What has happened to Iraq's missing $1bn? Outrageous.

One billion dollars has been plundered from Iraq's defence ministry in one of the largest thefts in history, The Independent can reveal, leaving the country's army to fight a savage insurgency with museum-piece weapons.

The money, intended to train and equip an Iraqi army capable of bringing security to a country shattered by the US-led invasion and prolonged rebellion, was instead siphoned abroad in cash and has disappeared....

The carefully planned theft has so weakened the army that it cannot hold Baghdad against insurgent attack without American military support, Iraqi officials say, making it difficult for the US to withdraw its 135,000- strong army from Iraq, as Washington says it wishes to do.

Most of the money was supposedly spent buying arms from Poland and Pakistan. The contracts were peculiar in four ways. According to Mr Allawi (Ali Allawi, Iraq's Finance Minister), they were awarded without bidding, and were signed with a Baghdad-based company, and not directly with the foreign supplier. The money was paid up front, and, surprisingly for Iraq, it was paid at great speed out of the ministry's account with the Central Bank. Military equipment purchased in Poland included 28-year-old Soviet-made helicopters. The manufacturers said they should have been scrapped after 25 years of service. Armoured cars purchased by Iraq turned out to be so poorly made that even a bullet from an elderly AK-47 machine-gun could penetrate their armour. A shipment of the latest MP5 American machine-guns, at a cost of $3,500 (£1,900) each, consisted in reality of Egyptian copies worth only $200 a gun. Other armoured cars leaked so much oil that they had to be abandoned. A deal was struck to buy 7.62mm machine-gun bullets for 16 cents each, although they should have cost between 4 and 6 cents.

...The Iraqi Board of Supreme Audit says in a report to the Iraqi government that US-appointed Iraqi officials in the defence ministry allegedly presided over these dubious transactions.

Senior Iraqi officials now say they cannot understand how, if this is so, the disappearance of almost all the military procurement budget could have passed unnoticed by the US military in Baghdad and civilian advisers working in the defence ministry.

Government officials in Baghdad even suggest that the skill with which the robbery was organised suggests that the Iraqis involved were only front men, and "rogue elements" within the US military or intelligence services may have played a decisive role behind the scenes....

Related: Ex-defence minister 'will be arrested over $1bn'

A Reuters version notes,

Hazem al-Shaalan (pictured above), who is living in Jordan and also spends time in London, has denied any wrongdoing and has said that whatever he did was ultimately approved of by American authorities.

This has been oddly underreported here, except for a few sites picking up the Reuters version, and the Voice of America.

The Music of New Orleans: Aurgasm offers tunes.

Neil Young's entire new album is online at NPR. It's called Prairie Wind. The AP photo is of Young performing Sunday at the 20th anniversary Farm Aid concert in Tinley Park, Ill. (MTV report) where Young made some trouble.

Business Week: Best of the Web. The editors' annual picks. You probably know many of these sites already, but a few may be new and welcome.

AP
Patrick Pitchford, right, mimics Victor Fruge, left, as he speaks in the banquet room of a group home in Houston last Friday. Both men, residents of Abstract House in New Orleans, were among 16 mentally ill men and recovering addicts who made their way in the aftermath of Hurricane Katrina to safety in Houston.

Katrina Kicked Off Troubled Souls' Odyssey: An, unusual, interesting Katrina story by AP Science Writer Joseph B. Verrengia.

HOUSTON (AP) -- They're out there. The shooters, the choppers, the looters, the lines, the foul water and the bodies. Especially the bodies. "But we're in here," says Victor Fruge.

Others -- hundreds of thousands of them -- had also escaped from New Orleans. But few could match the extraordinary, even miraculous odyssey of Fruge and his comrades -- 16 mentally ill men and recovering addicts, cast out of their group home, Abstract House, by the storm.

For a week the men stuck together through Hurricane Katrina and its rising waters, following a survival instinct like a candle in the dark and gamely caring for each other as they traveled unsupervised for nearly 500 miles. They arrived at dawn in Houston, a sprawling and unfamiliar city among the thousands of hurricane refugees who have made the exodus to Texas, but without a friend in sight.

Along the way they ate and slept in at least four different shelters and caught rides on four different means of transport, always clutching the psychotropic medications that keep their imaginary devils at arm's length while the real world around them sunk into a deeper hell....

FEMA: A legacy of waste: A South Florida Sun-Sentinel investigation.

The Iraqi government is expected to issue a warrant for the arrest of Hazem al-Shaalan, the former Defence Minister, in connection with the disappearance of more than $1 billion a senior corruption investigator in Baghdad said yesterday.

The Independent earlier revealed that the Iraqi army is so ill-equipped in the face of well-armed insurgents because its entire procurement budget of over $1 billion had been siphoned out of the country. Weapons were either never supplied or were discovered to be useless on delivery....