BAGHDAD - An Iraqi mechanism set up to help track Baghdad's use of its oil wealth suffers from poor management, flawed accounting systems and weak internal controls, a United Nations watchdog agency reported yesterday.
A draft audit report prepared by Ernst & Young for the International Advisory and Monitoring Boardand covering oil exports for the second half of last year criticised a range of Government efforts to account for oil sales and Baghdad's use of the proceeds. Oil is the country's main source of hard currency needed to rebuild after years of war, and the energy sector is struggling to recover from years of mismanagement and UN sanctions that were lifted after the US-led 2003 invasion.
The oil sector has suffered from sabotage and poor maintenance, but the audit made clear that it also suffers from mismanagement, leaving the door open to smuggling and corruption.
Corruption in the energy industry has cost Iraq hundreds of millions of dollars, the general inspector of the Ministry of Oil has estimated.
The board was created by the UN Security Council in 2003. The new Government has allowed it to remain in place, to reassure the international community it is managing its vast oil reserves wisely and for the benefit of the Iraqi people.
