9/28/2004

Iraqi Corruption

Corruption as a topic is rarely dealt with in political or media circles in the Arab world. But corruption as a culture is not unknown in almost all walks of political and administrative life in the region. However, Arab countries have occasionally touched upon issues bordering on corruption, though in much less vigor than other parts of the world. Terms like nepotism, favoritism and profiteering are commonly used by politicians and media along with embezzlement and election rigging. But the discussions have seldom been accompanied with serious measures to combat corruption in government ranks.

Corruption cases that have rocked Arab governments are not hard to find as each new regime attempts to uncover the illegal practices of its predecessor in a well-orchestrated smear campaign. However, little effort has been exerted by most sitting Arab governments to uproot corruption by putting under the law senior officials from heads of state down to political appointees, general managers and officers in the military and security services.

Anti-corruption measures adopted so far have not been serious enough to eradicate the virus. Some measures have grabbed headlines in international press, albeit their limited scope and restriction. In February 2001, the authorities in Dubai, for example, arrested Obaid Saqr bin-Busit, the emirate's customs chief and chairman of the World Customs Organization on corruption charges. But these measures are isolated and do not attack the core of the problem. To succeed, the battle against corruption has to be relentless, permanent and backed by constitutional and legal codes.

Iraq and corruption

There is some common ground in all Arab countries as far as corruption is concerned. But in Iraq, the focus of this study, corruption practices are perhaps unique and unprecedented as they are spearheaded by the head of the regime, Saddam Hussein, his family, cronies and immediate associates with total impunity.

Nowhere is nepotism as discernible as in Iraq. Petty corruption among civil servants is widespread, often linked to traditions of wasta – the use of connections for personal gain. Saddam, his sons, relatives and henchmen violate laws and instructions and often bend them for their own purposes.

Iraqis know of scores of examples where illiterate and ignorant members of Saddam's clan are given high-ranking positions in the government, army and security services. Transparency is a word, which has no place in their lexicon. Tales of their illegal riches and wealth are legend.

Favoring members of one's own family and friends is in fact part of the culture of the whole region. But nowhere have inefficient and inexperienced relatives of a ruler been given so much sway over the destiny of a country and a nation as in Iraq.

Though suffering from international isolation and crippling economic embargoes, information on corruption is not hard to obtain in Iraq. Scores of local academics, senior officials, media and civil society groups and individuals have either lost their lives or been silenced after long jail terms for their courage to expose corruption and lack of transparent governance in the country.

Corruption is so pervading in Iraq that it currently undermines the capacity of all basic institutions, including the armed forces and the security organs on which Saddam heavily relies for survival. Corruption is enhanced by the total impunity of its perpetrators, particularly those with connections to the regime and its head.

Corrupt networks, related to Saddam, his sons, relatives and associates play an excessive role in social, economic and political-decision making. The concentration of power and income from illegal sales of oil and other commodities has fueled grand corruption in a state held hostage by Saddam and his family.

Despite its secretive nature, there is ample evidence of the regime's rampant corruption. There are plenty of examples, illustrating the devastating impact the corrupt regime has had on almost all ways of life in the country. Those in power in Iraq have become too self-absorbed and far removed from the people they are meant to serve.

But before delving into the corrupt world of the regime in Baghdad, a historical background of the roots and legacy of corruption and lack of transparent governance may be in order.

The tentacles of corruption in Iraq

1. Saddam Hussein

The international press is replete with stories, articles and reports of the financial empire, which Saddam Hussein has built up for himself and his family. It is alleged that the conglomerate is deftly administered by his half-brother, Barzan al-Tikriti, the formerly notorious chief of Saddam's dreaded Mukhabarat or intelligence. Barzan is said to have laid down the foundation of this secretive empire during his tenure as Iraqi representative at the U.N. headquarters in Geneva.

According to international press reports, the conglomerate includes front companies, banks and assets, equities and real estate across the world. It is likened to an intricate web, almost impossible to uncover. International commissions were set up to probe Saddam's secret cashes of hard cash but to no avail.

The failure to unearth Saddam's hidden billions does not vindicate the Iraqi strongman. There is no lack of evidence of how Saddam, his sons and henchmen have managed to earn billions of dollars in hard currency by illegally manipulating the U.N. –supervised oil-for-food program and running an extensive smuggling operation outside it.

Hussein & Sons have developed many channels through which they have managed to export oil in exchange for hard cash and goods not subject to U.N. oversight. These channels include Turkey, Jordan, Syria, Iran and the Gulf states, and they are widening over time.

