Paul Bremer

Bremer was the top U.S. official under the provisional authority, which was Iraq's government in the early months of the U.S. and coalition occupation following the ouster of former Saddam Hussein.

Since leaving Baghdad he wrote a book about his experiences, and has been a primary target of allegations from Democrats, now the majority in Congress, that he was careless in overseeing the disbursement of billions of dollars in cash between 2003 and 2004.

Henry Waxman, Democratic chairman of the House (Government) Oversight Committee, faults not only the methods used to transfer the money, but the lack of controls exerted once it arrived in Baghdad. "Who in their right mind would send 360 tons of cash into a war zone? But that is exactly what our government did," he said.

Waxman refers to the shipment to Iraq of billions of dollars in cash from the Development Fund for Iraq held in a New York bank, adding it was possible some of the money found its way to insurgents.

In response, Bremer says he was in the difficult position of having to pay Iraqi civil servants in a cash economy he described as being "flat on its back," after years of neglect by Saddam Hussein. "We took seriously our charge to operate in an open and transparent fashion, and to use these Iraqi funds in the best interests of the Iraqi people. We always strived to meet those objectives and where we may have fallen short, I accept responsibility," he said.

Stuart Bowen, Special Inspector General for Iraq Reconstruction, said the Coalition Provisional Authority had ultimate responsibility for managing Iraqi funds. He said his audits found that the CPA under Bremer failed to account for how Iraqi government ministries used the $8.8 billion after they received it. "In our view, that duty extended to requiring the Iraqi ministries to provide something more than nothing about how they were using that money," he said.

Bremer insists that he had met standards the provisional authority was operating under at the time regarding accountability of funds.

However, other testimony by David Oliver, who served Bremer as CPA director of Management and Budget, underscored how risky the approach was. "We made sure that it was transparent what we were doing with the money, to the ministries, and then relied upon the ministry system, the entire financial system they had, to do that," he said.

Democratic Congresswoman Diane Watson expressed shock at what she called a lack of accountability, noting that American taxpayers are still being asked to foot the bill for Iraq. "It's such a callous attitude, [to say] it wasn't important, it was Iraqi money, you can't tell us whether you know or not where that money went?," he said.

Bremer was supported by Republicans on the panel who noted the difficult conditions under which he and others in the provisional authority operated.

Republican Congressman Tom Davis cautioned against what he views as Democratic attempts to politicize the issue. "Self-righteous finger-wagging and political scapegoating won't make Iraq any more secure, it won't rebuild that ravaged nation, and it won't bring U.S. troops home any sooner," he said.

Tuesday's hearing was the first of many expected in coming months examining Bush administration's handling of Iraq.

The same panel meets again Wednesday to hear about the use of private U.S. contractors supporting U.S. military operations.