Baghdad, 31 May 2010 - Reuters
Three managers of state-owned Iraqi banks have been arrested on suspicion of using bogus transfers to siphon off billions of dollars of government money to invest in private business.
The head of Iraq's anti-corruption Integrity Commission, Rahim Al Ugaili, said while most of the money had been returned to the banks as part of the scheme, about $360 million was still missing.
The money was withdrawn from four state-owned banks - three branches of the Rafidain bank and one branch of the Agricultural Bank, he said.
About $8.2 billion was withdrawn and then redeposited in a one-year period from Agricultural Bank alone.
He said the scheme involved collusion between merchants and bank managers to fraudulently withdraw money from the state-owned banks.
The merchants would use the government money to invest in private businesses and then return it to the banks.
Corruption has been a major problem for Iraq since the 2003 US-led invasion. Transparency International's 2009 corruption perceptions index has Iraq ranked as one of the world's most corrupt nations - 176th out of 180 countries. "This money was being used in business in the private sector, which means the money was being given to merchants who used it in trading... then they gave it back to the government [banks]," Ugaili said.
"If that continued with a larger amount of money, it would be very dangerous for the Iraqi financial system," he added.
Three lower-level employees of the banks were also arrested, Ugaili said. Arrest warrants also were issued for four merchants and the owner of an Iraqi private company. Some of them are abroad, Ugaili said.
Iraq's deputy finance minister for banking affairs, Dhiyaa Al Khayoon, said the scheme involved bogus bank transfers and collusion to hide bills received from the central bank. He said the manager of private Basra Bank had also been arrested.
"This is the biggest ever robbery from the Rafidain Bank," he said. "This is a catastrophe for the bank."
Ugaili said a lack of both money and political will had hindered Iraq's fight against corruption.
"I thought with the end of Saddam [era], we would not find people above the law... Now some of the [most] influential people in the country are above the law," he said.