The Report
of the Iraq Inquiry
The US
General Accountability Office (GAO) estimated that almost US$21bn
was
deposited
into the DFI during the Coalition Provisional Authority (CPA)
period, of which
On 10 June
2003, the CPA issued a regulation that gave Ambassador Paul
Bremer,
as
“Administrator of the CPA”, authority to oversee and control the
establishment,
administration
and use of the DFI and to direct disbursements from the DFI “for
those
purposes he
determines to be for the benefit of the Iraqi
people”.226
The
regulation also established a Program Review Board (PRB) to develop
funding
plans and
make recommendations to Ambassador Bremer on expenditures from the
DFI,
“in consultation
with the Iraqi interim administration, when
established”.
The CPA
issued a further regulation on 18 June, detailing the operation of
the PRB.227
Voting
members of the PRB included representatives of the Iraqi Ministry
of Finance and
the
UK.
The Inquiry
has seen the records of 60 meetings of the PRB (held between 7
June
2003 and 2
June 2004).228
Of those
records, 55 list the meeting’s attendees. A UK
representative
attended 41 of the 55 meetings. The UK was represented by a
junior
official on
36 occasions and by a senior official on five.
In March
2004, after an international competitive bidding process, the
International
Advisory
and Monitoring Board (IAMB) approved the appointment of KPMG to
audit DFI
activities.229
A Treasury
briefing stated that the CPA had used that process to
re-open
debate on
the scope of the IAMB’s mandate under resolution
1483.230
The CPA
signed the contract with KPMG to audit the DFI on 5 April 2004 –
almost
one year
after resolution 1483 and less than three months before the CPA
would be
KPMG
delivered its first audit reports, covering oil export sales and
DFI operations from
May to
December 2003, to the IAMB at the end of June 2004.232
The IAMB’s
response to the KPMG reports stated:
“KPMG has
concluded that all known oil proceeds, reported frozen assets,
and
transfers
from the Oil for Food Program had been properly and
transparently
accounted
for in the DFI. At the same time, based on a review of KPMG
reports, the
IAMB
believes that CPA controls were insufficient to provide reasonable
assurance
(i) for the
completeness of export sales of petroleum and petroleum products
for
225
US General
Accountability Office, Report to Congressional Committees, July
2005, Status of
funding
and
reconstruction efforts.
226
Coalition
Provisional Authority, Regulation No.2, 10 June 2003,
Development
Fund for Iraq.
227
Coalition
Provisional Authority, Regulation No.3, 18 June 2003,
Program
Review Board.
228
Coalition
Provisional Authority website, [undated], Program
Review Board Minute Archive.
229
International
Advisory and Monitoring Board on Iraq website, 24 March
2004, Statement
by the
International
Advisory and Monitoring Board on Iraq.
230
Briefing
Treasury, [undated], ‘Meeting with Gary Edson, NSC – Thursday
5th
February
[2004]’.
231
International
Advisory and Monitoring Board on Iraq website, 5 April 2004,
Statement
by the
International
Advisory and Monitoring Board on Iraq.
232
Report
KPMG, 29 June 2004, ‘Development Fund for Iraq: Statement of Cash
Receipts and Payments
For the
Period from 22 May 2003 to 31 December 2003 (with Independent
Auditors’ Report)’.
434