Iraq, the “theft of the century.” The options of the Iraqi government to recover the looted funds

Iraq, the “theft of the century.” The options of the Iraqi government to recover the looted funds


Iraq the theft of the century - The options of the Iraqi government to recover the looted fundsThe Iraqi Prime Minister, Muhammad Shia’ al-Sudani, appeared on Sunday, and next to him were piles of sums of money in US dollars and Iraqi currency, which he said were equivalent to 182 billion dinars (about 121.3 million dollars) that the Iraqi government was able to recover from an amount of 3.75 trillion dinars (2.5 billion dollars). ) disappeared from the accounts of the Iraqi Tax Department.

The recovered amount is part of the 1.6 trillion dinars stolen by an Iraqi businessman named, Noor Zuhair, according to Al-Sudani.

Zuhair is currently in prison after his arrest on the background of the case, but Al-Sudani revealed that a settlement had been reached through which Zuhair would be released on bail by a “liquidator he owns” in return for returning the stolen amount “within a two-week period.” He said that the judiciary will supervise the sale of financial assets owned by Zuhair, whose value is assumed “greater than sum”.

The discovery of the theft of money caused a shock inside Iraq because of the large amount of money, even though the country is somewhat coexistent with the corruption that dominates state facilities.

Transparency International, a global watchdog, ranked Iraq 157th out of 180 countries on its 2021 index of clean governance.

The scandal constitutes an early test for the new Iraqi government, which was formed late last month after a long political crisis.

The prime minister, Mohamed Shia al-Sudani, has vowed to crack down on corruption, but few expect any senior official or political leaders to be held accountable, says the Associated Press.

The embezzled amount amounts to about 2.8 percent of the state budget for 2021.

The auditors’ report, obtained by the Associated Press and first published by the Guardian, indicates that the theft was orchestrated by a vast network of officials, civil servants and businessmen. In Iraq’s entrenched patronage system, these individuals often have connections to powerful political factions.

Iraqi lawyer and legal expert, Hussein Al-Saadoun, says, “The next procedures are for the judiciary to complete its investigations through the specialized court, which is the Court of Integrity, and it is also possible to request an administrative investigation.”

Al-Saadoun adds to the “Al-Hurra” website that “it appears from the news that was reported by the media that the laws applied in this case are the laws of embezzlement, whose maximum sentences vary between 10 years and life imprisonment, according to the position and function of the employees who participated in it.”

He says that the accused, Nour Zuhair, benefited from a legal text that says that the bribe-taker gets reduced sentences if he provides the court with information about the case that leads to the discovery of the collaborators.

Organized corruption
The “theft of the century” scheme, as it is called in the country, came to light last month when an internal audit by the Finance Ministry reported that the General Tax Authority – Iraq’s Internal Revenue Service – had fraudulently paid about 3.7 trillion Iraqi dinars, or about $2.5 billion, to five companies.

The payment was made through 247 checks that were cashed between September 9, 2021 and August 11 of this year, from a branch of the state-run Rafidain Bank, which is located within the Tax Committee.

The account contains billions of dollars in deposits made by companies that were supposed to be returned to them once taxes were deducted and the companies submitted updated financial statements.

Allegedly, the five companies fraudulently withdrew refunds without depositing anything.

The acting finance minister at the time, Ihsan Abdul-Jabbar, who also served as oil minister, began an audit. He discovered the theft after receiving complaints from an oil company unable to recover its tax deposits, according to a senior official close to the investigation.

When the minister inquired about the remaining balance in the account, the official said, the IRS said it held about $2.5 billion, but further inspection revealed that the actual balance had been drained to $100 million.

This was the first indication of the massive theft. A subsequent review submitted to Parliament’s Finance Committee revealed the rest. The Associated Press obtained a copy of that report this week.

Long before the audit, the bank’s money-laundering department had expressed concern to the Ministry of Finance about the large volume of cash withdrawals.

The official said that Abdul-Jabbar’s predecessor, former Finance Minister Ali Allawi, requested that approval of any large withdrawals be confined to his office, but that key managers at the Tax Authority ignored the request.

Allawi resigned in August to protest corruption and foreign interference in Iraqi affairs.

Weeks before the first checks were cashed, the authorities removed a key layer of oversight, ostensibly because companies complained about long waiting times.

The decision came at the request of the deputy, Haitham al-Jubouri, who was then head of the Parliamentary Finance Committee.

The review found that the companies, three of which had been set up just weeks before payments were to be made, had submitted false documentation in order to be able to claim payments. The auditors could not follow the funds any further because they were withdrawn in cash.

The claim process requires lengthy paperwork and signatures from at least three departments within the IRS, as well as the director and deputy director of the finance department.

The Rafidain Bank also contacted the Tax Authority to verify the authenticity of the checks before disbursing them, according to the instructions.

In late October, Noor Zuhair Jasim, a well-connected businessman, was arrested at Baghdad International Airport.

Two officials of the Tax Authority were also arrested, and the judiciary says it confiscated several properties and assets worth millions of dollars.

Political factions in Iraq have long competed for control of ministries and other government agencies, which they then use to provide jobs and other services to their supporters.

A number of the factions are linked to different government agencies involved in the tax scheme, according to the Associated Press.

Bickering between powerful factions turned into deadly street fighting earlier this year, and any attempt to hold political leaders accountable for fraud could spark further unrest, according to the agency.

A proposal for an “amnesty” for the corrupt
Iraqi lawyer and legal expert, Hussein Al-Saadoun, says that he supports “easing” the penalties for the corrupt to enable the government to hold them accountable, an opinion that sparked controversy among other observers with whom Al-Hurra spoke.

However, Al-Saadoun tells Al-Hurra that severe penalties in cases of corruption and bribery, even minor ones, prevent complainants from reporting these corruption cases. Therefore, Al-Saadoun says that “it is logical to put reduced penalties for simple cases.”

Al-Saadoun also says that issuing an amnesty for the corrupt in exchange for forcing them to hand over the bulk of the money they stole will contribute to recovering that money, and encourages opening a new page after which the government can toughen penalties for those convicted of bribery and theft of public money.

According to Al-Saadoun, “laundering” part of the corrupt money will contribute to keeping it inside Iraq and transferring it to legitimate activities. It also “contributes to preventing unrest that may result from accusing corrupt people with political connections.”

Raouf Ahmed, an Iraqi legal expert specializing in corruption cases, says, “This solution is theoretically possible, but it has many problems.”

Ahmed added to Al-Hurra website that “the solution presupposes the presence of a strong state and effective, transparent and deep corruption investigations that discover massive corruption.” “.

Refunds outside Iraq
Lawyer Al-Saadoun says, “It is possible to prosecute the accused and the funds outside Iraq if there are agreements with the countries to which they seek refuge.”

The Iraqi legal expert, Ali Al-Tamimi, says that a provision in the United Nations Charter allows countries that fight terrorist states or groups, subject under Chapter VII of the UN Charter, to request economic assistance from the Security Council, including the recovery of these funds, and there is an agreement issued regarding the recovery of funds. The smuggled money was issued by the United Nations in 2004 and signed by Iraq in 2007. It allows claiming these illegally smuggled funds.

However, Al-Tamimi says that the matter requires coordination between the integrity, the Ministry of Foreign Affairs and the intelligence services to activate this.