American-led efforts to establish a civilian government in Iraq were further damaged yesterday by reports in Washington that the Pentagon is investigating allegations of high-level corruption within the Coalition Provisional Authority (CPA).

The CPA refused to comment yesterday on the claims that two of its officials and a senior Iraqi politician are being investigated for allegedly taking bribes over contracts for mobile telephone networks.

The controversy broke out as a civilian aircraft flying out of Baghdad was forced to make an emergency landing with its wing on fire, after apparently being hit by a surface-to-air missile.

The cargo Airbus A300, belonging to the courier company DHL, was forced to return to ground just 10 minutes after take-off from Baghdad International Airport at 9am. Nobody was hurt. Earlier anti-coalition insurgents had detonated suicide car bombs, killing at least 15 people, at two police stations north of Baghdad.

The award of lucrative licenses to build and operate mobile telephone networks has been dogged by delays and recriminations. A complaint over the handling of the process was filed by Turkcell, an Istanbul-based company which, with two American partners, bid in August for the right to build mobile telephone networks in Iraq.

The allegations of foul play - the first against any award by the CPA - were made to the United States Congress General Accounting Office (GAO), which evaluates federal expenditure. The GAO announced last month that it had opened its own review into whether the Bush administration has followed procurement rules.

After the mobile network contracts were awarded to three Middle Eastern companies, Turkcell lawyers said that the licensing process had been "erroneous, irrational, arbitrary and capricious".

Earlier this month, in response to pressure from the US Congress, President George W Bush authorized the creation of a new office of inspector-general within the CPA, which operates under the authority of the Pentagon.

The move came after widespread allegations of price inflation by US contractors and favoritism in the awarding of contracts. Iraqi companies have persistently reported a lack of transparency in the awarding of contracts.

Any bribery investigation will hamper US efforts to garner international support for Iraq's reconstruction, the cost of which has been estimated at $55 billion (£32 billion) by the World Bank.

Germany's ambassador to the United Nations, Gunter Pleuger, said recently that "the necessary international support will only be forthcoming if full transparency in the decision-making process is assured".

In Baghdad, a CPA spokesman said: "We can't say anything about a Pentagon investigation. We think that the process to award the contracts was fair and we went through a lot of steps to ensure that it was properly and transparently completed. "If there are allegations of corruption out there, it is entirely appropriate that they are investigated."

© Copyright of Telegraph Group Limited 2003

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