Iraq finds irregularities in post-ISIS construction deals

Government investigation committee reports inflated pricing and forgery in contracts by state-run reconstruction fund

The rubble left behind by fighting between Iraqi and coalition forces and ISIS militants in the old city of Mosul. Reuters

Projects by Iraq's state-run fund in charge of rebuilding areas damaged in the war with ISIS are mired in irregularities, a government investigation and audit committee has found.

Since taking office in October last year, Iraqi Prime Minister Mohammed Shia Al Sudani has been scrutinising deals signed by the previous government and has ordered a series of investigations over alleged corruption.

Critics claim that the moves are aimed at rivals of his main backers, the Iran-backed political factions who form the biggest parliamentary bloc.

The investigation focused on projects implemented by the Reconstruction Fund for Areas Affected by Terroristic Operations and financed under the Emergency Law for Food Security and Development.

Parliament approved the law in June last year to help the country meet its most pressing needs as political wrangling over forming a new government delayed the passing of a budget.

The law introduced a 25 trillion Iraqi dinar ($16.9 billion) programme to subsidise food, improve service delivery and continue vital development projects, including in the power sector and reconstruction.

There was an “exaggeration in the pricing for some items of the contracts”, the investigation committee said in a statement issued late on Sunday.

“In addition, there were huge differences in the prices of some similar items between one contract and another,” it said.

“It has been proven that there is forgery in the signatures of some CEOs in the contracts and documents submitted by the contracting companies.”

It said the reconstruction authority also completed procedures that usually take time within one day, signed deals with newly established companies that had a “low solvency ratio” and which “do not have the requirements, expertise and capabilities needed to implement the projects”.

The fund failed to distribute the projects fairly among the beneficiaries and against the goals set by the government, it added.

The Prime Minister approved the report’s recommendations, including sending the findings to the specialised court and the anti-corruption commission.

The statement did not give details of the projects in question or the value of the losses.

The reconstruction fund was established in 2015 amid a gruelling war between Iraqi security forces and ISIS militants, who had occupied about one-third of the country a year earlier.

Backed by a US-led coalition, Iraq announced victory over ISIS in late 2017 after three years of fighting that left large areas of the north and west in ruins. Millions of Iraqis remain without access to clean water, adequate electricity supply and proper health care.

The fund's mandate was to carry out and supervise the rebuilding of the damaged areas. Its projects are either financed directly by the government or by donors.

Mr Al Sudani dismissed the head of the fund, Mohammed Al Ani, in June following suspected corruption.

Mr Al Ani, who served as trade minister from 2018 to 2020, was replaced by Saad Faisal Al Jabouri, the former general director of the state-run Al Mishraq Sulphur Company.

Rampant corruption

Separately, the anti-corruption commission announced on Monday the arrest of a senior oil official over charges of “money laundering and illicit gain”.

Authorities found that the general director of the state-run Midland Refineries Companies owned six residential real estate properties in Oman, a large property in downtown Baghdad, and had partnership deals in trading companies and a hotel.

It put the total value of his assets, which it said were illegally acquired, at about 8 billion Iraqi dinars ($5 million).

Corruption has become one of the main features of Iraq's political landscape since the 2003 US-led invasion that toppled Saddam Hussein’s regime.

The country was ranked 157 out of 180 nations in Transparency International's corruption perceptions index in 2022.