Global Policy Forum

Iraq Oil Sales Concern Security Council

Associated Press
June 20, 2005

Members of the U.N. Security Council on Monday expressed concern over Iraq's handling of oil sales since the transfer of power from the U.S.-led coalition authority, after an audit reported shoddy accounting and mismanagement. The audit, by accounting firm KPMG, had found that Iraq's interim government mishandled about $100 million in oil money meant for development in the six months after they took power from the U.S. government on June 28 last year.

Members of the council got a briefing from Jean-Pierre Halbwachs, the outgoing controller and head of the International Advisory and Monitoring Board, which the council set up in 2003 to ensure the transparent operation of the Development Fund for Iraq. France's U.N. Ambassador Jean-Marc de La Sabliere said Halbwachs detailed some shortcomings exposed by the audit, released in May, and the fact that Iraq's monitoring of the money had not been sufficient.

"I think that all members of the council have acknowledged the efforts of the Iraqi government to improve the situation," de La Sabliere said. The audit had also found the now-defunct U.S. Coalition Provisional Authority used questionable accounting practices with money from the Development Fund for Iraq.

The audit was the third to be released since the board was set up by the U.N. Security Council in 2003 to ensure the transparent operation of the Development Fund, which receives Iraq's oil revenue as well as frozen assets from Saddam Hussein's ousted regime. The fund was controlled by the United States and Britain, Iraq's occupying powers, until the June 28, 2004, transfer of sovereignty to the new interim government, when it was handed over to Iraq's new leaders. The audit said Iraqi ministries were so behind the times that they were keeping financial records in paper notebooks.

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