There is no authority in Iraq, which can stop Saddam Hussein from doing anything he likes. He, his sons and henchmen have total impunity and are never held accountable for their actions.

Saddam maintains firm control of the Finance Ministry, the Central Bank and the Oil Ministry. Selling oil, printing money and almost all state-run financial transactions cannot be carried out without his prior approval. Statistics on the earnings and expenditures of these institutions are among the most guarded secrets in Iraq and are only made available to a very limited circle.

Saddam, who rules by decree, hands out largesse and other benefits at whim. The finance minister and the central bank governor dare not question his orders, which usually include granting huge amounts of money to relatives, cronies and senior army and security officials. Recently, he personally supervised the distribution of tens of thousands of saloon cars reaching Iraq under the U.N. oil program. They were mostly given, free of charge, to henchmen, cronies, relatives and army and security officers.

B. Saddam's sons and relatives

The role of Saddam's two sons, Uday and Qusay, and relatives of al-Majeed clan was gradually reinforced in the 1980s. In those early years of Saddam's despotic rule – he deposed Hassan al-Bakr as president in 1979 – rumors flew of the flamboyant lifestyle led by his elder son, Uday, and his blood-curdling stories of immoral behavior and practices that run contrary to the Islamic and Arabic norms of a traditional society like Iraq.

In the beginning, it was hard to confirm Uday's violent nature and immorality. But events later showed that almost whatever the Iraqis whispered behind close doors regarding Uday was true.

The 37-year-old son accumulated a host of roles, most notably ownership of the leading Iraqi daily newspaper Babel, and chairmanship of the country's Olympic Committee, football associations and journalists' union. He used these roles for purely personal gains.

Uday's income is estimated to be hundreds of millions of dollars a year and his ventures now include oil smuggling on a massive scale. He has been the linchpin of corruption in Iraq, competing with other family members and brutally squashing anyone standing in his way.

By the mid 1980s, Saddam's family, relatives and tribesmen were almost in total control of almost every aspect of life in the country. As a result, corruption became endemic and the family embarked on a cutthroat rivalry over wealth and property.

Uday illegally obtained ownership rights of some of the best ranches and factories in Baghdad. His insatiable appetite occasionally ran him into bloody clash with closest relatives. Favored by his father, Uday would always emerge a winner.

Arshad Yassin, once Saddam's chief bodyguard and one of his most corrupt relatives, saw his fortunes waning following a confrontation with Uday over property and smuggling of oil and Mesopotamian antiquities.

Hussein Kamel, Saddam's son in-law and once one of his best lieutenants, had to flee to Jordan in 1995, allegedly after a dispute with Uday. Uday himself took part in the liquidation of Kamel, his brother and father in a gun battle in the heart of Baghdad following their return from exile, spurred by a presidential pardon.

Before falling out, Kamel was Uday's corruption partner. Together, and through a dubious government privatization drive, they added the cream of Iraq's state-owned firms, farms and projects to their own mushrooming trade and business empires.

Uday and Kamel are also blamed for the crash of the Iraqi currency when they spread their control over the government-run money-printing house and flooded the market with paper money. They turned a blind eye to the Central Bank, which warned of grave financial consequences if they did not stop printing money without cover.

In less than a year, the Iraqi dinar dropped to 2,000 to the U.S. dollar from about 50. A year later, the dinar dipped to as many as 3,000 and many Iraqis began dumping the currency in favor of the dollar.

The dinar only rebounded when Iraq began exporting oil under a 1996 U.N. deal designed to alleviate the suffering of ordinary Iraqis from the crippling trade sanctions the world body has imposed as a punishment for Saddam's 1990 invasion of Kuwait.

C. The state

The drastic fall in the value of the Iraqi dinar led to a dramatic decline in purchasing power, particularly of the low-income groups who make up the majority of Iraq's 22 million people. To exacerbate the situation, Saddam slapped a freeze on wages and salaries. While inflation ballooned, salaries remained the same.

In 1995, when the dinar saw one of its steepest declines, the monthly salary of a civil servant was about 4,000 dinars. Most Iraqis rely on government salaries for a living. But that meant an Iraqi teacher's monthly salary was roughly two U.S. dollars, perhaps one of the lowest in the world.

Salaries have not changed a lot since then, but Iraqis now have access to food rations distributed under the U.N. oil program. These rations have warded off the specter of massive starvation.

But the nearly two U.S. dollar-salary is still less than what one would pay for a fried chicken in Baghdad or a tray of 30 eggs. The collapse of the currency value, masterminded by Uday and Kamel with Saddam's blessings, paved the way for the disintegration of one of the most learned and law-abiding peoples in the Middle East.

