A week ago we reported on the case of the "The Largest Theft Of Funds In National History" or the missing $6.6 billion in Iraq war reconstruction funding, which was literally composed of "shrink-wrapped bricks of $100 bills", which was part of a $20 billion total in "Marshall Plan" investment meant to stimulate the post-war economy. When discussing this so far undisclosed cash loss, "Stuart Bowen, special inspector general for Iraq reconstruction, an office created by Congress, said the missing $6.6 billion may be "the largest theft of funds in national history." Two new developments have emerged in this fascinating story. The first, as CNBCs Eamon Javers reports is that "The New York Fed is refusing to tell investigators how many billions of dollars it shipped to Iraq during the early days of the US invasion there." Javers adds: "The Fed's lack of disclosure is making it difficult for the inspector general to follow the paper trail of billions of dollars that went missing in the chaotic rush to finance the Iraq occupation, and to determine how much of that money was stolen." Well, for what it's worth, we may have an estimate of this largest war theft ever: talking to Al Jazeera, "Osama al-Nujaifi, the Iraqi parliament speaker, has told Al Jazeera that the amount of Iraqi money unaccounted for by the US is $18.7bn - three times more than the reported $6.6bn." If indeed the total theft amounts to virtually the entire amount of reconstruction spending that could possibly explain why the Fed is so coy in discussing this issue. Alas, just like the Fed's multitrillion bailout of the financial system, it is unlikely it will be able to keep the topic from reemerging, and that very soon - al-Nujaifi adds: "There is a lot of money missing during the first American administration of Iraqi money in the first year of occupation. "Iraq's development fund has lost around $18bn of Iraqi money in these operations - their location is unknown. Also missing are the documents of expenditure. "I think it will be discussed soon. There should be an answer to where has Iraqi money gone." Who will be the next Mark Pittman to sue the New York Fed to get the required information on how much cash the FRBNY was complicit in "disappearing" - we can't wait to find out.
The Bush administration flew in a total of $20bn in cash into the country in 2004. This was money that had come from Iraqi oil sales, surplus funds from the UN oil-for-food programme and seized Iraqi assets.
Officials in Iraq were supposed to give out the money to Iraqi ministries and US contractors, intended for the reconstruction of the country.
The Los Angeles Times reported last week that Iraqi officials argue that the US government was supposed to safeguard the stash under a 2004 legal agreement it signed with Iraq, hence making Washington responsible for the cash that has disappeared.
Pentagon officials have contended for the last six years that they could account for the money if given enough time to track down the records.
The US has audited the money three times, but has still not been able to say exactly where it went.
Al Jazeera's Iraq correspondent, Jane Arraf, reporting from Baghdad, said: "It's an absolutely astonishing figure - this goes back to 2003 and 2004.
"There is going to be a fairly wide net cast - some of them [involved in mishandling of this money] are thought to be US officials, but many here believe that it is the Iraqis who have filled their pockets.
"Safeguarding the money was up to the Americans ... after the invasion, provisional authority here was run by the American military.
"Piles and piles of shrink-wrapped US dollars came here, but the cash coming in is not the important part - it is what happened to it after [it got here].
"There are no documents to indicate who got it, where it was spent and what was ever built from it."