Iraq Needs To Expand Its Efforts To Quash Corruption – OpEd

The streets of Baghdad have been rocked by massive demonstrations in recent weeks, with a widespread— albeit largely leaderless— movement emerging to demand better governance in the country. This is hardly the first time Iraqi activists have spoken out against widespread corruption, economic strife and weak governance; anti-government demonstrations have been a recurring theme in recent years, particularly in the Shiite-dominated areas of central and southern Iraq.

Even so, the scale of these recent protests is as striking as the scope of demonstrators’ demands: “the people want the fall of the regime,” some have been chanting, in a call reminiscent of the Arab Spring. This year, calls for change seem to extend far beyond the need for functioning state services that has prompted previous protests. 

Iraq’s beleaguered prime minister Adil Abdul-Mahdi and his government have, at least, taken some steps to try and tackle the issue. Indeed, the government is readily admitting that it has to address the endemic graft which is thwarting Iraq’s progress towards stability. “We have problems with those political groups who have their grip over money, banks and power, and rooted to corruption,” says senior adviser Laith Kubba, “it is a problem and there is no real answer to it.” 

The government is testing out one response by establishing a “Supreme Anti-Corruption Council,” and declared that “a first list of high-ranking officials will be brought to justice.” Those targeted are reportedly ex-ministers and officials still in office, though no names have been announced officially. The council will certainly have its work cut out for it: anti-corruption group Transparency International last year ranked Iraq as the world’s 12th-most corrupt country. The problem is so widespread that Iraqis have a nickname for the worst culprits: hitan, Arabic for “whales.” 

Earlier this month, the Anti-Corruption Council announced it had turned nine senior former officials to the judiciary on corruption charges, and promised to turn others over soon. Others, however, were sceptical, reading the news as a superficial attempt to de-escalate ongoing demonstrations.

For many, the challenge of corruption in Iraq is far more deep-rooted than the prime minister’s initiatives are currently digging. “Corruption is so institutionalised in Iraq that it takes more than cosmetic changes like creating committees,” Kubba emphasised. “It requires a head-on confrontation, it will come with a high political cost…it requires a crackdown.”

Making matters more complicated is the fact that, to properly tackle the problem, Baghdad can’t limit its efforts to Iraqi citizens only. Indeed, a number of prominent non-Iraqis have their hand in perpetuating the country’s endemic corruption issues.

One quintessential example is the case of shadowy Lebanese businessman Raymond Rahmé, who was involved in a grisly case from 2004 involving the murder of two American contractors, Dale Stoffel and his construction manager Joe Wemple. According to the United States District Court in Washington, the Lebanese middleman appears to have absconded with some $25 million owed to Stoffel’s company for the refurbishment of old Iraqi military equipment. Stoking suspicions still further, Rahmé was also the last person Stoffel emailed before he and Wemple were ambushed and executed en route to collect their payment.

Far from facing justice for his likely role in this dark saga, Rahmé appears to have parlayed his ill-gotten funds into a number of new schemes. As a major shareholder in Iraqi telecommunications operator Korek, the Lebanese businessman has been the subject of fresh controversy. This time, he is accused of a set of misdeeds including failing to declare a substantial interest in Korek’s competitors, and lying to other Korek shareholders about the terms of a loan.

According to Kuwait’s Agility and France’s Orange—who invested roughly $1 billion in Korek through joint venture Iraq Telecom before being stripped of their stake in the company under dubious circumstances— Rahmé was in breach of his fiduciary duties regarding a number of multimillion-dollar deals which Korek concluded with companies in which he retained a substantial personal interest. 

Rahmé’s handling of a large loan has also landed him in legal hot water. Rahmé, along with fellow Korek shareholder and well-connected Kurdish businessman Sirwan Barzani, allegedly colluded with the Lebanese IBL Bank to obtain a US$150 million loan for Korek at an interest rate of 13.25 percent per annum. Korek directors appointed by Iraq Telecom were then falsely advised that the loan was unsecured. As a secured loan, the principal should have only attracted interest of around four percent, according to one of the claims against Rahmé and Barzani.

Adding to the controversy swirling around Rahmé, another one of his business ventures, Byblos Bank, is being sued by US plaintiffs for knowingly aiding Hezbollah. Byblos is on a list of eleven Lebanese banks implicated in a 1 January 2019 civil action under the Anti-Terrorism Act, on behalf of the estates and families of American nationals killed or injured in Iraq due to terrorism. A similar lawsuit has been filed for damages sustained by Israelis during the 2006 war on Lebanon, while other lawsuits are expected before the relevant statute of limitations expires.

The so-called crackdown on corruption which the Abdul-Mahdi administration is currently trying to carry out means little if foreign power players like Rahmé are permitted to grow wealthy off the back of Iraq’s transition to peace and security. If the government is truly serious about entering a new era of stability and responsible governance, it simply cannot allow people like Rahmé to escape scrutiny.

*Maya Robinson is an American consultant with a particular interest in conflict and governance in the Middle East.

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