9 ways the US wasted taxpayer money in Iraq

How does $8 billion in taxpayer dollars simply disappear? Look no further than the report out Wednesday by Stuart Bowen, the special inspector general for Iraq reconstruction.

The report details all the U.S. spending on rebuilding Iraq, including the billions lost to corruption, mismanagement, theft and fraud. Bowen told Wired that $8 billion of that money was wasted outright -- and that's a conservative estimate.

Overall, more than $60 billion in taxpayer dollars went to rebuild Iraq -- a far cry from the $2.4 billion fund Congress initially set up for Iraq reconstruction shortly after the March 2003 invasion.

Even now, there is little evidence that the money did any real good in the country or helped its citizens. "With all the money the U.S. has spent, you can go into any city in Iraq and you cannot find one building or project" built by the U.S. government, Acting Minister of Interior Adnan al-Asadi said in the report. "You can fly a helicopter around Baghdad or other cities, but you cannot point a finger at a single project that was built and completed by the United States."

The 171-page report is truly remarkable, and is a grenade lobbed into the deficit discussion now under way in Congress.

From the report, here are nine ways taxpayer money was wasted in Iraq.

1. Huge overbillings. One Dubai company, Anham, won a $300 million contract to run two warehouse and distribution facilities. Auditors found hugely inflated charges, including $3,000 for a circuit breaker valued at $94, $80 for a PVC plumbing elbow valued at $1.41, and $900 for a control switch valued at $7.05.

2. Unfinished projects. The U.S. government spent nearly $40 million to fix a prison in the Diyala province. The first contractor, Parsons Delaware, fell behind schedule by 990 days. The three subsequent contractors couldn't finish the job. In 2007, the U.S. pulled out of the project, and the prison is still dormant and will probably never be used.

3. Bribes and money laundering. Why was a convicted felon overseeing hundreds of millions of dollars in reconstruction funds? Robert Stein used a "rigged bidding process," according to the report, to award 20 contracts valued at more than $8.6 million. The man who won the contracts, Philip Bloom, spent the money on fancy cars, computers, jewelry and airline tickets. He laundered more than $2 million in cash stolen from a vault, the report said. Stein received nine years in prison and Bloom received 46 months in prison. Six others either went to prison or were placed under house arrest.

4. Excessive spending. One school administrator requested $10,000 for a small school refurbishment project. But U.S. authorities insisted on providing $70,000, which the report called "a needless waste." A health clinic cost $345 million, more than 40% over budget. A children's hospital (pictured) went 200% over budget, fell four years behind schedule and is still incomplete.

5. Poor coordination with Iraqi officials. The U.S. spent more than $1 billion to develop a police department program that officials said was unnecessary. After wasting about $200 million on the project, the U.S. downsized the program by 90%.

6. Not enough Iraqi approval. The U.S. didn't get enough buy-in from Iraqis for major projects. So the U.S. would plow money into a project, but no one on the Iraqi side would step up to accept the project or maintain it when complete. A $32 million project to build a financial management information system failed, for example, because no one in Iraq was interested in learning how to use it.

7. Incorrect accounting. In several cases, the costs for individual projects didn't match in different government databases. Sometimes, the costs on record were just the estimated costs, not the actual costs. In other cases, the money spent on a contract was multiplied dramatically due to erroneous reporting.

8. Missing data. Some of the money spent was not accounted for in agency databases. It's unclear if this was due to data-entry problems or something more sinister, such as fraud, the report said.

9. Inadequate contractors. The U.S. spent millions of dollars on contracts to fix the Mosul Dam on the Tigris River. But $19 million in equipment and materials went unused. And the project was poorly designed, inadequately executed and had no dedicated supervisor.

There were some positive stories in the report. The most successful of all the large infrastructure projects may have been the $185 million Ifraz water treatment plant, which served 600,000 people in Erbil. The plant was later expanded by Kurdish water authorities.

But overall, the report provides ample evidence that the U.S. went about reconstruction in the wrong way. "You think if you throw money at a problem, you can fix it," Kurdish government official Qubad Talabani, son of Iraqi president Jalal Talabani, was quoted as saying in the report. "It was just not strategic thinking."

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