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$18B Deposited in Lebanese Banks by Iraqi Politicians, Gov’t Agencies Has ‘Evaporated’

The funds mostly come from corrupt politicians and those seeking to avoid US sanctions

By Hudhaifa Ebrahim

An informed source in Banque du Liban, Lebanon’s central bank, told The Media Line that more than $18 billion belonging to Iraqi politicians, the Iraqi government, and the Kurdistan Regional Government of Iraq have “evaporated” due to the banking crisis in Lebanon.

The source, who declined to be named, said, “This is what can be counted, and is officially registered in the names of Iraqi personalities, companies, or government agencies. There are many personalities whose balances are registered under other names and with other nationalities.”

He explained, “The numbers are much higher. There are politicians who are afraid of sanctions, so they have opened bank accounts in the names of Lebanese personalities who follow the same trend, and they are often followers of [Hizbullah and Amal movement], loyal to Iran, or even Sunni personalities.”

The source also said that, so far, the Iraqis have not asked to withdraw their funds, and that if they did, Lebanon’s central bank would not be able to honor the request because it does not have sufficient liquidity, and “until liquidity is available, these funds remain just numbers in the banks.”

He said that more than $1.3 billion belongs to the Iraqi government and more than $650 million belongs to the Kurdistan regional government. “As for the rest of the sums, they belong to political figures, businessmen, and others who hold Iraqi citizenship, and their money has been deposited in Lebanese banks in their names and nationalities. As for those who hold other nationalities, such as European, Iranian, Asian, or American nationalities, we will not be able to count them.”

The value of the Lebanese currency against the dollar was stable for more than a quarter of a century, at around 1,515 Lebanese pounds to the dollar. From 2019, it gradually deteriorated, affected by a severe economic crisis afflicting the country, and is now 39,000 Lebanese pounds to the dollar on the parallel market, though the official rate remains 1,517 Lebanese pounds to the dollar.

Political corruption in Iraq contributed to the flight of funds abroad; Iraqi politicians who obtained funds illegally regularly deposited them in foreign banks. However, since the end of 2017, when the US government under former President Donald Trump began imposing sanctions on some of the politicians, depositing the money abroad became difficult, except in countries that did not implement US sanctions.

Abdul Rahman al-Mashhadani, an Iraqi economic analyst, told The Media Line, “This money can be recovered if the government requests it, but the money of Iraqi politicians cannot be demanded.”

He added that Lebanon could not pay the money now, but an agreement could be reached on recovering the money in installments.

“Lebanon is one of the most popular countries for Iraqis to deposit their money in, because the government there is loyal to Hizbullah, which in turn is loyal to Iran, and this is in agreement with the orientation of many Iraqi politicians,” he said. In Lebanon, due to the influence of Hizbullah, US sanctions on pro-Iranian figures and parties can be circumvented “so they can deposit their money there without fear.”

He continued: “What happened to the Lebanese banks plunged some Iraqi politicians into a financial crisis, but frankly, it is a small part of what the corrupt politicians own; their assets greatly exceed these sums.”

Al-Mashhadani explained that Sunni Iraqi politicians could easily deposit their money in European and Turkish banks. But Shiite Iraqi politicians could only use banks in Iran, Syria, and Lebanon. And since economic situations in Iran and Syria were so precarious, Lebanese banks were the preferred solution before the economic collapse in that country.

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Mazhar Muhammad Salih, an adviser to the Iraqi prime minister, said in statements to the Iraqi media that “politicians who have money in Lebanese banks should forget it.”

“They should forget it, it will not come back,” he told journalists while declining to answer questions about the Iraqi government’s money.

Nabil Jaafar Al-Marsoumi, an economics professor at the University of Basrah, told The Media Line, “The numbers regarding Iraqi deposits in Lebanon’s banks are not accurate; the amounts are much larger.”

 “These funds belong to companies, some of which are registered in countries where tax evasion is possible,” he added.

“Most of the money [deposited] in Lebanon is the result of corrupt operations that took place in Iraq. Lebanese banks have been facilitating deposit and transfer operations for Iraqis in the past years, and they have been a center [for financial corruption] for these officials,” Al-Marsoumi said.

Ahmed A., a former employee of the Iraqi Embassy in Lebanon who spoke on condition that his full name not be used, told The Media Line, “In my work, I witnessed the transfer of many Iraqi funds to Lebanon.”

“The sums were in the billions, and they were not withdrawn,” he said. “The Lebanese banks were paying more than 5% interest, which prompted Iraqi politicians to deposit their money in Lebanese banks, and now they cannot withdraw it.”

He continued: “Specialized companies carried out this task. These companies were tacitly affiliated with Hizbullah. They supervised the transfers of funds and managed the bank accounts of Iraqi politicians in Lebanon.”

He stressed that Lebanon was chosen to handle these funds due to Hizbullah’s control of the banks and said that some funds go to Iran as a form of support.

The politicians have billions of dollars in funds, some of which are the result of corrupt deals by foreign companies, which transfer these funds directly to the accounts of Iraqis in Lebanon,” he said. The former embassy employee added that he had “no idea” about the Iraqi government’s money in Lebanon.

Source: .  26. September 2022



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