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The U.S. Army has decided not to withold payment on disputed bills involving billions of dollars for Iraq contract work after Halliburton threatened that delays in payment could lead to an interruption of crucial support services to the U.S. military.

The Coalition Provisional Authority may have paid salaries for thousands of nonexistent employees in Iraqi ministries, issued unauthorized multimillion-dollar contracts and provided little oversight of spending in possibly corrupt ministries, according to the report by Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction.

The U.S.-led authority that governed Iraq after the 2003 invasion did not properly safeguard $8.8 billion of Iraq's own money and this lack of oversight opened up these funds to corruption, said a U.S. audit.

At least 232 civilians have been killed while working on U.S.-funded contracts in Iraq and the death toll is rising rapidly, according to a U.S. government audit sent to Congress. n addition, 728 claims were filed for employees who missed more than four days of work. Several hundred more were reported from neighboring Kuwait where companies working in Iraq have logistics and support operations.

Halliburton Co., the world's second- biggest oilfield services company, became the sixth-largest U.S. military contractor last year on the strength of its work to help rebuild Iraq and care for U.S. troops, the Pentagon said.

Riggs Bank pleaded guilty to helping former Chilean dictator Augusto Pinochet and the leaders of oil- rich Equatorial Guinea hide hundreds of millions of dollars. The federal judge questioned whether a $16 million fine agreed to by prosecutors was enough.

A new study is particularly critical of donors' tendency to use large western contractors to repair infrastructure damaged in the war, importing foreign personnel and equipment at a huge cost. In Iraq, that policy has proved disastrous, one of the authors said.

Pentagon competing with security companies for skilled commandos; Extra pay of up to $150,000.

The Pentagon is offering bonuses of up to $150,000 to keep elite commandos, such as Army Green Berets and Navy SEALs, in the military and prevent them from being lured away to higher-paying jobs by private security contractors in places such as Iraq and Afghanistan, defense officials said.

An American contractor gunned down last month in Iraq had accused Iraqi Defense Ministry officials of corruption days before his death, according to documents and U.S. officials.

Military contractors like Boeing, Halliburton and Lockheed, have become increasingly embedded with the Pentagon bureaucrats who give them lucrative work as the jailing of Darleen Druyun, a former U.S. Air Force weapons buyer, demonstrates.