Sheri Laizer | Exclusive to iKurd.net
Like an Eid sacrifice, the state of Iraq has been captured, carved up, and plundered – and it’s getting worse.
In October 2022, some US$2.5 billion went missing from the General Commission of Taxes (GCT) – one of the accounts of the Finance Ministry. The money was withdrawn in several enormous cheques for approx. $1 million each but with at least one written for as large a sum as $62 million. Finance Minister, Ali Allawi, resigned citing corruption as the cause. The largest financial heist so far in Iraq’s history, government officials colluded with the Rafidain state–owned bank and five private companies three of which were newly set up and can have been shell companies. The massive theft became public knowledge just one week into the new premiership of Mohamed al-Sudani.
The Guardian appears to have first headlined how the scheme was devised but did not name the key protagonist. He has since been exposed or scapegoated by numerous Arabic media outlets and social media as Noor Zuhair Jassim al-Mudather. But officials from the Badr militia organization under Hadi al-Ameri ‘s leadership in the Ministry of Finance are also said to have been complicit. On this subject the Guardian also noted:
“Accomplices inside the tax commission had signing authority for the cheques that were then cashed. The network was put in place by its former director, Shaker Mahmoud, according to four sources inside the finance ministry. Based on the letter from the prime minister’s office and a phone call with the audit chamber, Mahmoud ordered the removal of the audit, according to a document seen by the Guardian.”…Shaker Mahmoud and the executors of the plot were supported by the Badr Organisation that controls senior appointments to the tax and customs commissions, according to seven sources.
In addition, directors had to be approved by the prime minister, as per a 2020 decree…While the then finance minister, Ali Allawi, signed the paperwork for appointments, sources in the finance ministry said he had little authority over staffing. Two of his nominees turned down director positions after they received threats from Badr. “Allawi couldn’t remove anyone because Badr wouldn’t accept. And he didn’t get support from the prime minister’s office,” said one official.”
Noor Zuhair Jassim had been wanted by the judiciary for months for allegedly stealing an amount of more than one million US dollars while working in commercial facilities and Basra ports where he imposed taxes according to the Iraqi website DETAILS. He was indicted on October 25, 2022. It was said that he bought up real estate with several addresses on Princess Street in the expensive Mansour district totaling some 25 properties, a very large building recently acquired on the street, which aroused the curiosity of those around him, and a bank – its name not disclosed. He then moved to another area and bought more than 20 properties, in addition to those in the capital.
Without giving Jassim’s name at the time, independent Iraqi MP, Hussein Arab, had tweeted on October 15, 2022: “A swindler causes real estate prices to rise in Mansour and buys a bank, and all this through a fraudulent operation on the state’s tax secretariats and their amount. 2.5 billion US dollars. The five companies which cashed cheques were Al-Qant General Contracting Company, Al-Mobdioon Oil Services Company, Al-Hout Al-Ahdab General Trading Company, the Badiat al-Masaa Company, and the Riyah Baghdad Company for General Trading. “According to the findings of an internal investigation conducted by the ministry, the companies —at least three of them established last year— submitted fake documents for their claims.”
The massive cash withdrawals that were enacted between September 2021 and August 2022 were cleared with the knowledge of the PM’s office, the Integrity Commission, and the Central Bank of Iraq and processed through a branch of the state-owned, Rafidain bank within the General Commission of Taxes (GCT) a department of the Finance Ministry.
The General Commission of Taxes (GCT)
According to a well-researched study by Sajid Jiyad in the Century International headed Corruption is Strangling Iraq published on December 14, 2022, the great stash of money held by the IGCT had been deposited there from contractual disputes and failure to pay taxes. [13] According to one of the many sources he spoke with, “around one hundred companies, mostly in the oil sector, had deposited money into this account, almost all from 2016 and 2017 (although the account had been used as early as 2011). [14] These companies were due to receive their deposits back on completion of their projects, but for various reasons (failure to register or pay taxes, giving up due to bureaucracy, or having outstanding contractual issues), had not. He went on to say:
“It is not surprising that the theft benefited officials and parties backed by both the United States and Iran, because despite appearing to be politically at odds with each other, the systemic corruption in Iraq accommodates and requires the collaboration of such political rivals and enemies. These opponents fight each other in public but work together in private to enrich themselves, regardless of political and ideological positions.
