The changes that have occurred in the structure of the political system in Iraq after 2003 affected the structural composition of the economy clearly, especially the auction of currency, which has had a major share in this change. The views of economic figures are different in Iraq about the pros and cons of an auction of currency which is organized by the central bank since 2004, as they were split between supporter who see as an attempt to steal the Iraqi money and smuggle it abroad, and opponent to it stressing that it contributes to the stability of the dollar’s exchange rate against the dinar.
The economic corruption is a complex and thorny subject, and multi – faces and aspects ,noting that the most economic researchers are differed on the identification of the problem of corruption being the big one , linked to the an authoritarian and political corruption , , there are many names including (financial corruption) , which reflects financial irregularities carried out by the corrupt authorities of an apparent purpose of obtaining funds in illegal way , leading to wastage of public funds.
Rawabet Center for Research and Strategic Studies has received important documents with regard to auction of foreign currency in Iraq , issued by Office of Federal censorship ” Department of auditing of the activity of finance and distribution , ” that was sent to the General Secretariat of the Council of Ministers ,” the Public Service Commissions,” and all these documents stating that there are certain people and specific banks are buying and selling and smuggling of currency outside the country, and this is the economic corruption that eats the exhausted body of Iraq , although Iraq is already suffering from a severe economic crisis, and they had brought the country to borrow money from the IMF to cover expenses.
Member of the Finance Committee in the Parliament , Magda Tamimi
talked to channel al-Taghier – in a program( talk on the street), with a great regret for the currency auction in Iraq , indicating that it is the only country in the region to sell the dollar through a public auction, and this has a negative impact on the economy, because most of the oil revenues goes abroad via fake imports “, noting that the Finance Committee in the parliament is a staunch opponent to the survival of the currency auction, and tried in several ways to abolish it , through the publication of several documents by the chairman of the committee to confirm the existence of a corruption for the work of auction , which is carried out in coordination with the political parties, private banks and fake companies , but all these attempts did not lead to its repeal.
The Commission warned that “auction of currency is a drain of hard currency; because fake acts were done in it especially that the committees of economy, finance and integrity in Parliament , in addition to the Integrity Commission did not discover any file of corruption in the work of auction to bring it to the authorities responsible for it. It actually shows that there are a big political names involved in it and protecting itself through its political influence, “pointing out that” people who talk about the currency auction in the media had received numerous threats.
State sales of foreign currency amounted to (dollar) from 1/10 / 2003 to 10/11/2016 Four hundred and eight billion and eight hundred and seventy – five (408.875) million dollars, with the aim of imports to meet the country ‘s needs for investment and economic development, according to the letters and official documents cited by Tamimi … but the truth is that the actual imports ratio does not constitute even 15% , this means if we calculate the amounts sold in the alleged auction to the rate of real imports, we will find that it is equal to 61.3 (billion dollars) , then we get to an important question, which is : Where did go the difference between the sold currency and the value of actual imports noting that the value of the difference amounting to 347 billion dollars ?? and where did disappear these billions , who is responsible for that? Who are the real mafias behind the auction ?? There are a few people who are manipulating with the value of the dollar and these powerful mafias are working in organized crime and have control over certain banks, and these banks have a transfer companies and in this way money was smuggled outside Iraq with several names and several companies, but in fact they are belonging to certain people.
Some of the documents revealed that the reports of prevailing Committee (p. 1-12) for the Council of Ministers / Public Service Commissions to audit the files related to sessions of dollar auction at the Central Bank of Iraq in 2010, shows the following:
- Check the binders according to the instructions and circulars and publications available to the Committee.
- The number of sessions for the auction of foreign currency 242 a session during the year.
- The central bank’s total sales of dollar , stated during the year 2010 amounted by (thirty six billion dollars and two hundred and sixty million and thirty two thousand (36,260,032) dollars, distributed over two types:-
1.(Cash sale) and worth 2,193,797 two billion, one hundred and ninety-three million, seven hundred and ninety seven thousand dollars.
