Shatha Khalil *
The official documents of the Iraqi government revealed the largest operation of corruption and tax evasion, losses estimated at more than (180) million dollars in the contract to develop the Ahdab oil field, which is located in Wasit province, in the area of Ahrar, 27 kilometers west of the city of Kut , the oil reserve in the field of Ahdab is estimated in more than one billion barrels.
On November 10, 2008, CNPC signed a 23-year contract to develop the field. The work in field has been started in 2009 by the Chinese Al-Waha Petroleum Co. after conducting three-dimensional seismic surveys (3D) and digging new exploratory wells, as well as the old wells, The field consists of three domes (the first dome, the second dome, the fourth dome) and the name of the domes relative to the first wells dug in these domes, and the field works with a production capacity of 60 thousand barrels and reached 120 thousand barrels per day.
The tax for Al-Waha Petroleum Co. is considered as a refundable oil cost, which means that it is paid and those tax amounts are recovered , which estimated at more than (180) million dollars, but it has not paid since 2009 until 2014, as there was a manipulation of the public money on the basis of legal and administrative violations according to the minutes of the internal control meeting of the Iraqi Ministry of Oil, according to the following documents:
– Violation of the Iraqi law in force, Al-Waha Petroleum Co. has (Chinese) exempt all companies and subcontractors , belong to it and contracted with them , from tax payment.
– Tax evasion, as Al-Waha Co. Works hard to coordinate with the General Commission of Iraqi Taxes not to calculate the delay penalties and classify them in other sections in the receipts of payment to be recovered from the Ministry of Oil as an oil cost as if it was normal.
The net price method should not be adopted in Iraqi government contracts, nor should charging the government to repay the expenses of subcontractors.
Al-Waha Co. has signed contracts with its subsidiaries in net amounts and without tax payment, thus recovering the amounts paid as petroleum costs.
The Chinese Al-Waha Co. Worked on the delusion and misleading of the Central Oil Company to pay $ 30 million to deflect attention from what remains in its custody of $ 150 million, according to sources in the Iraqi Ministry of Oil.
After the disclosure of financial supervision authorities in the Iraqi Oil Ministry this corruption and circumvention of the law, the Al-Waha Co. Quickly to bribe senior officials in the ministry and send them to China to cover up the large embezzlement.
Despite the submission of the financial control reports and the formed committees that led to the detection of the size of corruption and tax evasion, the Ministry of Oil has not yet deducted any amounts from the payments of the Al-Waha Co. and the financial obligation (debt) of the State Treasury, putting more than a question mark on this deliberate condensation by officials in the ministry.
The director of the Office of the Chinese Al-Waha Co. in Baghdad, who speaks the Arabic language called (Li Zhenmin), the nickname (Abdul Aziz) , sponsor of the deal, providing material and moral briberies and travels of all those involved in this file, including the tax authorities, who are currently in China under the claim of being prepared by Chinese ( Abdul Aziz) in order not to deduct any amounts from Al-Waha Co. , according to sources of documents.
Iraq Reserve:
Iraq has 118 billion barrels of proven oil reserves. Another 235 billion barrels can be added to this reserve. Iraq also has 78 trillion cubic feet of proven gas reserves,in which another 110 trillion cubic feet can be added to through the promotion of exploration operation and development and the use of advanced technology, and new discoveries showed that Iraq has up to (350) billion barrels, and this represents the largest reserve in the world.
This figure is three times to the current proven reserve, higher than the current Saudi oil reserves estimated at 246 billion barrels.
The new estimates are based on the latest geological and seismic data collected by international oil companies with high technological reputation.
All this vast wealth and Iraq suffer from poverty, unemployment and a halt in production. Transparency International organization says that corruption in Iraq is not the result of abuse of power for personal gain, but through the use of power to corrupt and use the corrupt to gain power. Corruption has been legitimizing and practicing publicly.
The Iraqi government must put an end to the rampant corruption in the body and corridors of the state and its institutions and achieve decisive results in confronting it. The most important step today is the political will to deal with this problem seriously. The project against corruption in Iraq has become an urgent and important task that is not easy at all but it is not impossible. Corruption in Iraq is a cause and a consequence.
Translated by : mudhaffar al-kusairi
Economic Studies Unit
Rawabet Center for Research and Strategic Studies