In October, Iraq’s acting finance minister Ihsan Jabbar shocked the world by announcing an investigation into $2.5 billion that had gone missing from Iraq’s General Commission for Taxes, a department in the Ministry of Finance. It was described as the heist of the century.
The money had been given to five shell companies set up last year and investigations are ongoing, but experts tell The National that while several political parties have been implicated, senior officials are unlikely to be punished.
Earlier this month, it was alleged that attempts to toughen anti-corruption efforts by former prime minister Mustafa Al Kadhimi ended in a series of raids against rivals resulting in the death of one suspect under torture.
New Iraqi Prime Minister Mohammed Shia Al Sudani has placed a former intelligence chief and Iran-linked enforcer in a new anti-corruption team, while the new head of the country's biggest anti-corruption body is close to the Iran-linked Badr Organisation, stirring fears of more purges that do little to get to the root of the problem.
“If you look at the people in positions linked to the organisations where the theft happened, or those reported to be involved, you get a lot of political actors. From the Popular Mobilisation Forces [a largely Iran-backed militia force] to [former prime minister Mustafa Al] Kadhimi to [Parliament Speaker Mohammed Al] Halbousi to the Sadrists. It's unlikely that such a big theft went on without a major player taking a cut,” says Hamza, a consultant in Iraq who used to work for the main government auditing body. His name has been withheld for security reasons.
One problem, experts say, is that senior positions in ministries are often held by incompetent but politically connected staff whose role it is to illegally raise funds for parties.
Senior ministry positions known as “special grades” include “director generals” who are almost impossible to remove. They have the power to form new organisations related to their ministry.
“A director general is appointed by a council of ministers' vote and cannot be demoted by a minister. Should he be transferred elsewhere, he remains in that role, and that transfer needs the approval of the cabinet. Sometimes such an attempt to remove him by the cabinet might not work if a person is well connected,” Hamza says.
One recent victim of the anti-corruption drive was a director general at Iraq's ministry of trade, who died after being detained by Mr Al Kadhimi's anti-corruption force.
Corruption in Iraq exploded after 2003 as the US rushed in reconstruction funds at a colossal rate with little oversight, sending billions of dollars in cash because the banking system was not functioning.
In 2007, the former head of the Integrity Commission, Radhi Hamza Al Radhi, told the US congress — after fleeing Iraq — that $18 billion had gone missing.
Since then, that figure may have gone as high as $320 billion, according to Iraq’s Parliamentary Transparency Commission.
Omar Al Nidawi, an analyst with Enabling Peace in Iraq Centre, says one challenge is that the country’s main anti-corruption body, the Commission of Integrity, lacks skilled staff after being intimidated by political parties.
“There are limited options in the appointment of officials in key posts that are either tasked with fighting corruption or are suspected of prior corruption. After 20 years of purges and pervasive growth of patronage networks, there simply aren’t that many capable and clean officials at the top of any given department who are also brave enough to go to war with the Moqtadas and Nouris of Iraq,” he says.
Former prime minister Nouri Al Maliki and one of his main rivals, the influential Shiite cleric Moqtada Al Sadr, are accused of overseeing some of the worst thefts and intimidating the commission.
Kirk Sowell, who runs the Iraq-focused Utica Risk consultancy, highlights the partisan character of the new commission head, but also notes how his predecessor failed to instil accountability.
“[Former commission head] Ala Jawad Al Saadi was useless in the position under Maliki, useless under Kadhimi. Given the current make-up of this cabinet, even talking about fighting corruption is a joke,” he says.
The practice of stealing through shell companies was first discovered on a large scale in 2011, when, according to Transparency International, “a network of shell companies that embezzled procurement funds” had “close links to senior political parties and politicians, including the prime minister’s office”.
A history of theft
In 2008, investigators from the Commission of Integrity uncovered evidence of corruption at the Ministry of Trade, but trade minister Falah Al Sudani faced no repercussions from the prime minister, Mr Al Maliki, despite evidence that he had rigged state food purchases.
By some estimates, hundreds of millions of dollars were stolen from state food welfare programmes.
Other scandals worsened security, such as army generals selling fuel, food and ammunition for personal profit, undermining the army as ISIS gained strength in 2013-2014.
Corruption scandals in Iraq's defence sector 2003-2019
After the conflict against the militant group, not even reconstruction was spared from theft. Former Mosul governor Nufal Hammadi was dismissed in 2019 amid allegations by the UN of attempting to extract bribes from reconstruction projects — a rare case of accountability.
In the health sector, the ministry is widely regarded to be divided between Mr Al Sadr and Mr Al Maliki, who have seeded the ranks of staff with loyalists, which in the past has enabled the theft and resale of medicine, according to health officials who spoke to The National.
In 2008, Mr Al Maliki announced plans to build 200 schools in Iraq, setting aside nearly $240 million.
Contracts were awarded to four companies, three Iraqi and one Iranian. All contractors received a 20 per cent down payment, but they left behind only steel skeletons, an education ministry official told The National.
Some are still being worked on but are years behind schedule and the ministry has paid out approximately 235 billion of the 242 billion dinars — almost all the project allocations, the ministry official said.
As of last year, fewer than 100 schools had been accepted by the ministry, including 20 that were completely finished, he said.
Thousands of mud schools are still scattered across Iraq, a stark example of the collapse of the education system in a country that needs about 10,000 new schools.
Every year at the beginning of the school season, videos flood social media showing poorly refurbished schools and crowded classes. At some schools, pupils sit on the ground due to the lack of desks.
Over the years Iraq has been gripped by prolonged droughts, worsening the already difficult challenge of water access for communities where infrastructure is crumbling.
This has not stopped officials from trying to profit from water reconstruction projects.
The situation reached crisis point in summer 2018 when water levels dropped sharply in the Shatt Al Arab, a river formed by the confluence of the Tigris and Euphrates. Seawater encroached in the river’s estuary, overwhelming water treatment systems in the port city of Basra, which could not cope with the highly saline water.
One piece of infrastructure could have alleviated the problem: a water treatment station on the Shatt Al Arab, built with aid money by a Japanese-French and Egyptian consortium.
The plant could have provided fresh water for hundreds of thousands of people in Basra that summer, but was years behind schedule. A government inquiry found that vital components for the plant had been held up at customs by officials demanding bribes.
Iraq’s lack of power becomes a major news story each summer, when demand surges far above supply as Iraqis switch on air conditioning to combat the soaring temperatures. That overwhelms the grid and causes blackouts.
But while most experts agree reform of the sector is vital — such as reducing subsidies on tariffs ― corruption plays a role as well, eating into the electricity ministry’s funds.
A leaked 2018 report by US consultancy Hakluyt alleged that a powerful businessman close to Mr Al Maliki was helping the former prime minister’s party to take a percentage of power plant funds.
Last year, former electricity minister Mahdi Hantoush alleged that figures loyal to Mr Al Sadr had been over-valuing power plant contracts and pocketing the surplus, or demanding that contracts went to political loyalists.
According to interviews with government officials by academics Toby Dodge and Renad Mansour, as much as a quarter of ministry budgets might be lost to corruption.
"For Iraq to succeed in reducing corruption, the country must break the rent-seeking cycle that extends from the party bosses all the way down to the most junior civil servants and their interactions with the citizenry," Mr Al Nidawi says.