According to one source, the prime minister’s office made direct calls to the GCT and Rafidain Bank to make sure the withdrawals were processed quickly…though the list of suspects remains long. It includes Kadhimi and senior staff in his office, top security officials, Ministry of Finance officials, Rafidain Bank staff, Central Bank of Iraq officials, the five company owners and staff, officials at the Integrity Commission, and others well placed to enable the scheme. Assessing the names shows they are tied to six different political entities (including the four parties mentioned above and other, less formal groupings). “ [1]
The decision to remove the Federal Board of Supreme Audit from the process had been triggered by a request from lawmaker Haitham al-Jibouri when head of the parliamentary finance committee. In November 2022, he was arrested, believed to be the key official who had made the heist possible. Al Jabouri had cancelled the audit supervision process of the GCT in a letter written in the name of the Finance Committee but, according to Sajid Jiyad, without its knowledge or consensus, giving the tax commission the full authority to approve withdrawals alone: “According to sources I spoke to, the committee formed by Kadhimi (grandly titled the Permanent Committee to Investigate Corruption and Significant Crimes formed by Executive Order 29 on August 27, 2020) was used for a year and a half to target politically vulnerable individuals who had amassed wealth through corruption. These individuals were detained and subjected to torture and blackmail to extort millions of dollars for the benefit of Kadhimi and his circle.25 …The head of the committee, Ahmad Abu Ragheef, the deputy minister of interior for federal intelligence and investigation affairs, with the rank of general, was recently arrested and accused of torturing to death a former director-general in the Ministry of Trade. [29]”
The Washington Post then picked up the torture aspect of the story, openly scapegoating Mustafa al-Kadhimi [2] but failing to mention that the rotten system had been in place since 2003 and equally implicated Nouri al-Maliki and his successors to varying degrees. In response to the Washington Post feature, Mustafa al-Kadhimi issued a formal rebuttal in both Arabic and English, widely circulated on Twitter, emphasising his past role in human rights and association with the Iraq Memory Foundation. Other details concerning the accusations made were conspicuously absent. The tract ended with him wishing success to the new government that had replaced him.
The Captive State
Iraq is run by a vicious mafia of killers and embezzlers who have captured the state and stolen its resources. Running the country means little more to them apparently than divvying up the spoils and clinging to power. A solution to this is very difficult to envision.
Analyst, Sajad Jiyad, lamented, “Even when the government launches “anticorruption” initiatives, they are used for political or corrupt purposes. Much of the tens of billions of dollars lost to corruption ends up abroad, and Iraq struggles to repatriate those funds and the criminals responsible. Help from other countries would deter attempts to launder money.” [3]
Interestingly, in this regard, the Guardian exposure reported that many of the top players enjoy “gracious London homes.”
The head of the Integrity Commission, Judge Alaa Jawad al-Saedi was obliged to resign but Mohamed al-Sudani replaced him with Judge Haydar Hanoun al-Zayer (Zair). The New Arab (Al Araby) claimed that al-Zair is a leader in the pro-Iran al-Fatih Alliance headed by Hadi al-Amiri, the Badr leader whose group the Guardian has implicated as being involved in the heist.
Hussein Muenis (Mounes), head of al-Huquq (Law Rights) bloc in parliament tweeted that, “While the Iraqi state needs to be purified from the filth of the corrupt and robbers of public monies, the person who has been sacked on corruption charges on 23 August 2016, today has been re-appointed as head of Iraq’s integrity commission”. [4] The Supreme Judicial Council (SJC) however supported Zayer’s appointment denying any past wrongdoing on his part.
So, who controls the SJC?
Rafidain state bank
Rafidain Bank’s anti-money-laundering unit had reportedly sent repeated letters to its own management flagging up the suspicious transactions but no follow up action was taken either by Rafideen or the CBI that has full oversight of the banking sector and has been accused by other banking institutions of corruption in the past including taking over the assets of independent banking competitors -even through the threat of force and actual force.
