Iraqi Government Seeks Control Over Central Bank
Author: Omar al-Shaher Posted January 21, 2013
Iraqi activists and journalists have tried to exert pressure on the authorities in Baghdad to release Mudher Mohammed Saleh, deputy governor of the Central Bank of Iraq (CBI) after he was arrested on charges of embezzlement of public funds.
Saleh, who has a PhD in economics from an American university, has been detained for over a month and a half at a police station in central Baghdad. The 65-year-old professor of economics at the University of Baghdad voluntarily turned himself in to Iraqi authorities after an arrest warrant was issued against him.
Saleh is seen as a person of rare value to the Iraqi economy, having contributed to the development of a monetary policy that brought about stability to the Iraqi currency market. He wrote dozens of economic studies on how to develop cash management and activate banks, which the CBI website continues to publish.
Economists in Iraq say that Saleh’s experience has contributed to ensuring the stability of Iraq’s monetary policy, despite ongoing political and security turmoil in the country. For instance, the Iraqi dinar has maintained a fixed exchange rate for years after the CBI directly intervened in the currency market through an auction offering the U.S. dollar at subsidized prices.
Activists and journalists launched a solidarity campaign with Saleh on social networking sites demanding his immediate release.
Although Saleh could not be interviewed from jail, his close associates quoted him as being shocked to see the CBI continuing to carry out the practice for which he was arrested.
Saleh says instructions to offer the U.S. dollar that led him to be accused of embezzlement and squandering of public funds, and facilitating money-laundering operations, are still followed by the CBI.
According to Nasir Hamed, an Iraqi legal adviser, the charge of embezzlement of public funds prevents Saleh from being released, in spite of his poor health. Hamed said that “those accused of embezzlement of public funds are not entitled to release on bail until their trial, according to the law.”
However, a police officer at the station where Saleh is being detained confirmed that the deputy governor of the CBI has exceptional detention conditions. The officer, who spoke on condition of anonymity, said: “The deputy governor of the CBI is being held in a private cell and receives a specific treatment.” Close associates to Saleh refused to confirm this information.
Since 2009, the relationship between the government and CBI — led by Sinan al-Shabibi, governor of the CBI and seasoned Iraqi economist — has become tense. The Iraqi government had asked the CBI to put at its disposal a part of the Iraqi Federal Reserve, which was worth about $67 billion at the time. The government justified its request by its desire to fund the installation and operation of large power plant projects from sources outside the general budget in order to supplement the provision of power to the Iraqi population. However, Shabibi refused to comply with this request.
It seems that this issue has strongly angered the Iraqi government and caused a series of disputes with the CBI, which reached its peak with the arrest warrant issued against Shabibi at the end of last year.
Sources within the CBI said that Saleh strongly resisted the government when he took over for Shabibi after the former fled to Switzerland at the issuance of the arrest warrant. This resulted in the charges against Saleh to remove him.
Iraqi MP Ahmed al-Alwani said: “Accusing the CBI’s governor and his deputy of corruption is a clear attempt by the government to eliminate them, because they interfered with the government’s plan to take over the CBI.” He added: “I was a member of the committee that was specifically formed to investigate allegations of corruption in the CBI,” and explained: “We found negligence in clarifying and documenting the sale of money in some cases; however, we did not find evidence of corruption or embezzlement.”
Alwani and Saleh are both Arab Sunnis.
However, Deputy Speaker of Parliament Qusay al-Suhail, said that he personally confirmed that corruption exists in the CBI, adding: “My supervision over the committee, which was investigating the central bank’s case, allowed me to review a number of corruption files.”
Close associates to Saleh said that the case, which was expected to lead to his termination, is the fact that his name in on the list of individuals from the dissolved Baath party to be removed from public departments, and not allegations of corruption or embezzlement. However, it seems that his expectations were not accurate, and that he may be forced to face de-Baathification, if he manages to escape allegations of embezzlement.
Omar al-Shaher is a contributor to Al-Monitor’s Iraq Pulse. His writing has appeared in a wide range of publications including France’s LeMonde, the Iraqi Alesbuyia magazine, Egypt’s Al-Ahaly and the Elaph website. He previously worked for Al-Mada covering political and security affairs and as a correspondent for the Kuwaiti Awan newspaper in Baghdad in 2008-10.
Read More: http://www.al-monitor.com/pulse/originals/2013/01/iraq-central-bank-control.html
Omar al-Shaher is a contributor to Al-Monitor’s Iraq Pulse. His writing has appeared in publications including France’s Le Monde, Iraq's Alesbuyia, Egypt’s Al-Ahaly and the Elaph website. He previously covered political and security affairs for Iraq's Al-Mada newspaper.
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