Development Fund for Iraq

In May 2003, following the invasion of Iraq in March of that year, the Central Bank of Iraq-Development Fund for Iraq (DFI) account was created at the U.S. Federal Reserve Bank of New York at the request of the Coalition Provisional Authority (CPA) Administrator. A part of the fund has been transferred to Baghdad and Iraq, and the DFI-Baghdad account was opened at the Central Bank of Iraq "for cash payment requirements". The fund also eventually received money (US$1.724 billion) from seized and "vested" Iraqi bank accounts and funds seized by coalition forces ($926.7 million). ($650 million) of this amount belongs to Uday Saddam Hussein, the older son of the former Iraqi president. (This money was also used during the transition period before the DFI was set up.) The DFI have been disbursed mainly for “the wheat purchase program, the currency exchange program, the electricity and oil infrastructure programs, equipment for Iraqis security forces, and for Iraqi civil service salaries and ministry budget operations”.

The DFI was put under the control of the Coalition Provisional Authority and the administrative arm of the US-UK occupation forces. International Advisory and Monitoring Board (IAMB) was created in United Nations Security Council Resolution 1483 (2003). IAMB is an independent oversight body for DFI and its principal role is to ensure transparency and financial accountability of the DFI. The IAMB was operated from the establishment of the DFI on May 22, 2003 until the dissolution of the CPA on June 28, 2004.

In October 2004, the audits conducted by IAMB and KPMG revealed the CPA’s inadequate accounting system. IAMB failed its oversight process for several months because of procedural disputes and US manipulation. During this time illegal export of petroleum was conducted secretly from Iraq, and a large amount of funds for DFI were disbursed without accountability. According to the audits conducted by the Special Inspector General for Iraq Reconstruction (SIGIR), US$8.8 billion of the US$23 billion of Iraqi money disbursed for DFI has not been accounted the use.

...
Wikipedia