An audit was launched by then acting finance minister, Ihsan Abdul Jabbar, who was also oil minister at the time. An oil company unable to retrieve its tax deposits had exposed the theft, according to a senior official close to the investigation.
The judiciary has since seized 55 properties and $250m in other assets, with Noor Jassim al-Mudather and two officials from the tax authority initially under arrest. [5] All seem since to have been set free on bail. [6]
Killers go free while activists face torture and imprisonment
The release of Noor Jassim has been contrasted with the detention and sentencing of a young Nasiriyah activist, Hayder al-Zaidi, who allegedly tweeted criticism of the late PMF leader, Abu Mahdi al-Muhendes.
Human Rights Watch (HRW) Deputy Middle East director, Adam Coogle, said:“It is a sad reflection on the rule of law in Iraq that an activist like al-Zaidi gets three years in prison for a Twitter post he says he didn’t write while dozens of officials and armed groups enjoy impunity for killing activists and protestors” The court sentenced Hayder under article 226 of Iraq’s penal code, which prohibits “publicly insulting” the national assembly, armed forces reportedly, or any other government agency with a sentence not exceeding seven years in prison. Activists in Baghdad told Human Rights Watch that the PMF were responsible for Hayder’s arrest and that a committee within the PMF filed the legal complaint against Hayder. The sentencing decision states that the PMF is also entitled to financial compensation from Hayder.
Zaidi’s father, Hamid al-Zaidi said, “The one who stole $2.5 billion was released on bail. Meanwhile my son was sentenced to three years in prison for a Twitter post he didn’t even write.” [7]
It is the same kind of situation whereby the state’s killers of the Tishreen protestors are also walking free. [8]
Nour Zuhair Jassim (al-Mudhafar) AKA Abu Fatima was the managing director of Basra-based Al Mubdioon oil services company and Al Qant company. Al-Mudhafar was arrested in late October at Baghdad International Airport allegedly trying to leave by private jet for Istanbul, Turkey, with a large amount of cash. He was named as the CEO of two of the companies involved in the heist and is said to have obtained over $1 billion from the tax commission account, according to the audit. He is reported to have admitted receiving about a billion of the funds, only part of which has been recovered. Two officials at the tax authority were also detained and several properties and millions of dollars in assets seized. [9]
Iraqi journalist, Mustafa Saadoon, reported on Oct. 24 that there were alleged “attempts to help him [Muthaffar] escape.” Saadoon added that the suspect nearly fled Iraq, charging that there is “great collusion” in the dossier.
Ali Allawi’s resignation letter over the “vast octopus of corruption and deceit”
Ali al-Allawi had been in post as Finance Minister since 2020 and was also al-Kadhimi’s deputy. He resigned on August 16, 2022 after reading out the full text of his resignation letter in the Republican Palace during the weekly cabinet meeting. It took a full hour to deliver the full text to his audience. According to an Atlantic report published a month later, the letter detailed a series of outrageous scams that had been approved or promoted by some of the same people gathered around him, whom, he said, had helped create a “vast octopus of corruption and deceit” that was poisoning the entire country…The problem was not just dishonest leaders, but the entire system put in place by the Americans two decades earlier. “I believe,” he said, “we are facing one of the most serious challenges that any country has faced in the past century.” Allawi had drawn up a chart for himself showing which ministry employees answered to which political party. The real powers were the party bosses, the oligarchs, and the militia leaders. They treated even the government’s nominal leaders like lackeys. [10]
Al Istiklal news usefully summarized the background thus:
The embezzlement of the state funds was first revealed by Oil Minister Ihsan Abdul Jabbar on Oct. 15. Abdul Jabbar stated that “the outcomes of an investigation” he had led at the finance ministry had proven that the theft was carried out by an “identified group,” without revealing the alleged culprits. Abdul Jabbar notably made the announcement only days after the Iraqi parliament voted to end his designation as acting finance minister over his reported “implication in corruption.” Mustafa al-Kadhimi had designated Abdul Jabbar as acting finance minister in mid-August following the resignation of former finance minister Ali Allawi. Al Istiklal added: According to a report published by the Iraqi “Baratha” news agency on October 18, 2022, the theft was complete with official governmental and parliamentary books under the supervision of the Director of the Prime Minister’s Office, Raed Jouhi, who is currently the head of the Intelligence Service in Iraq.
