BAGHDAD (Middle East Eye) – A network of Iraqi officials working inside state institutions, including the country’s tax authority and an anti-corruption watchdog, are being investigated over an alleged plot to steal billions of dinars from the tax accounts of international oil companies, Middle East Eye can reveal.
The alleged plotters, who also included officials at the Ministry of Justice, targeted tax deposits paid by the oil companies to the Iraqi General Commission of Taxes (IGCT) in what investigators now believe was a prelude to the so-called “theft of the century”.
The main companies targeted were the China Petroleum Engineering and Construction Corporation (CPECC) and Lukoil Mid-East Limited, a local subsidiary of the Russian energy giant.
The scheme involved fabricating a paper trail of false documentation and cheques issued by the IGCT in July and August 2021 in response to purported requests from the companies for tax deposit refunds.
People falsely claiming to be representatives of the oil companies then tried to cash the cheques - and withdraw them as cash - at branches of the state-owned Rafidain Bank, which holds the IGCT’s tax deposit accounts.
No money was ultimately stolen because the value of the cheques - some worth tens of millions of dollars - and the apparent eagerness of some senior officials to facilitate their payment “drew attention”, a consultant within the Ministry of Finance told MEE.
According to the official, details of the cheques were reported to the Federal Commission of Integrity (FCI), a government agency tasked with investigating corruption in the public sector, which appointed an investigator to examine the case.
Some of the cheques were subsequently stopped, while an attempt to cash one cheque worth more than 44 billion dinars (more than $30m) was refused by a bank official.
But documents obtained by MEE suggest that some officials working inside the IGCT, the FCI and the Ministry of Justice were involved in the fabrication and authentication of documents that facilitated the attempted theft.
Financial investigators also believe the oil companies’ tax deposit accounts were targeted by the same network behind the theft of 3.7 trillion dinars ($2.5bn) from IGCT accounts held at Rafidain Bank between September 2021 and August 2022.
People involved in the investigation told MEE they believed the attempted theft had amounted to a dry run, in which many of the elements of the “theft of the century”, including the use of fake cheques and false documentation, were already in place.
They said it had also helped those involved to test the response of regulatory and auditing bodies, and to further refine their scheme to evade detection. Rather than using people posing as representatives of real companies, for instance, they used shell companies instead.
Crucially, according to one person involved in the investigation, a letter sent from a senior official within the FCI to the IGCT at the end of August 2021 had effectively signaled a “green light” to the thieves by indicating the watchdog would not interfere in the tax authority’s affairs.