THE BURNED OVER DISTRICT

Just like they did to Al Capone. The NY Times has the report of another government agency mishandling large sums of money in Iraq.

The State Department agency in charge of $1.4 billion in reconstruction money in Iraq used an accounting shell game to hide ballooning cost overruns on its projects there and knowingly withheld information on schedule delays from Congress, a federal audit released late Friday has found.

The agency hid construction overruns by listing them as overhead or administrative costs, according to the audit, written by the Special Inspector General for Iraq Reconstruction, an independent office that reports to Congress, the Pentagon and the State Department.

Called the United States Agency for International Development, or A.I.D., the agency administers foreign aid projects around the world. It has been working in Iraq on reconstruction since shortly after the 2003 invasion.

The report by the inspector general’s office does not give a full accounting of all projects financed by the agency’s $1.4 billion budget, but cites several examples.

And some of those examples.

In another case cited in the report, a power station project in Musayyib, the direct construction cost cited by the development agency was $6.6 million, while the overhead cost was $27.6 million.

The result is that the project’s overhead, a figure that normally runs to a maximum of 30 percent, was a stunning 418 percent.

The figures were even adjusted in the opposite direction when that helped the agency balance its books, the inspector general found. On an electricity project at the Baghdad South power station, direct construction costs were reported by the agency as $164.3 million and indirect or overhead costs as $1.4 million.

That is just 0.8 percent overhead in a country where security costs are often staggering. A contracting officer told the inspector general that the agency adjusted the figures “to stay within the authorization for each project.”

One has to wonder if The Glorious Little War was started just to increase the opportunities for fraud.