Between May 2003 and June 2004, $38 billion was allocated to the U.S.-led Coalition Provisional Authority, which ran the government of Iraq. The money came from the United States war chest and from Iraqi oil revenues and other assets that had been frozen in U.S. banks. No one is quite sure how much of the money got spent, because the CPA didn’t keep very good records.

The special Inspector General for Iraq Reconstruction can’t locate a lot of the contracts. A preliminary draft of the inspector general’s report, obtained last week by the New York Times, uncovered startling irregularities in how vast sums of cash were handled.

The living quarters of CPA officials often contained millions of dollars in U.S. currency, neatly bundled into shrink-wrapped bricks of $100 bills, the report says. The money was handed out to contractors from the United States, Iraq and coalition nations, often with no written contacts, no receipts and no certification that the work had been completed.

Despite the mess, The Wall Street Journal reports that neither the Justice Department nor the special inspector general have any plans to try to recover the money. Reason: There’s no paper trail.

Much of the money — about $25 billion borrowed from the U.S. treasury and added to the national deficit, the rest mostly money from Iraq’s oil revenues — apparently didn’t get spent during the CPA’s 14-month rule in Iraq. Sabotage, insurgent activity and a shortage of contracting officers kept the rebuilding process from ramping up as fast as U.S. officials had hoped. Another problem: U.S. government agencies were divvying up the money among themselves without proper accounting safeguards.

The problem comes in accounting for whatever money did get spent, most of it Iraqi oil money. L. Paul Bremer III, who headed the CPA, has defended the CPA’s contractors and its budgeting processes, saying that “Western-style budgeting and accounting standards” can’t be applied in the middle of a war.

That much is true. Mr. Bremer and his staff were plunged into a chaotic situation for which very little planning had been done. They had to operate on the fly and pay in cash. Every day brought dozens of new crises, many of which were settled with cash. Want to replace an elevator in a hospital? Hand the contractor $682,000 and shake your head in regret when three men are killed by the botched repair job. Want to fix a swimming pool? Hand over $100,000 and then find out the pool guy merely polished the pipes.

The Bush administration deals with Iraq the way that Mark McGwire dealt with steroid allegations: It’s not here to talk about the past. Yes, mistakes were made. Yes, perhaps we could have planned better. But doggone it, the Iraqis love freedom.

But sound financial and accounting practices are American values, too — or at least they used to be. The Justice Department can’t just let it slide. Defrauding the government in peacetime is a crime. Defrauding it during a war is very close to treason.

© 2006 St. Louis Post-Dispatch