CBS: Corrupt arms deals cost Iraq $800M

Investigators have found that members of Iraq's Ministry of Defense entrusted by the United States stole up to $800 million budgeted for battling insurgents.

The former minister Ali Allawi told CBS' "60 Minutes" that the arms fraud is "one of the biggest thefts in history" and that corrupt former Iraqi officials are now "running around the world hiding and scurrying around." He claimed that the Iraqi investigators who discovered the alleged missing funds got no assistance from U.S. and British coalition members, likely due to the depth of the conspiracy, CBS News reported.

Most of the fraudulent arms purchases were allegedly made during the term of former interim Prime Minster Ayad Allawi, who took office after occupation authorities turned over sovereignty to Iraqis on June 28, 2004. When new Defense Minister Saadoun al-Dulaimi took office in May 2005, an investigation was opened into several alleged cases of corruption.

He did not name the officials who allegedly stole the money. But Iraqi investigators are probing several weapons and equipment deals engineered by former procurement officer Ziad Cattan and other defense officials.

"The only explanation I can come up with is that too many people in positions of power and authority in the new Iraq have been, in one way or another, found with their hands inside the cookie jar," Allawi said. "And if they are brought to trial, it will cast a very disparaging light on those people who had supported them and brought them to this position of power and authority."

CBS News said U.S. officials have claimed that due to the parties involved, the incident is Iraq's responsibility -- making it one of 2,000 ongoing government corruption cases facing the troubled nation.