Judge Diaa Jaafar hearing the case claims:
“The Karkh Investigation Court took a number of legal measures against names that were repeatedly mentioned in the investigations, including the Director General of the General Authority for Taxes, the Assistant Director General of the Authority, the Director of the Financial Department and the Assistant Director of the Financial Department, and we also issued arrest warrants against the owners of the companies with a procedure series of precautions. And he indicated that “the Karkh Investigation Court formed an audit committee to conduct an audit and investigation of all 247 exchange documents, and to ascertain whether these amounts were spent in violation of the law and to clarify the type of violation and abuse of public money, stressing that “the release of three of the four defendants in the Tax Authority took place on bail, while the Director General of the Tax Authority who came to the court was suspended …and the assistant director general at the Salhia police station, another suspect was arrested in the Kurdistan region, as well as the arrest of the accused (Nour Zuhair), and a summons was issued against the former head of the Finance Committee, Haitham Al-Jubouri,11 based on the books and recommendations received by him, which included the abolition of previous censorship on exchange operations,” indicating that the procedure that is supposed to be taken by Al-Jubouri is that even if the issue includes some delay, but at the very least, a reference is made in the book and the recommendation to the need for subsequent audits to be conducted within a period not exceeding 15 days. (The poor English rendition is a by-product of the search translation.” [12]
Unfortunately to date, the judiciary of the ‘new Iraq’ has not proven itself transparent, just or effective. Haitham al-Jibouri was released on bail of 25 million dollars.
Concerning the plunder of the state overall, Sajad Jiyad believes “Estimates vary, but officials have said that somewhere between $150 and $300 billion has been lost to corruption from Iraq’s wealth since 2003. [2] These parties control territory, media empires, militias, banks, and a diverse network of companies operating across all sectors. [5] …The total amount of government funds lost to corruption during the U.S. occupation (2003–11) was likely around $20 billion. [6]…
Corruption is systemic across Iraq and the Kurdistan region. Corruption has pushed real estate prices up in the capital and in Kurdistan in direct relation to the money laundering going on. [13]
Future premises for the Central Bank of Iraq (CBI) – A New Tower of Babylon
Zaha Hadid Architects’ sinuous 170 m. tower long under construction for the Central Bank of Iraq is slowly rising above the Tigris. Uplifting its wave or palm like rippling sides towards the heavens in Jadriya, east Baghdad, construction is well behind schedule and probably over budget. The $772,000,000 budget estimate has been surpassed and gifted Iraqi-British architect, Zaha Hadid, alas did not live to see her project launched..
The Erbil 1 Tower Project [14]
`The KRG has endorsed the construction of its own tall tower, said to be ten metres higher than that in progress for the CBI. The projected Erbil 1 tower has no cultural symbolism or meaning for the region other than its ostentation. When teachers, civil servants and peshmerga’s salaries could not fully be paid it is an audacity to throw up such buildings in their face.
Mohammed Bradusti, Chairman of the company constructing the tower claimed last year that the 52 level tower would be completed within 4 years, according to the network, “which did not identify that company.” [15]
Where has the money come from? Why spend it on a Dubai style monolith when hundreds of thousands of people in Iraq are hungry and power outages occur every few hours?
The projected 180 m tower will chew up the cash but it will still remain vulnerable to attack by Iran, Turkey, ISIS and any number of the KRG’s enemies. The cost has been publicly reported to be around $35,000,000. It is symptom of the arrogance of the leadership in Erbil. To hell with Sulaimaniya seems to be their view.
