls at Iraqi ministries, citing "the
absence of reconciliation procedures, insufficient payroll records, deviation
from tendering procedures and inadequate contract monitoring by the CPA."
The IAMB was informed by the CPA that
some of Iraq's oil resources were not accounted for and had been smuggled.
Welcoming controls put in place to stem the problem, the Board called on the
Baghdad Government "to enhance these measures so as to curtail smuggling."
One key concern voiced by the Board in previous reports relates to the use of
sole-sourced contracts. The IAMB noted, at its March meeting, that some
contracts using DFI funds had been awarded to a subsidiary of Halliburton
without competitive bidding. In April, the IAMB asked the CPA for additional
information on the matter, including access to audits of the sole-sourced
contracts that had been conducted by the United States Defense Contract Audit
Edited copies of the DCAA reports were provided to the IAMB in October. "The
US observer informed the IAMB that portions of the reports had been redacted by
the DCAA to safeguard proprietary information of the concerned parties." The
versions received by the IAMB "highlight many shortcomings, including:
non-completion of the required technical evaluations, unsupported costs and
The IAMB has agreed to a recent US Government proposal to conduct a special
audit of sole-sourced contracts. That review, due to be conducted early next
year, will ultimately produce a public report.