2.Sales by remittances, worth 34,066,735 (Thirty-four billion, sixty six million , seven hundred and thirty-five thousand dollars).
Indicators that have been noted in the same report .. out of the 242 session of the auction of foreign currency, it was conducted only 212 which means that there are 30 missing a sessions , and the additional expenses incurred on the banks were not calculated by the central bank , it worth 10 Iraqi dinars per dollar on the sold amounts in cash at auction of dollar, and orders of buying dollar from the currency auction is presented on the day of the auction itself, and this is contrary to the letter of CBI / General Directorate of control over foreign remittance , and it was not attached the analysis statement of the amounts that have been purchased from the auction by some of the banks in favor of the banking companies and remittance companies and offices of banking that belong to banks , this is a violation , the procedures of internal control were not completed through the work of Central Bank / Commission of buying and selling of currency in receiving requests (register) , but the receipt is done directly by the Commission.
And some financial remittance companies and banking companies are buying dollar from the auction of the currency by more than one bank for the same session, and the signing of the minutes of the Committee on the buying and selling by the Chairman of the Executive Committee only instead of the rest of the members and this is a violation, repeating the names of customers by more than a bank to buy the currency to people themselves, at the same meeting to avoid providing commercial regular list and a quittance issued by the General Commission for taxes , and the lack of working paper , such as attaching a photocopy of passport with transactions of foreign currency auction of the cash sale by some banks and this is also a violation , Committee of buying and selling do not write a phrase a ( not to conduct a transaction only after making sure the availability of credit in the bank ) on the form of sale and purchase of the currency .
Contrary to the instructions also , the Executive Committee for buying and selling the currency are to convert amounts for the benefit of customers of some banks, and the exclusion of the Commission for Some banks , such as al-Amin Company for exchange and Financial conversion that to submit a request of cash purchase via Rasheed Bank of $ (50,000) fifty thousand dollars under the pretext of lack of analytical statement but after checking it was discovered the existence of the required statement!, and facilitate the other work of unclear reasons , although its legal papers were not completed, and did not give analytical statement according to the sidelines of the committee written on the transaction of purchase like companies (United for financial remittance , Al-Nawader for banking, Saba for banking)! , North Bank did not provide a commercial regular list related to the customer (Hussein Salim Hussein) and this also a violation, the fact that some banks were getting pledges in writing from their customers , rather than documents, and Analytical statements proved that it was deposited some of the amounts in cash and amounts exceeding (10,000) ten thousand dollars and this what has been done by a bank ( the Rasheed and United ), and through the audit, we noticed that al-Faidh company for exchange to purchase through the United Bank for investment for the benefit of companies and people (legal persons ) who are not real members and this is contrary, the amount required for the purchase did not record in a number or in writing , as the al-Mawrid company for banking did and this is aviolation, and we noticed in some forms absence of seals on the requests for sales and purchases submitted to the Commission, and not to attach approval issued by the Bank of Baghdad within enclosures of Order written on it that the information contained in the statements are correct and customers mentioned are known according to the principle , identify your customer ,and the company of ( Iraqna for financial remittance) are submitting requests to buy the dollar by some banks related to the imports belong to (government departments) and everything said is irregular … that the difference between the dollar , which is sold by central bank rate (1089) dinars, and sold at market with a price (1310) dinars, and this difference in value of sale and purchase increased purchase of speculators on buying and thus increasing the demand and rising prices as an inevitable result of that.
