The scandal represents an early test for Iraq’s new government, which was formed late last month after a protracted political crisis.
Iraq ranked 157th out of 180 countries TI index – a global watchdog – for clean governance for the year 2021.
The auditors’ report – a copy of which was obtained by The Associated Press, was the newspaper “GuardianThe first to publish it – indicates that the theft was orchestrated by a vast network of officials, civil servants and businessmen.
These individuals are often connected to powerful political factions patronage system established in Iraq.
“It was a very organized and well-planned robbery,” said Jamal al-Asadi, an Iraqi legal expert and retired judge familiar with corruption cases.
Three officials confirmed details of the plan to The Associated Press, all speaking on condition of anonymity for fear of retaliation.
How was it stolen?
- The scheme was revealed last month when an internal audit it conducted revealed Iraqi Ministry of Finance that the General Tax Authority- Iraqi Internal Revenue Service – It fraudulently paid about 3.7 trillion Iraqi dinars, or the equivalent of about $2.5 billion, to five companies.
- Those payments were paid by 247 checks that were cashed during the period from September 9, 2021 and August 11 of this year, from a branch in Al-Rafidain Bank which is run by the state and located within the General Authority for Taxes.
- The account contained billions of dollars in corporate deposits that were supposed to be returned to them as soon as possible Tax deductionThe companies have provided updated financial statements. Allegedly, companies withdrew money without making any deposits.
- The then acting Minister of Finance, Ihsan Abdul-Jabbar, who also served as Minister of Oil, conducted the audit. He discovered the theft after receiving complaints from an oil company that had been unable to recover its tax deposits, according to a senior official familiar with the investigation.
- When the minister inquired about the remaining balance in the account, the tax authority said it had $2.5 billion, but further scrutiny revealed that the actual balance was only $100 million, according to the official.
- That was the first indication of the massive theft. A subsequent audit was submitted to the House Finance Committee, a copy of which was obtained by The Associated Press this week.
- Prior to the audit, the anti-money laundering department at Rafidain Bank had expressed its concern to the Ministry of Finance about the high rate of cash withdrawals. He was the former minister before Abdul-Jabbar, Ali AllawiHe had requested that his office approve any large withdrawals, but the tax authority’s top managers ignored the request, the official said.
- Former minister Allawi resigned in August in protest of corruption and foreign interference in Iraqi affairs.
- Weeks before the first checks were to be cashed, the authorities removed a key piece of censorship, claiming that companies had complained about long waiting times. The decision to dismiss the Federal Financial Supervision Bureau from the process came at the request of Representative Haitham Al-Jubouri, who was then heading the Parliamentary Finance Committee.
- The audit found that the companies, three of which had been incorporated just weeks before payments were to be made, had submitted fraudulent documents in order to be able to claim payments. The auditors could not keep track of the money because it was withdrawn in cash.
Summary of the report: The amounts were stolen!
- The findings suggest that a wide network of tax officials and businessmen must have been involved in the plot.
- The claim process requires lengthy paperwork and the approval of at least three departments within the tax authority, in addition to the director and deputy director of the financial department.
- But the money is gone anyway, and it’s not clear who will ultimately be held responsible.
- Noor Zuhair Jassim, a businessman with links to influential officials, was arrested at the end of October at Baghdad airport. He was named CEO of two companies, and received more than a billion dollars from the account, according to the audit. His lawyer did not respond to a request for comment.
- Two tax officials have also been arrested, and the judiciary says millions of dollars worth of property and assets have been confiscated.
- But officials say it is unlikely that an embezzlement scheme of this magnitude could have been carried out without the knowledge of senior officials.
I’ve always competed Political factions in Iraq It gains control of government ministries and agencies, which it then uses to provide jobs and other benefits to its supporters.
A number of factions are linked to different government agencies involved in the tax scheme.
The current government only met in late October, more than a year after early elections, and bickering between powerful factions degenerated into deadly street fighting earlier this year.
Any attempt to hold political leaders accountable for this fraud could lead to further unrest.
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