Iraq coalition blocks UN auditors

An interim reported leaked to the Financial Times criticised the US occupation authority for the way it spends Iraqi oil revenues and say they have faced 'resistance' to performing their job by coalition officials.

KPMG said the Development Fund for Iraq, which is managed by the US-led Coalition Provisional Authority (CPA) and channels oil revenue into reconstruction projects, is 'prone to error' and at risk of fraud.

The firm said the resistance encountered could prevent it from meeting its 30 June deadline to complete work, when the CPA is dissolved and cedes sovereignty to an Iraqi government.

Auditors are reporting to the International Advisory and Monitoring Board (IAMB), a watchdog set up by the UN Security Council in May last year to oversee coalition spending from the Development Fund for Iraq (DFI) - an account containing Iraqi oil revenues, frozen assets and funds left over from the UN's oil-for-food programme.

The investigation into the missing £5.6bn oil-for-food programme money was originally handed to KPMG, but has since been given to Ernst & Young, following a public tender.