Billions of dollars of Iraq's own money cannot be accounted for by the occupying forces responsible for the funds, it is claimed today.

Two reports, compiled independently, show glaring gaps in the handling of about $20bn (£11bn) generated from Iraq's oil and other sources since the war ended last year.

The Coalition Provisional Authority (CPA) was given responsibility for the stricken country's finances by the United Nations on the understanding all revenues would be paid into a central fund.

The UN stipulated that money in the Development Fund for Iraq (DFI) would have to be shown to be used in Iraq's best interests.

But today, both the charity Christian Aid and the Liberal Democrats castigate the CPA, saying no audit of how the money was used had been carried out until April this year - two months before the hand-over of power.

And Christian Aid describes information regarding the allocation of money as "woefully inadequate".

On May 29, the CPA revealed $19.4bn (£10.7bn) had been paid into the DFI and spent on - among others - a wheat purchase programme, electricity and oil infrastructure programmes, and equipment for Iraqi security forces.

The coalition said $10bn (£5.5bn) of the total sum came from oil revenues.

But the Lib Dems claim there was a shortfall of up to $3.7bn dollars (£2.03bn) between the amount of oil revenue earned and the money paid into the DFI by the CPA.

Iraq's vast oil resources generate billions of dollars each year, but both studies insist it is not known how that money has been spent.

Helen Collinson, of Christian Aid, said: "For the entire year that the CPA has been in power in Iraq, it has been impossible to tell with any accuracy what the CPA has been doing with Iraq's money."

The coalition assumed control of the Middle Eastern country's finances after the fall of Saddam Hussein in May last year.

A United Nations resolution was passed, giving control of Iraq's oil revenues and other finances to the coalition under certain conditions.

The DFI was supposed to be independently audited, but this did not happen until April this year, according to Christian Aid. The charity calls the failure to account for the Iraqi money a flagrant breach of the United Nations directive.

A senior UN diplomat said: "We only have the total amounts and movements in and out of the DFI.

"We have absolutely no knowledge of what purposes they are for, and if these are consistent with the Security Council resolution."

Sir Menzies Campbell, Liberal Democrat Shadow Foreign Secretary said of the missing oil revenue: "This apparent discrepancy requires full investigation.

"The cost of reconstruction of Iraq is considerable and those countries who are being asked to contribute will want to know that Iraq's own resources are making a maximum contribution."

The two studies, published to coincide with the transfer of power on Wednesday to a new Iraqi government, will raise further questions over the handling of Iraq post-Saddam Hussein.

Ms Collinson said: "What has the coalition got to hide by not making such information available for Iraq's own money? Is it putting the cash to the best use for the people of Iraq - or is it still rewarding US companies with lucrative contracts?"

The charity's report revealed that most of Iraq's reconstruction projects have been awarded to US companies - who charge up to ten times more than their Iraqi equivalents.

Flames of fury - Page 3