Volume 1 - Iraq Watch

seas accounts in Lebanon and Jordan to separateaccounts held by the former Regime leadership andthe IIS in overseas banks.In late 1999, the state-owned Rafidian Bank took overthe CBI’s role in managing Iraqi government fundsabroad, mostly through Rafidian’s Amman branch.The Central Bank of Iraq did not possess anyauthority for auditing the foreign currency accountactivities of overseas assets of the Rasheed Bank,the Rafidian Bank, or the Iraqi government ministries.In 1994, the Cabinet of Ministers decided togive the Rasheed and Rafidian Banks as well as Iraqigovernment ministries the authority to open theirown overseas accounts independent of CBI controlsor authority. As a result, the CBI was no longer ableto determine the foreign currency holdings of theseinstitutions.When directed by the EAC, CBI would transfer foreigncurrency funds from its overseas accounts in Jordanianand Lebanese banks into ministries’ accounts,often those held at the Rafidian Bank in Amman,Jordan or Beirut, Lebanon. In theory, the EAC wouldonly direct CBI to transfer funds into another governmentbank or ministry overseas account to fund animport purchase. The EAC transfer of funds’ request,however, only indicated the recipient Iraqi organization,the amount, and the bank account numberto which the funds were sent. CBI officials had nomeans for establishing the end use or final destinationof the transferred funds.• CBI did not transfer any funds into personalaccounts from its overseas accounts. Any transferof government funds into personal accounts wouldhave been possible only if conducted through theoverseas branches of the Rafidian and Rasheedbanks or other government ministries’ accounts.CBI Governor al-Huwaysh wrote several letters to thecabinet ministers requesting increased controls, or atleast auditing capability, over foreign currency transactionsconducted by the Rafidian and Rasheed banksand government ministries. In early March 2003, withthe imminent threat of war, the cabinet ordered governmentministries with overseas accounts to transferall their foreign currency funds to CBI accounts inoverseas banks. This was done in order to providegreater security for government funds that had beendispersed in these various overseas accounts, but notyet utilized.• In early 2003, Saddam convened a meeting duringwhich he ordered the removal of $1 billion fromthe CBI in order to avoid the risk of all the moneybeing destroyed in one location in the event of anallied attack. Present at the meeting were the Ministerof Finance, the Minister of Trade, the Directorof the MIC, the Presidential Secretary, the Chiefof the Presidential Diwan, and the Governor of theCBI.• Two weeks before the outbreak of the war in March2003, Saddam formed a committee that was responsiblefor the distribution of funds. The committeeconsisted of the Minister of Finance, the Chief ofthe Presidential Diwan, the Presidential Secretaryand Saddam’s son, Qusay Saddam Husayn al-Tikriti. The group visited the CBI and inspected theboxes that contained the $1 billion. The money wasstored in 50-kilogram boxes that contained either$100 notes or 500 notes.• According to multiple Iraqi officials, includingCBI Director Huwaysh, Qusay, along with SSODirector Hani ‘Abd al-Latif Tilfa al-Tikriti, andapproximately 50 other people, appeared at theCBI on 19 March 2003 and removed the boxes ofmoney. The money was then distributed to differentministries, including the MoT, which received eightboxes of money. After the war, the MoT boxes wereturned in to the proper authorities through ‘Adnanal-Adhamiya, head of the MoT Legal Department.Overall, all the money was recovered except forabout $130 million.Iraqi Bank HoldingsThe following chart (see Figure 33) summarizesthe total assets accumulated by Iraqi’s banks beforeOIF (for more details, see Annex G: Iraq’s BankingSystem).Funding of the MinistriesPrior to the sanctions resulting from the August 1990invasion of Kuwait, the Iraqi government wouldfinance its international trade and operations using lettersof credit, secured or non-secured and recoverableor non-recoverable, in accordance with internationalRegime Financeand Procurement47