Basmaja residential project .. new evidence on financial corruption in Iraq

Basmaja residential project .. new evidence on financial corruption in Iraq

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Aspects of corruption  in Iraq are  various and complex and its arms  has worsened and  become numerous  to be   turned from the corruption of individuals to the corruption of institutions , which led to the deterioration of the country ‘s economy and drain the state budget , and this affects the standard of living of the citizen to  increases the poverty of the poor and increase  the wealth of  the corrupt .
The latest chapters of the continuing corruption is  the Basmaja residential project  on  which  reliable information  obtained by the Rawabet center  for Research and Strategic Studies  to confirm approval of lending of   government banks (Rafidain and Rasheed , Trade Bank of Iraq) to  project of Basmaja  by  600 billion new Iraqi dinars, and this is contrary to the law of investment and  trespassing to the  public money and a waste of the state treasury ,  this lending  came  following  to  the loan of two billion dollars the company has got it  at the beginning of the project at the era of  the former prime minister  Nuri al – Maliki.
The question arises: Why do they approve  lending the company again, even though she had not paid  back till this  moment any part of the first loan that it  got it in 2012 ? and  which is  the entity  responsible for granting lending to  investment  project that   the executing company is supposed  to spend on it from   its own money, and not from government bank loans ?, who is behind the corruption  concerning  the  approval of the loan? this is what should be disclosed by  the integrity Committee,  and transfer  it to the judiciary; to stop the series of corruption by  looting of public money by  influential looters , and beneficiaries .
The Parliamentary Integrity Commission member Mishan al – Jubouri  revealed in a television interview (13 / February / 2016  , link below the article) for part of the corruption of  Basmaja residential file, saying that the financing of  the project by two billion dollars is illegal because it is  an investment project, not a contract, and it hides a deal of corruption behind it  , if we follow the movement of two billion , we will know that it had been transferred to South Korea immediately?
al – Jubouri wondered : Is it reasonable to finance the investment project from  the state? And  the money has not transferred , that has not already spent legally , to the country of the investing company? And who is the influential corrupt entity in  the Iraqi state that facilitated the fraud process and the smuggling of two billion to South Korea to  the accounts of the smugglers and stressed that the Committees of  integrity and        Board of  Supreme       Audit ( BSA ),  to reveal the facts of this dangerous file, and to stop circumventing on  the  investment laws and the waste of public money.
“Since the beginning of  Basmaja residential project and suspicions hovering around it , ” This is shown by a member of the Economic and Investment Committee  Nora Salem,  in an interview through  al-Taghier  channel  , speaking about the corruption of the project and the mystery that revolves around it .
She stressed that the economic and investment committee in Parliament has not seen the project contract, and when the contract was requested  , it was sent after a long period in secret and personal way! Noting that sending  a very huge project of contract in this way raises doubts and questions; as “the project  turned from investment to contracting  after the government’s participation in it through the allocation of two billion dollars, and in particular the companies participated to the project  are essentially” lagging behind “in previous projects and  suspicions of corruption hovering around it.
Salim stressed that ” the company wanted to withdraw from the project for lack of sufficient funds to have, but Maliki ‘s government has supported the project to instruct banks to lend to the company two billion dollars.
And Dr. Abdullah al – Jubouri / deputy for the Iraqi coalition  revealed to  al-taghier channel , that  the area of the project was presented as 8,000 acres and turned out to be 6, 700 acres only, and  the  orchards   surrounding the area  were taken   from ​​the peasants without compensating them to create   a big problem  , the migration of peasants and  commit an aggression  on their rights and  according to the  law , they must be compensated, and the Korean company acquired the land for the project free of charge, demanding from the Iraqi state to cover infrastructure with Iraqi funds and this  a great disaster .
Al- Jubouri added that there was a technical corruption  in addition to  the the financial side that the land  did  not subject  to Geological Survey, an area close to the nuclear reactor  where the contaminated radiation was too much, and it was supposed  that the project to have   approvals from 12 government departments  then  the approval    about  the  suitability  of the land  to live or not , and that did not happen .

The Integrity Committee member Jawad Alshahyla  said that it is supposed  the state  to contribute  with  the loan charged for the citizen with an  interest rate of 3% and  the government  bears 3%, but it has happened here that the government  took out 4% of the state budget instead of 3%, which means that there is a ratio of 1%  estimated by $ 750 million  lost  a month, where   the money went  and where  spent? This indicates that there are influential and whales and brokers manipulating with money of  Iraqis, and stand behind the project, which calls for the Integrity Commission , which owns all the project files to open an investigation of the circumstances of  Basmaja residential project  that is raising doubt and controversy.
According to official sources, the “tender raised with a ceiling   to spend no more than $ 500 to build per square meter with the infrastructure within Basmajh Complex, The Korean company made to implement the project at a lower cost than the cost involved, it offered to build one meter to $ 450,” and ” The Curious It is that the contract had been awarded to them at a cost of $ 630 per square meter, an increase of $ 130 for the exact amount of the Iraqi government, and then added $ 100 claimed to improve   social status, and added $ 210 for obscure reasons, so  the cost per square meter has become   $ 940  instead of 500. ”
it was revealed  that ” the Korean company received  before it  place one brick  of 25% of the project value, equivalent to about two billion dollars, and although it is still lagging behind in the achievement.”

