Iraq’s prime minister ordered a judicial investigation on Thursday into one of the country’s biggest banks, the Trade Bank of Iraq, saying it was suspected of committing “violations”, according to a report from Reuters.
The bank’s president and chairman, Hussein Al-Uzri, could not be reached for comment.
A British adviser to the bank’s board, Sir Claude Hankes, condemned the move by Prime Minister Nuri al-Maliki’s government as “political skulduggery”. He said the bank had resisted efforts by members of the government to try to make it undertake “improper banking transactions”.
Trade Bank of Iraq was set up in 2003 after the U.S.-led invasion that toppled Saddam Hussein. It has been involved in financing trade and investment aimed at supporting reconstruction.
Maliki reportedly visited the bank’s Baghdad headquarters on Thursday accompanied by security forces. A source close to the bank said there had been a “raid” on its offices.
The prime minister’s office issued a statement saying an official committee set up by Maliki, which had included representatives of the finance ministry and the central bank, had detected “violations” at the Trade Bank of Iraq.
“The report confirmed the existence of financial violations which could go as far as corruption,” Ali al-Moussawi, media adviser to the prime minister, told Reuters.
Responding to the allegations, Hankes told Reuters by phone:
“From what I know … I believe this can only be politically motivated … I don’t believe this committee is even qualified or has any legal status … This is an attempt to destroy the bank’s independence and integrity … this is one of the only institutions in Iraq that was independently and professionally run.“
With 14 branches across Iraq, the bank in May reported total assets of $15 billion in 2010, a 16 percent increase from 2009. It reported its profits increasing last year by 18 percent to $361 million. An Iraqi banking source said the violations detected related to billions of dinars of “irrecoverable bad debts” owed by Iraqi companies to the bank. Allegations included poor administration and non-compliance with banking regulations, the source said.
Hankes called the bank “one of the success stories of Iraq” and said its results were independently audited by Pricewaterhouse Coopers to professional international standards.
In June last year, the bank’s headquarters in Baghdad were attacked by two suicide bombers which killed 26 people. Local security officials suspected al-Qaeda was responsible for the attack.
In a separate email reaction to Thursday’s developments sent to Reuters, Hankes said “members within the Maliki Government have been party to trying to persuade the Bank to undertake improper banking transactions”.
“The Bank and its management has consistently refused to undertake any such transactions,” he added.
Hankes said the move against the bank should worry the international community, “in particular, the US Government and the US Federal Reserve, who handle hundreds of millions of payments for and on behalf of the Iraq Government (through the Central Bank of Iraq), for which there is no proper oversight.”