Tax Evasion Scheme Rocks Iraqi Government: $2.5 Billion Embezzled from Tax Commission’s Accounts

A massive tax evasion scheme has been uncovered in Iraq, resulting in the theft of $2.5 billion from the country’s tax commission accounts. The scandal, dubbed “the heist of the century” by Iraqi media, involves influential businessmen and corrupt officials working together to embezzle funds through shell companies.

How the Scheme Worked

According to a confidential 41-page report obtained by The Guardian and Middle East Eye, the scheme involved submitting fake documents to claim refunds from the tax commission’s accounts. The companies involved in the scam received the stolen funds in 250 cheques between September 2021 and August this year.

Those Involved

• Businessman Nour Jassim: As CEO of two of the five companies involved, he received more than $1 billion according to an audit carried out by the ministry last month.
• Tax Officials: Two officials have been arrested for their involvement in the scheme.
• Rafidain Bank: The state-owned bank was complicit in the fraud.
• Badr Organisation: The powerful pro-Iran organisation received pay-offs in exchange for their silence and cooperation.

The Investigation

The investigation has led to:

• Detention of Businessman Nour Jassim: He is currently being held by authorities.
• Seizure of Properties and Assets: Several properties and assets worth millions of dollars have been seized.
• Audit Findings: An audit carried out by the ministry last month revealed the extent of the fraud.

The Political Context

The scheme took place under the watchful eye of former prime minister Mustafa Kadhimi’s office, which cancelled an audit of the tax commission’s accounts shortly before the first cheques were cashed. The thefts coincided with a year of political turbulence following the October 2021 parliamentary election.

The Response

• Finance Minister Ali Allawi’s Resignation: He resigned in protest against rampant corruption.
• Fresh Audit Ordered: Interim replacement Ihsan Abdul Jabbar Ismail ordered a fresh audit which found that there was not enough money in the looted tax account to pay legitimate refunds.
• New Prime Minister’s Pledge: Mohammed Shia al-Sudani has pledged to tackle corruption as soon as he formed a government on October 27th.

The Impact

Iraq’s ranking on Transparency International’s Corruption Perceptions Index has been steadily declining since 2003, with the country currently ranked 157 out of 180 countries.