Despite the clear knowledge of the banks of its suspect management policy and disposition of deposits of customers (such as the Middle Bank East, Huda, al-Bilad , al-Shimal) , but it was still present in the auction, the document indicated that was sent from the Iraqi Central Bank , reporting office of money laundering / Audit and investigation Department Issue Number: 2 Date 7 / 4/2015, to the presidency of the prosecution , Department of prosecutor that the Bureau noted through the analysis of data and information of internal transfers from the Rafidain Bank through a system of payments to promote the balance of Huda Bank (joint stock company) to participate in the window of sale and purchase of foreign currency in the current account at the Iraqi Central Bank , where remittances amounted to 1,543,212 (Trillion and five hundred and forty – three billion and two hundred and twelve million dinars for the period from 02.02.2014 up to 20.6.2014 with the show that the volume of executed foreign remittances of the period above of about 1,802 (one billion, eight hundred and two million) and a number of measures and steps have been taken of the anti – money Laundering Act No. 93 of 2004 , the office has not been able to get any clear explanation on the sources and the safety of the money and the destination to convert
The document indicated , which was directed from the Finance Committee to the President of the Integrity Commission and its
theme was violations and the corruption in the currency auction in the date of 11.10.2015 number (740) , to the details of one of the banks that practice such violations and crimes committed by a group of banks and their owners, including the Bank of Huda, where suggest that : There are three documents belonging to the bank, namely:
- document of its purchases from the Central Bank for the purpose of import,
- and a document from the Registrar of companies show that most companies are not registered to suggest irregularities and violations and fraud of this process,
- and a document from the Registrar of companies show that the founders of the al-Taib company of the financial transfer, including Hamad Yasser Mohsen is the person who runs Huda Bank and has shares in it , which , as the Central Bank to transfer purchases of Bank of Huda amounted (6,455,660,368 ) ( six billion, four hundred and fifty – five million, six hundred and sixty – six thousand , three hundred and sixty – eight dollars a) to Jordan ‘s Housing Bank during the years 2012.2013, 2014 and the first part of 2015 and the registration was done for an account of three companies are: al-Taib for financial transfer, and Iraqina for fanancial transfer , Inc. Almahj company for financial transfer. Upon investigation it became clear that Mr. Yasser Hamad Mohsen bought the dollar from the central bank with false documents and turned it into a company owned by him and dispose of it completely .
The registration of hundreds of commercial companies that do not have a headquarters or staff and the goal of these companies that from which to implement the money laundering offenses and thus be able to open accounts for these companies in several banks, this was disclosed by a member of the Economic Committee MP Haitham al – Jubouri, referring to sending (15 ) fifteen thousand forged bill of purchase of currency to the judiciary and stressed that a large number of companies that have transformed to them money were fake while calling for the formation of a competent financial courts of financial matters according to the instructions of the Central Bank of Iraq and the other negative side on the Iraqi dinar in the currency auction is to increase the demand for dollar at the auction will lead to a high price; and thus lower the value of the Iraqi dinar, and that means low purchasing value of the dinar, and the political and security conditions played an important role in the lack of confidence in dinars as increased the demand for the dollar and larger for the future caution and all this weakens the value of the Iraqi dinar.
The Iraqi economy is not in isolation from the world economic movement, as the US Federal Bank, a global regulatory institutions for the movement of the dollar, which could determine the direction of money and ways of its laundry has sent warnings to the administration of Iraqi Central Bank over the effectiveness of local laws towards big waste of foreign currency “, in while the central bank considered talking about the subject of an auction of currency as something unpermitted , except to issue statements from time to time to explain some of the outstanding issues.
Failure to resolve the thousands of files of corruption by the Iraqi judiciary and the process of recycling the corrupt on the ministries who undertake on the management of ministries and of its joints (parties and politicians) refers to the existence of a tacit agreement between them for the survival of an ongoing corruption system that is compatible with their interests. According to a document which was directed , dated 10/08/2015 from the Chairman of the Finance Committee to the President of the House of Representatives, and Minister of Finance, and the Integrity Committee that the issue of auction of foreign currency is very dangerous because the Iraqi Central Bank resorted to selling the dollar from the bank reserves after the income of Iraq from dollar of the sales of oil has become less than a dollar sale in auctions, and if the matter continued in this way, the foreign currency reserves in Iraq would be endangered, which confirms that the absence of state power and the absence of economic policy produced this corruption.
Shatha Khalil
Translated by : Mudhaffar Alkusairi
Rawabet Center for Research and Strategic Studies