Where’s Kurdistan’s missing $4 billion?

By Michael Rubin:

The story of the United Nation’s Oil-for-Food program is tragic. Meant as a humanitarian program to support the war-weary people of Iraq, it came to symbolize not only Iraqi President Saddam Hussein’s antipathy to his own people, but also UN administrators’ venality and corruption.

Alas, Saddam’s fall did not end corruption. Despite the poverty Iraqis suffered under Saddam, Iraq was never a poor country. The United Nations held billions of Iraq’s money, and Saddam had hidden billions more. When the Baathist regime fell, the United States set up the $17 billion Development Fund for Iraq which included unspent Oil-for-Food money, Saddam’s frozen assets, and proceeds from new oil sales.

Much of that money is now missing, and Iraqis are rightly indignant. A letter sent last month by the Iraqi parliament’s Integrity Committee to the United Nations’ office in Baghdad demands accountability, and accuses the United States of corruption.  “All indications are that the institutions of the United States of America committed financial corruption by stealing the money of the Iraqi people, which was allocated to develop Iraq, [and] that it was about $17 billion,” the letter reportedly read.

The Coalition Provisional Authority (CPA) certainly wasted much money in poorly conceived development projects. (In full disclosure, I worked in the CPA but not in a financial or developmental capacity). There was disorganization, poor accounting, waste, and neither a cohesive strategy nor consensus about goals.  The CPA did not, however, steal $17 billion; it mismanaged it.  It should certainly be held accountable for that.

Some money did disappear. In the CPA’s waning days, its administrator L. Paul Bremer transferred $1.6 billion in cash to the Kurdistan Regional Government (KRG), slightly less than half of the money which the KRG demanded. The transferred Oil-for-Food money was to be split between the Kurdistan Democratic Party and Patriotic Union of Kurdistan.  That was not the only money transferred, however. According to family members and senior politicians, both leaders also received money from the American intelligence community and development funds from across the U.S. government. International donors provided additional cash.  As Nechirvan Barzani stepped down from the premiership, he reportedly bragged that the KRG had $4 billion in the bank.

That cash and much of the rest transferred to the KRG now appears to be missing. While the money was meant to belong to the citizens of Iraqi Kurdistan, top political leaders in both major Kurdish political parties apparently transferred funds from the international payments into personal bank accounts. Granted, too often in Iraqi Kurdistan, leaders treated the treasury and personal bank accounts as interchangeable. The Korek cell phone company is the prime example. Its leaders apparently used several hundred million dollars in KRG money to purchase the national license. In effect, they used the Kurdish citizens’ own funds for personal gain. Korek today may be worth billions of dollars. In a democracy, a company would have issued shares to provide start-up funds. The shares would reap profit or loss for investors. In Kurdistan, however, ordinary citizens assume the loss but family members of the political leaders monopolize the gain.  In effect, they gamble without risk of loss. Assuming each Iraqi Kurdish resident received a share for what was, in effect, their forced investment in Korek, every individual in Kurdistan should now receive cash dividends for their share.

Assuming Nechirvan Barzani’s account of a $4 billion surplus was accurate, then Kurds should demand accountability not only for the $4 billion, but for the interest and profit that $4 billion would generate. If senior Kurdish officials from both parties transferred any or all of that money into their personal bank accounts, then they should be accountable not only for the principle, but also for the interest, stock dividends, and profits from investments in companies and real estate. Kurds may not realize it, but they now own shares in companies in China, hotels in the United Arab Emirates, and stocks in American companies. If, for example, that $4 billion investment generated 5 percent profit per year which was reinvested, then in the last two years, the principle has grown by more than $400 million.

Both Masud Barzani and KRG Prime Minister Barham Salih have promised reform. Financial transparency must be at the top of their agenda alongside press freedom. Borrowing from government coffers is not legitimate; it is theft. When public officials seek personal profit from the public treasury while ordinary, non-politically connected citizens struggle to get by, they are not simply gambling or investing; rather, they are replicating the financial crimes Saddam committed against the Iraqi people.


4 Responses to Where’s Kurdistan’s missing $4 billion?
  1. Balen Jamal
    July 3, 2011 | 14:33

    The thugs that rule Kurdistan don’t see Kurdistan’s natural resources as Kurds’ because not only they act like Saddam and his sons but also think like them. Saddam and his sons did not think Iraqi oil belonged to Iraqis; they argued that they liberated and nationalised the oil and hence it belonged to them as the ruling family. This is how Barzanis, their thugs, and their apologists think about Kurdistan’s income and natural resources.

    Massud Barzani talks about reforms and ending corruptions while he and his family are the source of the widespread corruption in Kurdistan. An example is Korek; this telecom company illegally belongs to the Barzani family. Until recently, they wouldn’t allow other competing, telecom companies to operate in the region. This way, they forced people to purchase the services of this company. In fact, even today they don’t allow other companies to operate in the region without a good share of the profit. If we take a look at the history of, for example, Saudi Arabia we would see similar steps have been taken by the totalitarian ruling family there. Barzanis learn from these systems.

    Nechirwan Barzani didn’t mention the 4-billion out of honesty or decency; he was simply forced to mention the money after the case was known to people through the few independent media (Hawlati, Awena, and Livinpress) of the region. He simply indirectly said: we, the KDP, stole the 4-billion and put it in the bank accounts of the two ruling families, and now, it is your responsibility (PUK’s) to find a lie and explain its whereabouts. Actually, all what Nechirvan Barzani did during his time as the head of the tribal, family government of Kurdistan was developing his personal estate ( a large area of Irbil) and buying private jets.

    The 17-billion that the Iraqis are now trying to locate was actually not a charity fund from the USA; the USA government is now taking back the money. The very money that did not reach Iraqis is now being paid back by Iraqis. Frankly, I don’t give a damn about problems outside Kurdistan. I do not care about this missing 17-billion but I need to know what’s been happening to the very large income of Kurdistan? Exactly what comes in and what goes out from this income? That’s what I would like to know about.

  2. Aso
    July 4, 2011 | 13:55

    the strangest, yet funniest thing in this world is that all the dictators are alike. they take the same steps. they never learn that it is only the dictators who will leave, not the nation. these pirates in Kurdistan can steal, kill and torture people now and for a while, but eventually they must choose between two options, either bowing to the demands of the people or taking the road of their own destruction. they can exhaust the nation, but they will never force them to give up their rights. they must learn from Mubarak and Ben Ali. they collected a lot of money: where did it go?

  3. Butan Amedi
    July 5, 2011 | 22:33

    When the American investigation of the missing money started, I saw a political cartoon of Ambassador Bremer answering press questions. In response to a question about the missing $9 Billions, Bremer was said: “Look, Buddy! In Iraq, CPA is Coalition Provisional Authority, not Certified Public Accounting.”

    The cartoon was hilarious, so I decided to send it to a friend who was an accountant with the CPA in Baghdad. He confirmed to me that they flew to Kurdistan, first to Erbil then to Sulaimania, and made the transaction to KDP and PUK official. He said that as soon as they landed in Sulaimania, they were asked by PUK officials about the amount of money provided to KDP. He said that the amount was equal.

    The accountant also said that they have photographs and receipts as evidence for the transfer. What they lacked was documents from Iraqis to show how and where the money was spent.

  4. Lazz
    May 20, 2012 | 09:55

    Again Kurdish people are so disappointed by KRG Government which they brought nothing but bunch of scandalous and corruptions and they took the same path as Saddam’s regime had taken before.Generally speaking we don’t see any pledged reforms yet to done .

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