Social values and ethics started crumbling and in their place a culture of corruption permeated through the state and has persisted until the present day. Bribes and kickbacks have become the norm rather than exception. It is now extremely difficult in Iraq to obtain documents or get access to officials and have your case settled without paying a bribe.

Major areas of corruption in Iraq

Corruption has become part of the culture of the place and has crept into all sectors, including the army, the judiciary, police, health sector and state-administered trade. Here are a few examples of how pervasive corruption has become in these establishments.

A. The army

The culture of Wasta thrived in the Iraqi armed forces shortly after the 1980-1988 Iraq-Iran war. Both officers and conscripts began exploring ways that would help them stay away from the battlefield. Many had to pay huge amounts of money to their superiors to be given non-combat tasks or simply stay at home.

Some conscripts were known to pay their salaries to their officers in return for extended leaves. Some soldiers and even officers were reported to have registered homes, cars and other belongings in the name of those with the authority to keep them away from the battlefield.

Stories abound of how senior officers, in collusion with army contractors, embezzled food rations and millions of dinars. Light arms and ammunition stolen from army depots were sold on the open market. Nepotism and favoritism played a big role in conferring decorations and medals during the war since they were usually accompanied with hefty financial benefits and gifts.

B. The judiciary

The regime blatantly mounted a campaign to meddle in the affairs of the judiciary in Iraq. Only members of the ruling Baath party now have the right to perform as judges in Iraq. A judge now must be a party member otherwise he will have to go.

The measure, sponsored by Saddam, dug the final nail in the coffin of the judiciary in the country. The judicial branch now plays little role in Iraq. The legislative branch is a rubber stamp as Saddam and his Revolutionary Command Council are the country's only legislators.

The judiciary has lost its prestige and independence in the country. Saddam turned it into a government-administered branch, prone to corruption like any other state establishment where bribes, nepotism and favoritism play a domineering role.

C. The police

The collapse of the dinar and the abject poverty of most of the population have led to a breakdown in law and order along with social values and ethics. Incidence of theft soared and crimes never heard of in Iraq became common occurrences. A demoralized, low-paid police force and security services took the opportunity to cash in on the rising crime incidence.

Iraqis found that the police occasionally colluded with thieves and criminals. Numerous thefts, after investigation, were found to be carried out with police assistance. Iraqis now need to bribe the police when reporting an incident. Relatives need to pay if they want to see their loved ones in jail.

The security services, the backbone of the regime's survival, are no exception. Forgery of passports and travel documents has always been an easy matter for those with money in Iraq. Though tightly controlled by security agents, many opponents of the regime have been able to leave after bribing their way through passport and emigration offices.

But the regime has no mercy for anyone caught with faked travel documents. Several passport officers have been arrested on charges of forgery and punished severely. The regime takes no chances when it comes to its security.

D. The health ministry

Smuggling of medicines and medical equipment is one of the most lucrative businesses in Iraq in which influential figures, among them Saddam's relatives, are implicated. However, corruption here is also carried out by officials on a much lower level.

Medicines of chronic diseases, which are hard to obtain from government dispensaries, are sold on the street at exorbitant prices. All medicine arriving in Iraq is supposed to be dispensed freely to the population under U.N. rules governing oil sales.

However, precision instruments, bought through the proceeds from oil sales, are smuggled to neighboring countries or sold to private clinics and hospitals.

E. The trade ministry

It is clear now that the regime has been manipulating the U.N.-authorized oil-for-food program as a means to "bribe" Arab and foreign countries. The trade ministry, which administers Iraqi purchases and contracts, openly links its business deals with the outside world to how sympathetic countries and individuals are of the regime. It pays lip service to sound commercial practices.

As a result, Iraq's partners have been exploiting the regime's approach of trade favoritism. They have flooded Iraqi markets with low quality and sometimes expired goods, which find no buyers in their original countries.

Even the local press has occasionally drawn attention to rotten items the trade ministry hands out to Iraqis as part of their monthly food rations. Trade Minister Mohammed Mehdi Saleh, one of Saddam's most loyal henchmen, is reported to have piled up huge wealth.

Saleh is the mastermind of kickbacks and commissions Saddam gets from murky and illegal trade practices. The international press has highlighted the re-sale of essential foodstuffs and medicines arriving in Iraq under the U.N. oil program to neighboring countries. The trade ministry is also blamed for importing food items unfit for human consumption.



