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January 22, 2020 Special Dispatch No. 8515

Al-Arabiya: Leaked Documents Suggest Iraq Is Helping Iran Defy Sanctions

January 22, 2020
Iran, Iraq | Special Dispatch No. 8515

Introduction

Following the rise in U.S.-Iran tensions in the aftermath of the Soleimani assassination, the Iraqi parliament passed a decision calling on the government to expel U.S. forces from Iraq. The U.S. responded by suggesting that should the Iraqi government follow through, the U.S. would respond with economic sanctions. Since the passing of this decision, Iraqi media[1] has become increasingly focused on the possibility of U.S. sanctions against Iraq. In the meantime, the Dubai-based Saudi Al-Arabiya network reported that Tehran is exploiting the U.S. exemptions for Iraq in order to get around U.S. sanctions.

This report will examine some of these claims.


SOMO Headquarters in Baghdad (Source: Somooil.gov.iq)

Leaked Documents

On January 21, 2020, Al-Arabiya[2] said that it had obtained "leaked documents" from an Iraqi MP that contain evidence of fraud on part of the Iraqi State Organization for Marketing of Oil (SOMO). The documents appear to be letters of guarantee sent by the Iraqi Central Bank to several Iraqi private banks, asking them to open credit accounts in U.S. dollars for the purpose of importing oil derivatives to meet local needs such as gas, oil, gasoline, diesel, white oil, and liquid gas.

According to the report, the boards of these private banks includes Iranian businessmen and  individuals who have ties to Iran, which the report underlines as an indication that Tehran is benefiting from these contracts and defying U.S. sanctions.

"It shows that Iran has been exporting its oil derivatives to Iraq, at a price backed by the Central Bank of Iraq, and is profiting from the bank's daily auction of hard currency by employing middlemen to convert Iraqi dinars into dollars," the report says, adding that the funds are later transferred out of Iraq using private exchange offices and banks.


A page from a leaked document (Source: Al-Arabiya.net)

Iraqi Private Banks Involved

The report lists several Iraqi private banks involved in transferring these funds:

Regional Cooperation Bank

The official statement from the Central Bank of Iraq, confirms that the Regional Cooperation Bank is owned by Iraqi and Iranian businessmen.

The United Bank For Investment

The United Bank for Investment is owned by Fadel Al-Dabbas and Iraqi businessman Khamis Al-Khanjar, who was sanctioned by the U.S. Treasury Department for being linked to Iran-backed militias. It is worth noting that this bank was placed under the trusteeship of the Central Bank of Iraq in November 2018. Moreover, the Jordanian public prosecutor issued a memorandum to Interpol calling for the arrest of "Al-Dabbas," on May 28, 2018, for which the report does not provide a reason.

The same bank has on its board, a controversial banker named Hassan Nasser Jaafar Al-Lami, AKA Abu Rami, who owns 40% of the bank's shares. Al-Lami owns two additional private banks: Iraq Islamic Bank, and Trans-Iraq Bank, along with the Sama Baghdad Company for Currency Exchange. According to the report the latter was shut down by Jordanian authorities in 2016.

On January 14, 2020, the Lebanese Satellite Channel MTV aired an interview with an Iraqi woman who claims that she worked as an employee for the Central Bank of Iraq. The woman, referred to as a whistleblower, describes Al-Lami as "the financial Qassem Soleimani of Iraq." In her interview the woman claims that she has documents that prove Al-Lami is among the key officials in Iraq who facilitate the financing of Iran and Hizbullah with foreign currency, and that he entered Lebanon on December 6, 2019.[3]


Hassan Nasser Jaafar Al-Lami, AKA Abu Rami, (Source: Arabyia.net)

Elaf Islamic Bank

According to the report, Elaf Islamic Bank has dealings with the Iranian Export Development Bank and was subjected to U.S. sanctions in 2012. The report says that these sanctions were lifted under in 2013.

Al-Bilad Islamic Bank

The director of Al-Bilad Islamic Bank's board, Aras Habib Al-Faili, has been sanctioned by the U.S. Treasury Department for funding the Islamic Revolutionary Guard Corps (IRGC), and for transferring funds from Tehran to Hizbullah, the report says.

Iraqi Union Bank

Iraqi Union Bank is owned by the brothers Aqil and Ali Muftin, who according to the report have close ties with pro-Iran former Iraqi PM Nuri al-Maliki.  In 2016, the American Federal Reserve placed $200 million of the bank's funds on hold due to suspicion of corruption.

Lack Of Monitoring

The leaked documents further show "financial fines imposed on SOMO due to delays in loading and unloading oil tankers, along with other fines related to service contracts of crude oil."

The report suggests that the lack of a comprehensive monitoring system in Iraq makes it difficult for anyone to tell if there is a difference between the quantities of oil extracted, produced, exported, and what is consumed domestically.

"One of the foreign companies that were operating in Iraq previously confirmed that there is a huge difference that reaches up to 50% when transporting crude oil to tankers, which prompted it to withdraw from Iraq."

It should be noted that on June 20, 2019, "Eni," an Italian energy company, had refused a shipment of Iranian crude that was falsely labelled as Iraqi oil, in an attempt to evade U.S. sanctions.[4]


(Source: Al-Arabiya.net)

 

[1] Rudaw.net, January 18, 2020.

[2] Alarabiya.net, January 21, 2020.

[3] Mtv.com.lb, January 14, 2020.

[4] Argusmedia.com, June 21, 2019.

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