Volume 1 - Iraq Watch

assets in employee-named accounts. These accountsheld funds accumulated through the kickback of fundsfrom import contracts under the UN OFF program.Huwaysh, former Director of the MIC, estimated thatthere was $1 million in this account and the Iraqi MIChad $1.5 million for procurement of Belarusian goodsin this account. However, that actual total was $7.5million (see Iraq’s Illicit Revenue section).Regime Attempts To Recover Funds Prior to OIFA high-ranking government official stated thatSaddam ordered all funds located in foreign banksbrought back to Iraq in 2001. ISG judges thatSaddam took this action to prevent his assets frombeing frozen or seized by the international community.This order indicates that Saddam knew he mightcome under international pressure in 2001, possiblyas a reaction to the Al-Samud missile project or theillicit profiteering from the OFF program.• A committee was formed to accomplish the transferof these Iraqi funds. The committee consisted ofthe Finance and Trade Ministers, the Chief of thePresidential Diwan, and the Governor of the CBI.• The role of the Diwan Chief was mainly to providefunds to those individuals, known as “couriers”,selected by the Finance and Trade Ministers andCBI Governor to travel to retrieve the funds. Mostcouriers were trusted employees of their respectivegovernment entities.• At the committee’s second meeting, the Governorof the CBI stated that Iraq had already broughtback to Iraq up to $200 million worth of gold. Thegold was purchased through an unidentified bank inBeirut and secured in CBI vaults.The Role of Cash TransactionsThe CBI provided foreign currency in cash to Saddamthrough an official funding mechanism establishedto release cash from CBI reserves to the PresidentialOffice. The Presidential Office did not have a fixedbudget, and CBI often received messages requestingforeign currency for release to the Presidential Office.The amounts ranged from thousands of US dollarsup to $1 million, which were always paid in cash inforeign currency. The Presidential Office was the onlyentity that would ever request money in cash from theCBI, but the requests never exceeded $1 million. ThePresidential Office stated that the cash was used foroverseas travel, for government business, and medicalreasons. The CBI Credit Department accountedfor the cash sent to the Presidential Office in the sameway that it accounted for funds used by Iraqi ministries.The ministries, however, never received foreigncurrency cash. If the ministries needed Iraqi dinarsfor domestic purposes, they would obtain it from theirrespective Rafidian bank accounts.Saddam seldom interfered in the affairs or businessof the CBI. As a standard practice, CBI intra-governmentalrelations focused on the Cabinet of Ministers,the Ministry of Finance, and the Presidential OfficeStaff. The authorization for CBI to release cash tothe Presidential Office usually came from either thePresidential Office Chief of Staff or the Vice Chairmanof the Cabinet of Ministers. Some notableexceptions were Saddam’s post-1993 annual specialrequests for cash and his last request for cash on 19March 2003, when he authorized Qusay to withdraw$1 billion from the CBI.Iraq’s Gold ReservesThe CBI vaults contained four tons of gold reservesas of early June 2003. The value of these goldreserves was insignificant in comparison to the bank’slevel of cash reserves. CBI began accumulating thesegold reserves in 2001 by purchasing gold in relativelysmall quantities on a frequent basis from Lebanesebanks in which the former Iraqi Regime had large foreigncurrency deposits. As a standard purchase procedure,the respective Lebanese banks supplying thegold would deliver it to the Iraqi Embassy in Beirutfor shipment to CBI vaults in Baghdad via diplomaticpouch. The CBI bought gold in amounts ranging from100 to 500 kilograms per purchase. This amount ofgold could be shipped easily by diplomatic pouch.Also, CBI bought gold in small quantities in orderto avoid raising the market level of gold in Lebanonand to avoid scrutiny by the US. The Regime did notremove any of the gold from CBI vaults during thewar with coalition forces.• The CBI Investment Department Director GeneralAsrar ‘Abd al-Husayn was directly responsible formanagement of the gold purchases using cash fromthe overseas accounts in Lebanon. CBI GovernorDr. Isam Rashid al-Huwaysh, however, retainedfinal responsibility for supervision of the gold purchaseprogram.Regime Financeand Procurement51