View Full Version : Oil Graft Fuels the Insurgency, Iraq and U.S. Say

02-05-2006, 03:25 PM

Oil Graft Fuels the Insurgency, Iraq and U.S. Say

(Beltman713: So, the oil that was supposed to pay for reconstruction, is actually funding the insurgency. Typical!)

BAGHDAD, Iraq, Feb. 4 — Iraqi and American officials say they are seeing a troubling pattern of government corruption enabling the flow of oil money and other funds to the insurgency and threatening to undermine Iraq's struggling economy.

In Iraq, which depends almost exclusively on oil for its revenues, the officials say that any diversion of money to an insurgency that is killing its citizens and tearing apart its infrastructure adds a new and menacing element to the challenge of holding the country together.

In one example, a sitting member of the Iraqi National Assembly has been indicted in the theft of millions of dollars meant for protecting a critical oil pipeline against attacks and is suspected of funneling some of that money to the insurgency, said Radhi Hamza al-Radhi, the chairman of Iraq's Commission on Public Integrity. The indictment has not been made public.

The charges against the Sunni lawmaker, Meshaan al-Juburi, are far from the only indication that the insurgency is profiting from Iraq's oil riches.

On Saturday, the director of a major oil storage plant near Kirkuk was arrested with other employees and several local police officials, and charged with helping to orchestrate a mortar attack on the plant on Thursday, a Northern Oil Company employee said. The attack resulted in devastating pipeline fires and a shutdown of all oil operations in the area, said the employee, who was granted anonymity because he was not authorized to speak publicly about the matter.

Ali Allawi, Iraq's finance minister, estimated that insurgents reap 40 percent to 50 percent of all oil-smuggling profits in the country. Offering an example of how illicit oil products are kept flowing on the black market, he said that the insurgency had infiltrated senior management positions at the major northern refinery in Baiji and routinely terrorized truck drivers there. This allows the insurgents and their confederates to tap the pipeline, empty the trucks and sell the oil or gas themselves.

"It's gone beyond Nigeria levels now where it really threatens national security," Mr. Allawi said of the oil industry. "The insurgents are involved at all levels."

American officials here echo that view. "It's clear that corruption funds the insurgency, so there you have a very real threat to the new state," said an American official who is involved in anticorruption efforts but refused to be identified to preserve his ability to work with Iraqi officials. "Corruption really has the potential of undercutting the growth potential here."

An example of how the insurgents terrorize oil truck drivers occurred last month, as a 60-truck convoy of fuel tankers from Baiji that was intended to alleviate fuel shortages in Baghdad was attacked by insurgents with grenades and machine guns despite the heavy presence of Iraqi security forces. In some cases Iraqi guards on the Syrian border have been paid off to let stolen shipments through, and the oil is then sold on the black market, Mr. Radhi said.

Senior officials in Iraq's Oil Ministry have been repeatedly cited in the Iraqi press as complaining about what they call an "oil smuggling mafia" that not only siphons profits from the oil industry but also is said to control the allocation of administrative posts in the ministry.

The former oil minister, Ibrahim Bahr al-Ulum, told the London-based newspaper Al Hayat late last year that "oil and fuel smuggling networks have grown into a dangerous mafia threatening the lives of those in charge of fighting corruption," according to a translation by the BBC.

Mr. Ulum said in an interview with the television network Iraqiya that raids on "smuggling dens" in Baghdad had netted forged documents and tanker trucks.

The indictment against Mr. Juburi, who is now believed to be hiding in Syria, charge that he stole money intended to hire and equip thousands of guards in 2004 and 2005 to protect an oil pipeline running between Baiji and the northern city of Kirkuk, Mr. Radhi said. Iraqi officials also suspect, but have not proved, that Mr. Juburi funneled some of the money he was given to protect the pipeline to the insurgents who were attacking it.

An Iraqi Army battalion commander Mr. Juburi hired was arrested recently and accused of organizing insurgent attacks on the pipeline, said a high-ranking Iraqi official who is close to the investigation. The official spoke on the condition of anonymity because he was not authorized to speak about the indictment. It is not clear whether Mr. Juburi knew that the commander was helping plan the attacks, the official said.

Frequent insurgent attacks on the pipeline have been one reason Iraqi oil exports have plummeted over the past year. The mortar attack on Thursday that led to the arrests of oil company officials and police officials was described by Northern Oil company employees as one of the most damaging in years.

