MORE THAN HALF A BILLION DOLLARS EARMARKED TO FIGHT THE INSURGENCY IS STOLEN FROM IRAQ'S TREASURY AND A FORMER IRAQI OFFICIAL SAYS THE U.S. AND OTHERS ARE NOT HELPING FIND THE MONEY OR THE SUSPECTS -- "60 MINUTES" SUNDAY

60 MINUTES Has Obtained Audio Recordings Implicating Former Iraqi Officials

More than half a billion dollars earmarked to fight the insurgency in Iraq was stolen by people the U.S. entrusted to run the country's ministry of defense before the 2005 elections, according to Iraqi investigators. Iraq's former minister of finance says coalition members like the U.S. and Britain are doing little to help recover the money or catch suspects, most of whom fled the country. 60 MINUTES' investigation also turned up audio recordings of a suspect who seems to be discussing the transfer of $45 million to the account of a top political adviser to the interim defense minister. Steve Kroft's report will be broadcast on 60 MINUTES Sunday Oct. 22 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

"We have not been given any serious, official support from either the United States or the U.K. or any of the surrounding Arab countries," says Ali Allawi, who was confronted with the missing funds when he took over as Iraq's finance minister last year. He thinks he knows why Iraqi investigators have gotten little help. "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," says Allawi, who left his post when a new Iraqi government was formed earlier this year. "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," he tells Kroft.

One of the people praised in former U.S. Ambassador L. Paul Bremer's memoirs is a major suspect in the case. Ziad Cattan was in charge of military procurement at a time when the ministry of defense went on a $1.2 billion buying spree. Allawi estimates that $750 to 800 million of that money was stolen. Judge Radhi al-Radhi, head of Iraq's Commission on Public Integrity, which investigates official corruption, tells Kroft that a lot of the money that wasn't stolen was spent on outdated, useless equipment. "It isn't true," says Cattan, who 60 MINUTES found in Paris and who was recently convicted in absentia in Iraq for squandering public funds. He showed Kroft documents and pictures of equipment that he says is now in Iraq. "All equipment with this $1,200,000,000 it is now a day in Iraq,'' he says. An official from Jane's, one of the world's foremost experts in military hardware, says the documents Cattan provided were too vague to prove anything.

Audio recordings obtained by 60 MINUTES reveal Cattan talking to an associate in Amman, Jordan in 2004 about the distribution of Iraqi funds. According to two independent translations, he is discussing payoffs to Iraqi officials. One possible payoff the recordings allude to is the transfer of $45 million to the account of a top political adviser to the defense minister, a man who is also identified on the recordings as a representative of the president and the prime minister of the interim government. Cattan acknowledged his own voice was on the recordings. Three translators say he specifically mentions "45 million dollars," but he disputes the translation. "I don't say dollars," he tells Kroft. "I don't remember what the matter was."

Cattan maintains that U.S. and coalition advisors at the Iraqi Ministry of Defense approved everything he did and says the recordings have been doctored. Audio experts consulted by 60 MINUTES could not find any evidence of that. Judge Radhi also has a copy of the recordings and says a former employee of the ministry of defense confessed after hearing them.

60 MINUTES has learned that Cattan is building himself a villa in Poland. Another suspect, Naer Jumaili, principal in a middle-man company that handled much of the $1.2 billion in Iraqi military contracts, is said to be buying real estate in Amman, Jordan, and building himself a large villa, even though he is wanted by Interpol. Judge Rahdi believes the fugitive suspects are bribing their way to freedom and says countries like Jordan and Poland have been "no help at all" in apprehending the suspects or recovering the money.

The case is one of 2,000 Iraqi government corruption cases the judge's commission is handling that, all told, involve $7.5 billion.

No one in the U.S. government would speak on camera about the case. But U.S. officials say this was Iraqi money spent by a sovereign Iraqi government and therefore is the Iraqis' business.