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June 2, 2006
The International Advisory and Monitoring Board (IAMB) on the Development Fund for Iraq (DFI) met in Washington, D.C. on May 30-31, 2006 and issued the following statement:
"The IAMB met to continue its oversight role over the use of resources of the DFI, which is the principal repository for Iraq's oil-export receipts and continued to oversee audits of the DFI.
"The IAMB was briefed by Ernst & Young, the appointed DFI auditor, on the status of the audit of the resources and disbursements of the DFI and of the oil export sales from July 1, 2005 to December 31, 2005. There has been slow progress to date. The IAMB reiterated the need for timely completion.
"In line with its earlier decisions, the IAMB requested an independent verification of the global settlement of all six DFI funded task orders under the Kellogg, Brown and Root (KBR) contract reached between the U.S. Government and KBR on December 22, 2005 as well as a review of the remaining sole-sourced contracts to determine whether excess costs were incurred that would be the subject of renegotiation. However, progress has been slow in executing these special audits: (i) the follow-up audit of sole-sourced contracts has only recently been awarded to KPMG; and (ii) the US Government is still in the process of identifying a suitable audit firm to complete the review of the KBR settlement. The IAMB urged the expeditious completion of these special audits.
"With the expiration of the IAMB mandate by December 31, 2006, the IAMB reiterated its earlier observations that it is important to continue the oversight role over oil export sales, and the resources therefrom. Building on the financial management law, an oversight body should be set up by the Government of Iraq that would be independent, competent and professional, to ensure the continued oversight of external audits. The IAMB will make recommendations on the modalities of an oversight body to the Government of Iraq.
"The Government of Iraq informed the IAMB in March that the Iraqi Ministry of Oil had concluded an agreement with the US Government to rebuild the metering system in the Basrah oil port of the Southern Oil State Company, funded by a grant from the US Government and expected to be completed by end-2006. In addition, a preliminary agreement has been entered into by the Government of Iraq with the Shell Oil Company to act as a consultant to the Iraqi Ministry of Oil in matters relating to metering and calibrating, which would include the establishment of a measuring system for the flow of oil, gas and related products within Iraq, and export and import operations, within the next two years. The IAMB welcomed the action the Government of Iraq is taking on the implementation of the IAMB recommendations, but continued to reiterate its concern that key actions, especially the installation of an oil metering system, needed to be comprehensive and were taking a long time to implement.
"The IAMB received a useful briefing from the President of the Iraqi Board of Supreme Audit (BSA) on progress towards strengthening of the BSA capacity, and a summary of the main findings of recent audits that have a bearing on the work of the IAMB and the financial position of the DFI, including relevant audits in regard of the oil extraction and sales. The IAMB supports the international BSA capacity building initiatives currently underway.
"As part of its oversight role over the use of resources of the DFI, representatives of the IAMB met with the Special Inspector General for Iraq Reconstruction (SIGIR) in Arlington, Virginia, on April 5, 2006 to seek clarification of recent SIGIR reports and to determine the impact of those reports on the DFI. SIGIR's reported concerns echo concerns consistently raised by the IAMB and the DFI external auditors regarding the use of DFI resources. SIGIR provided further clarifications to this meeting of the IAMB. In view of the number of exceptions reported by SIGIR and the DFI external audits, the IAMB is still not in a position to conclude that all DFI monies have been accounted for and that all DFI resources have been used for the benefit of the Iraqi people.
"The next meeting of the IAMB is tentatively scheduled for July 17–18, 2006."