Baghdad and Erbil have lost their way
At the end of 2022, writing for the Washington Institute, Nawras Jaff said “the PUK leaders claim the income of the Sulaymaniyah governorate—between oil revenues, taxes, and the income of two international border crossings—still is insufficient to cover the basic needs of the governate’s budget and salary. Insufficient funds have caused a wage crisis in Sulaymaniyah regions such Halabja, Garmyan, and Rapareen, resulting in late salary distribution…”16
At a meeting held in the House of Commons in London in November 2022, ethe PUK’s ex Intelligence, chief Sheikh Lahur Jangi Talabani, said, “…Also there was some money in the banks in Sulaimaniyah, probably over $400 million that went missing and was replaced with checks which were issued by the banks in the past as collateral to business people, who the banks owed money to. There is no money in the banks. It’s gone!
“Then there’s the case of this senior intelligence officer who was blown up with his wife and kids in Erbil. The KRG Security Council investigated and held some people accountable and unfortunately some of them proved to be members of the Counter Terrorism service in Sulaimaniyah. The PUK is not happy about this and wanted the information relating to the investigation to be withheld from the public. But it was made public the night before the election of the president [of Iraq] with the alleged perpetrators appearing on television and saying who was behind the killings…” [17]
As one Kurdish commentator living in the States said to me recently, “The United States is becoming ever more frustrated by the lack of unity between the two main political parties that have divided Kurdistan between them for so long. If they don’t pull together soon the US may finally just walk away. It would not be for the first time, would it? Iran would then be very happy to deal with them. Everyone knows what is going on, but no one can say anything. The crooks running the country will sue you if you try to expose them – or, maybe, they will just kill you. Only those with prosperous think tanks behind them dare risk naming who is responsible for this sad state of affairs.” [18]
1 https://tcf.org/content/report/corruption-is-strangling-iraq/
2 https://www.washingtonpost.com/world/2022/12/21/iraq-kadhimi-corruption-committee-torture/
3 https://tcf.org/content/report/corruption-is-strangling-iraq/
4 https://www.newarab.com/analysis/can-iraqs-new-government-survive
5 https://www.theguardian.com/world/2022/nov/20/heist-century-iraq-state-funds-tax-embezzlement
6 Independent lawmaker Basim Khashan on Nov. 28 slammed Sudani’s move as “a parade to pass an odd measure; the release of a suspect accused of stealing” billions of dollars. Baghdad-based journalist Simona Foltyn on Nov. 28 expressed surprise over the release of Muthaffar, positing that the “evidence” against him “seems irrefutable.” See: https://amwaj.media/media-monitor/will-iraq-pm-open-pandora-s-box-in-pursuit-of-massive-corruption-case
7 https://www.hrw.org/news/2022/12/06/iraq-activist-imprisoned-peaceful-criticism-security-forces
8 https://www.hrw.org/news/2022/11/29/iraq-no-justice-protester-deaths
9 https://www.timesofisrael.com/auditors-in-iraq-uncover-staggering-2-5-billion-tax-fraud-by-officials-businesses/
10 https://www.theatlantic.com/international/archive/2022/09/ali-allawi-iraq-corruption-resignation-letter/671509/
11 https://www.middleeasteye.net/news/iraq-theft-century-ex-head-parliamentary-finance-committee-arrested
12 https://www.ina.iq/168626–.html
13 https://www.tellerreport.com/news/2023-01-04-in-baghdad–real-estate-is-on-the-rise–also-driven-by-money-laundering.SJ43duz5i.html 14 https://www.facebook.com/e1.tower.erbil/?paipv=0&eav=AfYnmGwJr0Sj1iI3w3nB8UNRYnYTM_Fx4H-SkgpLHAxiQW2-ZGBwFaCIBxI7ScO1-HU&_rdr
15 https://www.zawya.com/en/projects/construction/kurdistan-to-build-iraqs-tallest-tower-xrif16by
16 https://www.washingtoninstitute.org/policy-analysis/puk-and-kdp-new-era-conflict
17 https://drawmedia.net/en/page_detail?smart-id=11374 Ex-intel chief Talabany warns Iraqi Kurds risk civil conflict leaving Turkey, Iran room to meddle
18 Private interview with author, January 4, 2023
Sheri Laizer, a Middle East and North African expert specialist and well known commentator on the Kurdish issue. She is a senior contributing writer for iKurd.net. More about Sheri Laizer see below.
The opinions are those of the writer and do not necessarily represent the views of iKurd.net or its editors.
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