Between April 2003 and June 2004, the Federal Reserve shipped $12 billion to help run war-ravaged Iraq. Most of the money came exclusively from assets frozen in US banks dating back to the 1990 Gulf War. Now it appears that $9 billion of that money has gone missing. Washington failed to keep track of the money once it left American soil. The cash was put into the hands of the Coalition Provisional Authority which turned out to be no CPA. And in the mismanagement and greed, an unknown firm with a PO box in the Bahamas was put in charge of auditing.

The full shocking account is contained in this piece from Donald Bartlett and James Steele in the October edition of Vanity Fair.

The report implicates not only the CPA but other contractors in what amounted to widespread fraud and corruption.

"C.P.A. officials tried to keep a rough running tab on the amount disbursed to individual Iraqi agencies such as the Ministry of Finance ($7.7 billion). But there was little detail, nothing specific, on how the money was actually used. The system basically operated on "trust and faith," as one former C.P.A. official put it. Once the cash passed into the hands of the Iraqis or any other party, no one knew where it went. The C.P.A. turned over $1.5 billion in cash to Iraqi banks, for instance, but later auditors could account for less than $500 million. The United Nations retained a team of auditors to look over American shoulders. They didn't see much, because they were largely cut off from access while the C.P.A. held power. As a report by the U.N.'s accounting consultant, KPMG, noted dryly, 'We encountered difficulties in performing our duties and meeting with key C.P.A. personnel.'

" 'There was corruption everywhere,' said one former military officer who worked with the C.P.A. in Baghdad in the months after the invasion. Some of the Iraqis who were put in charge of ministries after Saddam's fall had never run a government agency before. Their inexperience aside, he said, they lived in constant fear of losing their jobs or their lives. All many cared about, he added, was taking care of themselves. "You could see that a lot of them were trying their best to get a quick retirement fund before they were ousted or killed," he added. 'You just get what you can while you're in that position of power. Instead of trying to build the nation, you build yourself.'

"Did any withdrawals from the vault pay for secret activities by government personnel? It is an obvious possibility. Much of the cash was clearly destined for American contractors or Iraqi subcontractors. Sometimes the Iraqis came to the palace to collect their cash; other times, when they were reluctant to show up at the American compound, U.S. military personnel had to deliver it themselves. One of the riskier jobs for some U.S. military men was to fill up a car with bags of cash and drive the money to contractors in Baghdad neighborhoods, handing it over like a postal worker delivering mail.

" 'Fraud' was simply another word for 'business as usual.' Of 8,206 'guards' drawing paychecks courtesy of the C.P.A., only 602 warm bodies could in fact be found; the other 7,604 were ghost employees. Halliburton, the government contractor once headed by Vice President Dick Cheney, charged the C.P.A. for 42,000 daily meals for soldiers while in fact serving only 14,000 of them. Cash was handed out from the backs of pickup trucks. On one occasion a C.P.A. official received $6.75 million in cash with the expectation he would shell it out in one week. Another time, the C.P.A. decided to spend $500 million on 'security.' No specifics, just a half-billion dollars for security, with this cryptic explanation: 'Composition TBD'-that is, 'to be determined.'

Read through this. It's a chilling account. At the end of the day, it's impossible to calculate the human cost of this war. But in monetary terms, as the writers point out, the amount has been grossly inflated by fraud and corruption.