If this is true, this story is beyond comprehension. Unfortunately, the article is unclear on what exactly happened, and mixes in the news report with unsupported allegations about how the loss is compromising the Iraqi army's ability to resist the insurgency.
What gives this story credibility, however, are the quotes from Ali Allawi, Iraq's Finance Minister. Clearly something happened. But what? The money clearly wasn't physically stolen -- you can't cart off that kind of cash. But then what exactly happened? Was it embezzled? Or did it simply disappear via corrupt procurement contracts -- in which case "theft" is being used rather metaphorically, in the sense of "a rip off." But the article also hints that some money may have disappeared without even the figleaf of procurement. This much is certain: Allawi is definitely grinding an axe with the Ministry of Defense.
Forbes is also reporting on the story.
Hat tip: JG