Watchdog group calls on UN to extend Iraqi oil oversight board mandate

By OGJ editors
WASHINGTON, DC, Apr. 21 -- Time is running out to get a full and fair accounting of Iraq's existing oil revenues, an international watchdog group charged Wednesday.

"There is not enough time left to cram in an audit of more than a year's worth of expenditures, many of which have not been accounted for," said Svetlana Tsalik, director of the Open Society Institute's (OSI) Iraq Revenue Watch.

The monitoring group in charge of overseeing Iraq's oil revenues has less than 3 months to account for billions of dollars of Iraqi funds spent by the US Coalition Provisional Authority (CPA), the group said. Tsalik said that the International Advisory and Monitoring Board (IAMB) cannot provide accurate accounting for this money unless it is able to work beyond June 30, when CPA is scheduled to hand over power to an Iraqi interim government.

OSI called on the UN Security Council to extend the board's mandate as long as necessary to complete a full audit of the Development Fund for Iraq (DFI) under coalition management. The report also urges IAMB to provide opportunities for Iraqis to participate in the board's work on equal footing with current members. "Iraqi partnership in the IAMB is crucial to the legitimacy of the board's conclusions and the continuity of its work," said Tsalik.

CPA officials could not be immediately reached for comment on the OSI report.

CPA ultimate authority
After months of political wrangling between the US and the UN, IAMB was created last October to oversee the management of DFI, the main repository for Iraq's oil revenues (OGJ Online, Nov. 7, 2003).

IAMB members include the UN, the World Bank, the International Monetary Fund, and the Arab Development Fund. CPA still has final authority over how funds are spent, regardless of what IAMB's findings may be.

In a long-awaited action, CPA announced Apr. 5 that KPMG Audit and Risk Advisory Services would be performing audits on behalf of IAMB. The partners associated with the contract will be Michel Picard and Abdul-Hakim Al-Adhamy, CPA officials said.

OSI said a full accounting is needed because of the "substantial" amounts of money involved. According to CPA, the fund has received $6.9 billion in crude oil export revenues, $3.8 billion in frozen and seized assets from Saddam Hussein's regime, and $4 billion in leftover UN Oil-for-Food program funds.

Meanwhile CPA has spent more than $7 billion in DFI funds on infrastructure, administration, security, and other projects, without any independent monitoring or supervision, OSI said.

Since IAMB began work in December, it has expressed concern over the use of DFI funds to pay for a contract awarded to Halliburton Co. with no competitive bidding.

IAMB also urged CPA to begin metering extracted Iraqi crude immediately in order to further control smuggling. IAMB also questioned the use of barter transactions for certain oil sales.

CPA is investigating the smuggling and barter issues. It also has promised to consider ways to ensure that equivalent proceeds from barters are placed into DFI in accordance with UN resolution UNSCR 1483.