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Rafidain Bank Scandal: Ministry Refuses Comment Amid Investigation

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The Iraqi Ministry of Finance has declined to comment on allegations that Rafidain Bank was used to siphon millions of dollars from the country’s tax authority, despite being warned by officials about the risks of removing oversight mechanisms.

Background

According to a report, one of the main reasons why the thefts were not detected earlier was that Iraq’s public spending watchdog, the Financial and Budgetary Supervisory Authority (FBSA), had been removed from its role in auditing tax deposit refund requests in August 2021. The FBSA had previously been responsible for scrutinizing these requests to prevent corruption.

The Investigation

A senior official familiar with the investigation said: “The FBSA was the biggest obstacle faced by the thieves, so they worked to remove it.”

It is alleged that Haitham al-Jubouri, then head of the parliamentary finance committee and later an advisor to Prime Minister Mustafa al-Kadhimi on financial policy, pushed for the removal of the FBSA’s oversight role. Jubouri had received complaints from companies frustrated with delays in payment of tax refunds.

The Proposal

In a letter to Finance Minister Ali Allawi, Jubouri suggested that the Independent Government Commission for Transparency (IGCT) conduct the audit procedures instead, limiting the role of the FBSA to its basic tasks. This proposal was backed by Raed Jouhi, head of Kadhimi’s office, and Ibrahim al-Zubaidi, the prime minister’s legal adviser.

Analysis

However, an analysis by MEE found that neither law cited by Zubaidi provides a statutory basis for removing the oversight role of the FBSA in regard to tax refund requests. Despite this, the IGCT and FBSA halted their oversight of refund requests, allowing millions of dollars to be withdrawn as cash at Rafidain Bank branches without being detected.

Aftermath

When contacted for comment, Jubouri was questioned by a Baghdad court but no arrest warrant was issued. He has since left Iraq for Jordan.

The ministry’s decision not to comment on the allegations comes amid growing concerns about endemic public sector corruption in Iraq. Former Finance Minister Ali Allawi resigned last year, citing frustration with a separate scandal involving Rafidain Bank and describing the case as “the straw which broke the camel’s back”.

Allawi’s Statement

Allawi denounced the contract as corrupt, describing the case as part of a broader network of secret networks consisting of senior officials, businessmen, politicians, and corrupt state officials operating in the shadows to control entire sectors of the economy.