U.S. PAID IRAQ CONTRACTORS BILLIONS WITH DUFFEL BAGS OF CASH

U.S. was big spender in days before Iraq handover:

"The United States handed out nearly $20 billion of Iraq's funds, with a rush to spend billions in the final days before transferring power to the Iraqis nearly a year ago, a report said on Tuesday.

A report by Democratic Rep. Henry Waxman of California, said in the week before the hand-over on June 28, 2004, the U.S.-led Coalition Provisional Authority ordered the urgent delivery of more than $4 billion in Iraqi funds from the U.S. Federal Reserve in New York.

One single shipment amounted to $2.4 billion -- the largest movement of cash in the bank's history, said Waxman.

Most of these funds came from frozen and seized assets and from the Development Fund for Iraq, which succeeded the U.N.'s oil-for-food program. After the U.S. invasion, the U.N. directed this money should be used by the CPA for the benefit of the Iraqi people.

Cash was loaded onto giant pallets for shipment by plane to Iraq, and paid out to contractors who carried it away in duffel bags.

The report, released at a House of Representatives committee hearing, said despite the huge amount of money, there was little U.S. scrutiny in how these assets were managed.

'The disbursement of these funds was characterized by significant waste, fraud and abuse,' said Waxman.

An audit by the U.S. Special Inspector General for Iraq Reconstruction said U.S. auditors could not account for nearly $8.8 billion in Iraqi funds and the United States had not provided adequate controls for this money.

'The CPA's management of Iraqi money was an important responsibility that, in my view, required more diligent accountability, pursuant to its assigned mandate, than we found,' said chief inspector Stuart Bowen in testimony.

CASES OF ABUSE

Auditors found problems safeguarding funds including one instance where a CPA comptroller did not have access to a field safe as the key was located in an unsecured backpack."