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Billions of Taxpayer Dollars Allegedly Lost in Iraq Reconstruction

The U.S.-led war in Iraq, now entering its fifth year, has cost hundreds of billions of dollars -- spending that both supports the American military effort and attempts to rebuild the battered nation. Auditors and other experts believe billions of dollars have been lost as a result of waste, fraud and fiscal abuse by war profiteers. A U.S. Senate committee has been studying what can be done to eliminate such problems. VOA's Sean Maroney reports.

Through its first four years, the total cost of the war in Iraq -- both in human lives and in monetary terms -- has far exceeded all projections. The Bush administration originally billed the war at $50 billion, but actual spending has been nearly 10 times higher, and is still growing.

Programs to rebuild Iraq consumed much of that spending, and U.S. lawmakers are trying to put a stop to profiteering that siphoned off billions of dollars intended to help the Iraqi people.

Senator Patrick Leahy explains: "The American people are sacrificing so far, half a trillion dollars. We'll at least double that amount [eventually]. They ought to make sure at least -- whether they agree with or oppose the war in Iraq -- they at least know that their tax dollars are being spent the way they should be."

Special Inspector General Stuart Bowen investigates alleged fraud in Iraq's reconstruction. He says there are many factors that make oversight difficult.

"One of the challenges in Iraq is putting together a case when there is no electronic trail to follow,” says Bowen. “There is no EFT -- electronic funds transfer -- in Iraq, which means you depend exclusively on individuals coming forward [to expose fraud]. And we're talking about individuals coming forward in an environment where their lives are threatened."

Bowen's office examined spending patterns several months ago on reconstruction projects in Iraq. The auditors found up to half of all money paid to U.S. government contractors goes to administrative costs rather than actual building work.

In one case, the report said, K.B.R. Incorporated, a subsidiary of the giant U.S. corporation Halliburton, billed the federal government $163 million for its overhead costs -- more than 55 percent of the budget for the full rebuilding project.

The audit also noted bureaucratic flaws that caused long delays, which in turn led to high administrative costs.

But Bowen says private contractors are not the only ones to blame for wasteful spending. "Corruption within the Iraqi government is a serious problem inhibiting all progress in Iraq. We have called it the 'second insurgency' in our reports."

In the course of 300 corruption cases the inspector general's office has opened, investigators found millions of dollars went to Iraqi officials in kickback schemes.

U.S. government lawyers say they expect more prosecutions in the future from investigations still under way.