The battalion commander hired by Mr. Juburi was identified as Ali Ahmed al-Wazir, commander of the second battalion of the first brigade of the Special Infrastructure Brigades, based in the Wadi Zareitoun district, said the high-ranking Iraqi official close to the investigation. Mr. Juburi fled Iraq just before a warrant was issued for his arrest in late December, Mr. Radhi said. Mr. Juburi's son, Yazen Meshaan al-Juburi, has also been charged in the case and is believed to have fled with him.

Mr. Juburi's party, the Conciliation and Liberation Bloc, won three seats in December's elections. But the charges against him are not likely to affect the current negotiations over forming a new Iraqi government, Mr. Radhi said, because the party Mr. Juburi formed can nominate someone to replace him in the new National Assembly.

Mr. Juburi has long been a controversial figure in Iraq. He was once intimate with the family of Saddam Hussein, but joined other Iraqi exiles in calling for Mr. Hussein's overthrow after fleeing Iraq in 1989.

He claimed that he worked with American Special Forces in the weeks before the war in a covert attempt to undermine the Iraqi military, broadcasting calls to military commanders to lay down their arms from a television station in Kurdistan. He claimed to have taken control of Mosul by the outbreak of the war, but he was later ousted by American commanders.

Mr. Juburi's tribe, the Juburis, is powerful in Salahuddin Province, through which the oil pipeline from Baiji runs. Partly for that reason, Mr. Juburi was asked in 2004 to organize 17 battalions of soldiers to protect the pipeline. In January 2005, Mr. Juburi was elected to the National Assembly, becoming one of a few Sunni Arab members and a hard-line critic of the government, led by Ibrahim al-Jaafari. Iraqi and American officials say they believe that some members of the Juburi tribe are involved in the insurgency.

After attacks on the pipeline grew worse in 2005, a three-month investigation found that Mr. Juburi had hired only a small number of commanders, paying them to appoint hundreds of ghost soldiers on paper and funnel the salaries back to him, Mr. Radhi said.

Mr. Juburi's son, Yazen, was responsible for supplying food for the soldiers, and he appears to have pocketed much of the money allocated for that purpose, the Iraqi official said.

Oil smuggling is only one part of a broader corruption problem that ranges from small-scale kickbacks to major fraud of the kind that took place in Iraq's Defense Ministry, where investigators last August said they had identified more than $1.3 billion in misspent military contracts. Hazem Shaalan, who was defense minister under former Prime Minister Ayad Allawi and gave Mr. Juburi the job of protecting the Baiji pipeline, was charged with public corruption last year and is now living in London.

Not all the corruption is related to the insurgency. But American and Iraqi officials say its scale is so broad as to be a serious threat to Iraq's economic rebirth.

The Commission on Public Integrity has referred about 450 cases for prosecution, and it has more than 1,000 other cases under investigation, Mr. Radhi said.

The reports of corruption have set off a major reform effort in recent months, with American advisers assisting internal investigations and promoting new rules like requiring financial disclosure forms for government officials.

But the changes have often been stymied by intimidation and violence. Iraq set up a new post in each government ministry to do internal monitoring, the inspector general, but two of the officials were assassinated last year just as they were about to publicize the results of investigations. Six other employees of the Commission on Public Integrity have been killed, and the rest live in constant fear of retaliatory violence.

"When the corruption is large, people incline to terror," Mr. Radhi said.

Some of the officials in charge of fighting corruption appear to have been drawn into it instead. The Iraqi inspector general program has suffered from "significant missteps and lapses in progress," and several inspector generals have been relieved of their jobs pending indictments, according to a State Department report on Iraq's reconstruction efforts.

The threat of violence has also deterred many Iraqi journalists from reporting on corruption, despite a campaign by American officials, who have optimistically declared the week starting Feb. 19 to be Anti-corruption Week.

"We have talked to three editors in the past week about anticorruption stories," said an American official in Baghdad who spoke on the condition of anonymity. "They are afraid of getting whacked if they print them."

In other cases, anticorruption officials have helped to hide illegal behavior, joining what Mr. Radhi called "Mafia type" organizations within the government ministries.

The Iraqi government has begun requiring all employees to sign a code of conduct, and all high-level officials must fill out complete financial disclosure forms. But 40 percent of them have refused to do so, saying they fear that filling out such forms will be equivalent to telling kidnappers what ransom to charge, Mr. Radhi said.

There have been some successes, he said: eight government officials have been convicted on corruption charges and sentenced, though many more have escaped prosecution by fleeing to other countries.