U.S. Firms Suspected of Bilking Iraq Funds

American contractors swindled hundreds of millions of dollars in Iraqi funds, but so far there is no way for Iraq's government to recoup the money, according to US investigators and civil attorneys tracking fraud claims against contractors.

Courts in the United States are beginning to force contractors to repay reconstruction funds stolen from the American government. But legal roadblocks have prevented Iraq from recovering funds that were seized from the Iraqi government by the US-led coalition and then paid to contractors who failed to do the work.

''The Iraqi people are out of luck, the way it stands right now," said Patrick Burns, spokesman for Taxpayers Against Fraud, a watchdog group.

In some cases, contractors were paid twice for the same job. In others cases, they were paid for work that was never done.

Among the contracts paid for was Halliburton's controversial no-bid contract to restore Iraq's oil infrastructure, worth $2.4 billion. In addition, at least seven more cases against contractors have been filed in US civil courts under the federal False Claims Act.

In the first phase of the fraud claim involving Custer Battles, the jury ruled in March that the company should pay triple damages to the US Treasury for the $3 million it was paid for delivering a fleet of trucks that didn't work and old, spray-painted Iraqi cranes that were passed off as new imports.

Lawyers said the injustice surrounding wasted Iraqi funds has helped fuel the insurgency. ''Like a colonial power, the Bush administration took Iraq's oil money, and wasted it. The Iraqis well know that. That's one reason why they're shooting at US soldiers."

In February, a North Carolina man pleaded guilty to conspiring with at least three others to steal more than $2 million from the Iraqi fund. The money, earmarked for refurbishing a police academy and library in the town of Hillah, was spent on expensive cars, machine guns, jewelry; hundreds of thousands of dollars in cash was also smuggled into the United States.

[Excerpt of an article by Farah Stockman, Boston Globe]