The US Federal Reserve sent record payouts of more than $4 billion (€3.1 bn) in cash to Baghdad on giant pallets aboard military planes shortly before the United States gave control back to Iraqis, it has emerged.
The money, which had been held by the United States, came from Iraqi oil exports, surplus dollars from the UN-run oil-for-food program and frozen assets belonging to the ousted Saddam Hussein regime.
Bills weighing a total of 363 tons were loaded onto military aircraft in the largest cash shipments ever made by the Federal Reserve, said Henry Waxman, chairman of the House of Representatives Committee on Oversight and Government Reform.
"Who in their right mind would send 363 tons of cash into a war zone? But that's exactly what our government did," the California Democrat said during a hearing reviewing possible waste, fraud and abuse of funds in Iraq.
On December 12th, 2003, $1.5 billion was shipped to Iraq, initially "the largest pay out of US currency in Fed history," according to an e-mail cited by committee members.
It was followed by more than $2.4 billion on June 22, 2004, and $1.6 billion three days later. Sovereignty was returned to Iraq on June 28th.
Paul Bremer, who as the administrator of the Coalition Provisional Authority (CPA) ran Iraq after initial combat operations ended, said the enormous shipments were made at the request of the Iraqi minister of finance.
Democrats led by Mr Waxman also questioned whether the lack of oversight of $12 billion in Iraqi money that was disbursed by Mr Bremer and the CPA could have enabled insurgents to get their hands on the funds, possibly through falsifying names on the government payroll.
"I have no knowledge of monies being diverted. I would certainly be concerned if I thought they were," Mr Bremer said.
The special inspector general for Iraqi reconstruction, Stuart Bowen, said in a January 2005 report that $8.8 billion was unaccounted for after being given to the Iraqi ministries.
"We were in the middle of a war, working in very difficult conditions, and we had to move quickly to get this Iraqi money working for the Iraqi people," Mr Bremer said.