Anti-corruption policies and future prospects

The future of the present regime ruling Iraq is in balance. Any discussion of the policies and measures needed to combat the rampant corruption in the country has to take future prospects and indications into account without ignoring the present situation.

There is a lot of speculation on the future of Iraq as a country and the nature of its political system in the future. Iraq observers and analysts put forward a variety of options for what is likely or unlikely to happen.

It is not the objective of this paper to dwell on the scenarios or possibilities of what might happen to the country. Therefore we will restrict ourselves to two major scenarios regarding Iraq's future as a country and political system.

The first scenario envisages a unified Iraq with territorial integrity and a democratic government that will help stabilize the political system and develop it in a positive manner. The second scenario conceives a situation in which the country implodes and turns into feuding and warring statelets.

And since all parties involved in the Iraqi case, including the present regime, its opponents, neighbors and the U.N. Security Council, support the idea of a unified country with territorial integrity, we will assume that the first scenario is the most viable and likely. This is the hypothesis of this study and its recommendations are based on this premise.

But we need to bear in mind that the collapse of the present regime will not automatically solve all of Iraq's problems. Those holding such a view will be proven wrong and naive. On the contrary, the removal of the regime may open the door for problems unheard of before. This is exactly what happened in the aftermath of the 1958 revolution that toppled the monarchy and the 1963 coup masterminded by members of the ruling Baath party.

A mere change of the regime will not put an end to corruption. We need to assume that only the emergence of a democratic system that holds integrity, transparency and accountability as the main pillars of governance will be capable of waging a successful attack on corruption.

Corruption is not new in the Iraqi society. Anti-corruption measures were taken by previous governments but with little or no success, though all of them were waged in response to mounting public pressure. Of the numerous anti-corruption campaigns, at least three are worthy of discussion here as each represents a certain era in the development and history of the Iraqi society and government.

1. Civil service reform

This was the first project of political and administrative reform in Iraq by a civilian government and in the shadow of the constitution. It was initiated shortly after the emergence of Iraq as an independent state in the early 1920s following urgent calls from the public and political parties for reform in response to the numerous financial and political scandals.

In those early days Nouri Saaeed had almost total control of the government with a lot of influence at the royal court. King Faisal asked Saaeed to undertake the reforms and eradicate corruption.

A law to purge the state of corrupt civil servants was issued but Saaeed employed it to get rid of his adversaries. Many innocent officials were sacked and replaced by Saaeed's supporters and henchmen. The campaign ended without achieving any of its objectives.

2. Military reform project

This was the second attempt at reform by the military. The 14 July 1958 Revolution mounted a large-scale campaign to purge the government, the army and the security services. In fact the whole of the governing class was replaced. The new government put forward an ambitious anti-corruption plan aimed at restructuring and reforming the whole of the political and administrative system as well as the armed forces.

However, the reforms ground to a half weeks later. Once the new clique of military officers took over, a bitter and bloody feud started over influence. Calls for reform and combat of corruption drowned in the face of the bickering.

3. Political reform

This reform program was the brainchild of the political parties and factions, which had some margin of freedom. It was launched in the aftermath of the 17 July 1958 Revolution but like its predecessors it achieved nothing.

The warring political factions stymied the program and engaged in a bitter and bloody fight. The result was a series of executions, murders and mutilations with the aim of scaring opponents. The situation continued with one party trying to finish the other. It only ended with today's reign of terror in which the ruling despots have brutally crushed opponents and squashed any attempt at reform.

Reasons behind failure of previous reform

There are of course reasons for the failure of the three reform projects. The author believes that any fresh attempt to combat corruption in Iraq has to take them into consideration. They include:

1. Lack of tolerance and absence of democracy. When the reforms were announced each party believed its tenets were right and sought to impose them on the others, using force if necessary. Every party thought the other side was alien and had no right to take part in governing the country.

2. Denying the right of the majority to rule through the ballot. Each side tried to exterminate the other before it had the chance to do the same to it.

3. Paying no attention to standing laws and regulations and the disrespect with which many dealt with the constitution.

4. Concentration of power in the hands of one individual or a group who put their own interests above those of the public and the state. There was no separation of executive, legislative and judicial powers.

Importance of reform in Iraq

With the advent of globalization, Iraq's position as a major source of energy and a regional power becomes increasingly significant. Therefore, reforming its political, economic and judicial systems are of paramount importance not only to the country itself but the world at large. There are at least three reasons, which render reforms an urgent necessity.