 

And indicated  of pressures exerted on the company after signing the contract with it  to enter  a secondary partner as a contractor  for infrastructure   works pointing out that some of officials  threatened  the company  to withdraw  the  contract from it in the event  of its refusal and this is an evidence of hidden corruption  of the project that they wanted  through the Korean company to loot the state money  making use of their influential locations and their parties .
And the National Alliance MP Ali al – Badri , revealed that ” a number of companies met in Basmaja project that  suspicions of corruption are hovering around it  and delay in its work , ” pointing out that ” the project has become a meeting place and gathering point for those companies.”
And  al – Badri  charged  the Ministry of Planning ”  with the responsibility for this matter , ” stressing “that the ministry has to put the  lagging company  in the black list, so do not give it  future projects.”

 

The former member of the Parliamentary Integrity Committee Jawad Alshahyla  revealed in  (12 / September / 2012), that $ 7 billion was under the trusteeship  of the National Investment Commission  that a quarter of it was awarded to the Korean company. This is contrary to the fact that the contract of the company  was an  investment contracts, but in this case the contract is not an investment after it has been providing this amount from  Rafidain and Rasheed banks , adding that the Iraqi government bore the burden of publicity and promotion.
MP / National Alliance / Adnan Jabbar al- Mayahi  surprised  that  the former  Governor of Baghdad  Salah Abdul Razzaq  to make this project as a  part of his achievements and his electoral program , stressing that ” the investment process in the country is still at a standstill , and most of the projects awarded by the National Investment Commission lagging behind and the best proof of that the  Basmaja residential project that the beginnings were not encouraging from the planning and implementation aspect  , “he said.
The Korean media said  that ” the Korean authorities jailed for nine years on the head of Hanwha Corporation , ” Kim Sung – Yun, ” on charges of embezzlement and breach of trust.”
and added” The public prosecutors in South Korea called for a fine of $ 142 million on the head of the company, because of the use of the company ‘s assets and sold shares from  its subsidiaries, for his family members at prices lower than the market, in addition to that he was working under false names.”
The question that comes in the mind ,  has the project withdrawn from this company after the corruption scandal, and how  to give millions of dollars to  a company  that its owner  accused of corruption and sentenced? And where are  the positions of  Iraqi government and the Iraqi investment and the Integrity Commission and its  role  to shed light on such corrupt companies and those  who  are   behind  and support   it for the causes of corruption by wasting money of the state under the pretext of residential complexes that eliminate the housing crisis.
and the project  is facing the problem of how to pay the Korean company in the absence of decline of   buying interest  , even though spending   on campaign of marketing  and  millions wasted on advertising campaigns , which was expected to reap 25% of the project  (2 billion dollars), creating a major funding crisis, forced  former prime minister  to issue   , at each  batch  due to the Korean  Hanwha  company ,   a decision  from  the Council of Ministers  to obligate  the Rafidain and Rasheed banks to  finance these payments.

 

Amember of the Parliamentary Integrity Committee “Juma Diwan”   says that  the signed  project between the Iraqi government and the executed  Korean company  “,”  the value of the contract , amounting to ten billion dollars is  a tremendous  and not commensurate with the project  that it can accomplish more than a hundred thousand residential units, noting that the company actually received  from it  two billion dollar. ”
Diwan continues , “if we consider that all project apartments with an area of 140 square meters, the price of 84 million dinars, the cost of the project will be eight billion and $ 400 million with a full – service, noting that according to the investment law  the Korean company should be abide by  to ensure secure services , health centers, schools and  police centers , and it was necessary to be part of the contract and  carried out by the Korean company. ” and the Diwan indicates that the government entrusted al-Rafidain and Rasheed banks  and Trade Bank of Iraq  to fund  part of the project that constitutes  a breach  to the investment law pointing out  the investment means to provide the investor with a land  to undertake the responsibility  of  providing the necessary requirements without charging the governments any obligations.
While the Parliamentary Integrity Commission has shown, that there are a lot of “suspicions of corruption” on the  contract f project , including the previous government ‘s accusation as “implicated” the Central Bank and the Rafidain and Rasheed banks, where ,despite that ” it is not  its right.”
The solution to the problem of  Basmaja housing project, the Integrity Committee has to undertake the responsibility  for the disclosure and accountability of financial corruption, and return the money that bellowed from the state budget, dealing with the problem  with transparency and clarity  and create a healthy climate to attract foreign investments and to contribute to push the development process forward.

Shatha Khalil 
Unit Economic Studies 

Translated by Mudhaffar al-Kusairi

Sources:
Writings
Alsumaria News

Rawabet Center for  Research and Strategic Studies