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The Heist of the Century: Corruption in Iraq


Widely known in public press as the “robbery of the century,” eight million USD were stolen from the Banco Rio in Argentina. However, the world of journalism had not yet been faced with the real theft that well deserves the title: “Heist of the century”. In October 2022, 2.5 billion dollars evaporated from an Iraqi governmental taxation account making up the “largest corruption scandal” in the Iraqi modern history. The billions, which were paid by the Iraqis as taxes, were withdrawn in cheques. However, it was revealed that the billions were plunged by five companies, three of which were one month old companies. When the scandal erupted, the Iraqi finance minister at the time stepped down. Previously in June 2022, the country was also shocked by a fraud that destabilised the Iraqi banking system. The news revealed that over USD 700 million in public funds had been embezzled.


Consistently, hundreds of millions are embezzled from Iraq’s banks in a form of an organised manipulation of the Iraqi national economy. However, this wide and extensive abuse of power is deeply embedded in the Iraqi systems of patronage. Nepotism, bribery, the pursuement of personal vendettas, pay-to-play schemes, and infighting have been eroding the bones of the Iraqi state for over two decades. The country is languishing under the yoke of power abuse that is deeply inherited in the Iraqi governing system. Since the overthrowing of Saddam Hussein’s regime, the country has been divided between the Arabs and the Kurds. The Kurds dominate the northern part of Iraq, where Iraq’s most important oil resources are located. The Shia Arabs in the south dominate the other half of Iraq’s oil and natural resources. However, both groups benefit from the country’s oil revenues underhand without contributing to the national budget. Consequently, the individual groups benefit from these sales, rather than the nation as a whole. Moreover, these different groups send huge sums of money outside of Iraq for their own investments. The continuous flow of oil revenues out of the country, the constant embezzlement, and the inceasing abuse of power and manipulation had exasperated poverty, unemployment, and deprivation in the Iraqi society.


In the Iraqi Kurdistan Region (IKR), financial and political life are heavily intertwined. No effective businesses can exist without the support of the influential parties or their officials. Most of society’s activities are controlled by the two main Kurdish political groups and their associates. They are: The Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK). Here, corruption is a problem and Kurdish politics is dominated by the Barzani and Talabani tribes. Evidently, the Kurdish authorities are deeply corrupt and all parties, including Masoud Barzani, then president of the IKR, acknowledged this issue. A deep dive into this topic demonstrates that there are different ways that the political groups can control the wealth and business operations in the region. For example, PUK owns a number of companies such as Nokan and Shar. The KDP owns a number of companies such as Kar, Korak Telecom, etc. It is easy for these companies to do well, because when there is a government contract, which is usually allocated via one of the two main parties, they make sure that their own companies can get it.


Although some reforms were introduced in the IKR, the deeply embedded system of patronage here remains. Moreover, the focus of these reforms has been to hold some low-level administrators to account. No prominent officials have been prosecuted for corruption charges. Contrastingly, political leadership on the issue of corruption is largely absent. And when it is present, that may not be a positive development. There are three supposedly non-political bodies in charge of oversight: Inspector Generals, the Integrity Commission, and the Board of Supreme Audit. Anti-corruption mechanisms are in place, but they are regarded as ineffective, and the agencies are reportedly not incorruptible themselves. The Inspector Generals – placed in each ministry to conduct audits, and recommend and investigate cases under CPA Order 57 – have little effect because they have to go through their minister (who is in charge of the people they are investigating) to make progress, thus removing their independence. Prime Minister Maliki (2006-2014) attempted to control the Inspector Generals, as well as both the Integrity Commission and the Board of Supreme Audit. Ministers often ordered investigations dropped, and all three bodies experienced political interference, and the investigators of the Commission on Public Integrity experienced real and threatened violence. During investigations of corruption in an armament deal between Iraq and Russia, when the Investigation Commission sent questions to Nouri al-Maliki, the then-Prime Minister (and acting Defence Minister) ignored them, effectively obstructing their investigations.


On a different level, the Commission of Integrity (CoI) offers whistle-blowers the means to report corruption through its hotlines. Public sector workers are theoretically protected from reprisals by law, but private sector workers are not. However, many civil servants surveyed by UNODC in 2013 voiced concerns about the repercussions of whistleblowing. They feared the potential adverse consequences of reporting corruption, and indicated a lack of faith in the state to protect them: 66.3% would not feel adequately protected (38.9% of those are afraid of losing their job, while 22.8% fear physical harm).


As corruption continues, whistle blowers are constantly threatened. Journalists who shed light on relevant topics suffer murder, assassination, torture, kidnapping, abduction, intimidation, detention, harassment, beating, and arson. Despite the attention given to the plight of journalists in the Kurdistan region, the murder of journalists has continued. According to a recent report by Euro-Med Human Rights Monitor, Iraq, alongside Syria, ranks as one of the most deadly countries in the MENA region for journalists. Here, an average of six journalists have been killed per year since 2014. One such case is Widad Hussein, a Kurdish journalist for Roj news an outlet allegedly affiliated with the Kurdistan Workers Party, who was abducted in August 2016 and killed. Hussein’s body, which bore signs of torture, was found the same night that he was abducted. The independent media charged the KDP Asayish of killing the journalist but the KDP has fervently denied these charges.


Corruption is thus widespread in Iraq, with the IKR being one of the most corrupt areas in the country. While billions of dollars of public funds have been misappropriated by high-ranking individuals, those who have uncovered corruption here have been threatened, harassed, and detained. The “heist of the century” that took place in October 2022, was only one episode of the two decades-corruption series in Iraq that exceeds over 450 billion dollars evidently. Experts do not expect a genuine shift in the Iraqi governing system as the system’s stabilisation guarantee the stakeholders interests at any cost.


By Yara Barazy - MENA Consultant and Arabic Linguist


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