1. The geo-political status of the country as a gateway to the oil-rich Arabian Gulf and the whole of the Middle East. World powers, particularly Great Britain and the United States of American, realize how important Iraq is in this respect. Before the collapse of the former Soviet Union, they feverishly sought to use Iraq as a bulwark against the spread of communism and later fundamentalism in the region.

2. Iraq has enormous economic potentials. Its proven oil reserves are the world's second largest after Saudi Arabia. It has massive deposits of sulfur and phosphates and huge potential to become the Middle East's breadbasket.

3. Besides its oil riches, present-day Iraq is the site of some of the world's greatest civilizations. The Sumerians, Akkadians, Babylonians and Assyrians set up unrivalled cultures between the Twin Rivers, Tigris and Euphrates. For five centuries, Baghdad was the beacon of Arab and Islamic civilization and a first class world power under the Abbasids. Iraq is rightly placed to play a big role in the current dialogue between civilizations.

Means to combat political corruption

No reform in Iraq will bear fruit without the establishment of a pluralistic and democratic system. The Iraqis, with all their different hues, ethnic affiliations and religious and sectarian factions, are unanimous that democracy is the only framework capable of bringing them under a unified Iraq. The Iraqi society is heterogeneous with different languages, customs, traditions and beliefs. Mutual respect and tolerance are of paramount importance and a society like Iraq will not thrive without democracy. For the reforms to have the chance of success, it is vital to take the following points into consideration:

1. Safeguarding human rights of the population as outlined in the International Human Rights Convention. Freedom of expression has to be guaranteed for all, including criticism of the government. Iraqis must have access to sources of information other than those made available by the government. Freedom of political parties is essential.

2. No one should be above the law and no authority, group or individual, should be given the right to promulgate laws, or issue decisions and regulations without recourse to the judicial authorities (parliament).

3. Concentration of power in the hands of an individual or special group should be avoided by all means available. Executive, judicial and legislative powers have to be separated. Ignorance of this fundamental principle was the main reason behind the failure of earlier reforms.

4. Rotation of power is important along with the universal respect of the outcome of fair and free elections. Iraq should be turned into a state of institutions and not individuals.

5. Transparency has to be reinstated. Corruption grows and thrives in the darkness. The state and its institutions need to adopt transparency in their decisions, activities and procedures. The media need to be given full freedom to bring to light all aspects of the government. A free press corners corrupt officials and hinders their activities by exposing them to the public and bringing them to justice.

Means to combat administrative and financial corruption

It is useless to reform the administration and civil service without first waging a war against corrupt politicians and policy makers. Misadministration flourishes under corrupt politicians and recedes under a pluralistic and democratic government where transparency, integrity and ethics prevail. Freedom of expression and press are vital pillars of any anti-corruption bid. Civil servants have to work under new strict guidelines. The whole of Iraq's civil administration structure is in an urgent need of complete overhaul. Here are some suggestions:



1. Restructuring the administration, which in certain aspects is still a legacy of the Ottoman Empire and British occupation of the country. The bloated system is now governed by an accumulation of laws and regulations some of them dating back to the 1920s. No serious attempt has ever been made to reform Iraqi civil service, by far the biggest employer in the country. Iraqi civil servants, humiliated and demoralized under Saddam Hussein, suffer from intricate packages of laws, regulations and amendments issued haphazardly and often at the whim of senior officials..

2. Laying of new guidelines to appraise performance of civil servants. The current system rarely acknowledges efficiency and innovation on the part of government employees. The only appreciation is to show loyalty and sympathy to the ruling Baath party and Saddam. The Iraqi strongman has set up a highly complex system of privileges and benefits which he hands out in the light of various decorations and medals he has been conferring on tens of thousands of supporters and associates. Hard work and diligence are no longer the measure but the number of medals. The guidelines have to discard all current system of largesse and benefits, get rid of favoritism and nepotism and set up a new approach that relies solely on expertise, efficiency and innovation.

3. Reinforcing auditing of revenues and public expenditures. Iraq needs powerful auditing bodies to examine and verify accounts of various state-run bodies and establishments. Also, an auditing system is needed to check accounts of senior officials including the president. Senior officials need to declare their income once they are assigned their posts. Another declaration is necessary when leaving office. Independent auditors should check the accounts and make them public if necessary.

4. Cultivating integrity and civil service ethics. It would be wrong in a future Iraq to assume that ethics and integrity are inherent and civil servants are not required to be trained to better their behavior. Intensive courses are essential to teach civil servants how to deal with private and public wealth and property, and how to treat clients and work with superiors.

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