Iraq: Iraq's Commission on Public Integrity revealed yesterday that Baghdad will soon issue a warrant for the arrest of Hazem Shaalan, the former defence minister who is accused of misappropriating at least $1.3 billion (€1.07 billion) allocated for the purchase of weapons and equipment for the country's armed forces.
Commission chairman Radhi Hamza al-Radhi said he had transmitted a file to the central criminal court in July and warrants in connection with the case should be issued in a week to 10 days. The main accusation is that the defence ministry made contracts through intermediaries who took large commissions, a practice which is prohibited.
Mr al-Radhi stated: "What Shaalan and his ministry were responsible for is possibly the largest robbery in the world. Our estimates begin at $1.3 billion and go up to $2.3 billion."
Mr Shaalan, who is reported to be residing in Jordan, has denied any wrongdoing and has said that all of the contracts concluded during his period in office were approved by the US embassy, which had advisers in the ministry.
Lt Gen David H Petraeus, the officer in charge of supervising the training of Iraqi troops, warned the embassy that corruption was a danger but it, apparently, did not intervene because the Iraqi government was meant to be in charge.
Two months ago the Iraqi Board of Audit issued a 33-page report detailing abuses which took place between June 2004 and February 2005 when the US-appointed government of Dr Ayad Allawi was in office. The board investigated 89 contracts and discovered a pattern of deception and a lack of transparency which showed that more than half of the defence ministry's budget had been squandered on unusable equipment and overpriced items or lost in dubious deals.
A large proportion of the funds was spent on weaponry from Poland, Pakistan, Arab countries, the US and Europe. Multi-million dollar contracts were awarded without tenders or bidding and without the necessary approval from the premier's office. No records were kept of large purchases and the full value of contracts, said to be worth $1.27 billion, was paid in cash. The intermediary for 43 of the contracts, worth more than half the total, was Nair Muhammad Jumaili, a former currency exchange dealer.
Among the equipment purchased were refurbished 28-year-old Soviet-era helicopters, armoured cars which were so badly made that they could not protect troops from automatic fire, and machine guns advertised as being US-manufactured but were Egyptian-made models.
Machine gun munitions were bought for four times the normal price.
Mr Shaalan, who ran a small business in Britain before returning to Iraq in 2003, and the chief procurement officer Ziad Cattan, a dual Iraqi-Polish national who had lived in Europe for 27 years, are being held responsible for the alleged fraud. According to informed sources, both men were US "assets" during the period of Baathist rule. A warrant was issued several weeks ago for the arrest of Mr Cattan, the alleged ringleader, who fled rather than risking indictment. Initial intimations of a scandal in the defence ministry surfaced last spring.
There is evidence that the ministries of communications, transport, trade, interior, public works and labour are also mired in embezzlement. Authoritative sources say corruption inside the oil ministry is widespread and its commercial outlet is accused of illegally depositing $100 million in Iraqi and Jordanian banks.
