The head of a U.S. oversight agency investigating reconstruction projects in Iraq says there are many instances of fraud and waste that are hampering efforts to improve living conditions in the country. VOA correspondent Meredith Buel has details in this report from Washington.

Special Inspector General for Iraq Reconstruction Stuart Bowen, center, (Feb. 2007 file photo)

In a hearing before the House Budget Committee, Bowen told lawmakers that theft, fraud and corruption continue to harm efforts to rebuild the country.

"Our audits and inspections and investigations have found numerous instances of waste and some egregious examples of fraud and we continue to move forward on 57 fraud cases," he said. "But waste is really the challenging issue in Iraq reconstruction and it is no surprise that our audits have uncovered instances of waste. That is my job."

Bowen's latest audit says the Iraqi government has failed to take responsibility for more than 2,000 reconstruction projects financed by the United States.

The inspector general says that has forced U.S. agencies to hand over the projects to local individuals or entities which, in many cases, do not have the expertise to keep the ventures running.

"The asset transfer process that had been worked out with the Iraqi government has been off the rails for about a year and other means have had to be used to transfer projects such as local transfer or unilateral transfer," he said. "That raises grave questions about the sustainability of what the U.S. has constructed in Iraq."

Bowen says even after the United States declares that certain projects are complete, significant problems emerge.

He pointed to a $90 million project to overhaul a power plant in Baghdad that broke down because employees at the facility did not know how to operate it properly.

Other projects, Bowen says, are being hurt by continued terrorist activity and political instability.

Addressing the same congressional hearing, Deputy Secretary of Defense Gordon England said the Pentagon actively pursues evidence of theft and corruption.

"Regarding abuse, we do everything we can obviously to prevent abuse, but like every other part of society you can't prevent all of it, but you can uncover it and you can punish people who do not play by the law and that is a deterrent," he said.

Inspector general Bowen says even though the Iraqi government has assumed responsibility for managing the country's recovery, spending on public works and other capital projects is falling far short of what has been budgeted.

Bowen says increasing that spending is critical to the nation's future.

"The burden of financing the recovery of Iraq is a burden squarely on the shoulders of the government of Iraq," he said. "They have tremendous resources that are untapped in the oil and gas reserves and if that sector can be brought on line and operating optimally, then there is a great potential for progress."

Bowen says there are signs of progress, citing a modest increase in Iraq's oil production.

He says, however, the 2.1 million barrels of oil being produced each day is still below the production levels before the U.S.-led invasion in 2003.