Iraqi Officials, Others on “Corruption” in Iraqi Oil Establishments, Oil Thefts
Dubai Al-Sharqiyah Television in Arabic at 1217 gmt on 29 November 2007 carries in its “Incomplete Picture” feature a 39- minute live panel discussion on “corruption and thefts” in the Iraqi oil establishment. The discussion is moderated by an unidentified anchor who hosts Abd-al-Karim al-Lu’aybi, inspector general of the Iraqi oil ministry, via telephone from Baghdad; Tariq Shafiq, an Iraqi oil expert, via satellite from London; Abd-al-Hadi al-Hasani, chairman of the Iraqi parliament’s oil committee, via telephone from Baghdad; and Musa Faraj, acting chairman of the Integrity Commission, via telephone from Baghdad. The reception of Faraj’s contribution is very poor in parts.
In his introduction, the anchor says senior oil ministry officials are accused of running oil deals, while it is said that other officials receive half a dollar for every barrel of oil in return for awarding tenders and contracts to particular companies.
Asked about the volume of Iraqi oil production in 2007, Al- Lu’aybi says production rates vary monthly, but it exceeded the planned 1.5 million bpd, adding that in recent month. production exceeded 1.7 million bpd. Al-Lu’aybi says oil revenues in 2007 to this day amounted to approximately $31 billion.
Told that in September 2007 the BBC reported that Washington had donated to Iraq until the end of 2006 about $44.5 billion towards reconstruction, and asked how much of that aid have Iraqi oil establishments received for their reconstruction, Al-Lu’aybi says the oil ministry has not received any sum directly from the United States. He says the US side has a specialized body that implements some projects for the Iraqi oil ministry, whereby the ministry merely informs the US side of its needs, and it is the US side which does the procurement. Asked if the ministry received sums indirectly from the United States, Al-Lu’aybi says the ministry received aid in the form of equipment and projects implemented.
Asked about the extent of corruption in the oil establishment and told The New York Times reported in May 2007 that the amount of thefts of Iraqi oil were 100,000 to 300,000 bpd or the equivalent of $15 million a day, Al-Lu’aybi says how could that amount have been stolen daily. He wonders if the oil could have been stolen in vehicles and doubts it because if each vehicle can carry 200 barrels, to steal 100,000 barrels “thousands of vehicles will be needed” daily. Al-Lu’aybi says there is only one export pipeline extending from the territorial waters to Basra’s floating port which is heavily protected by the coalition forces. He says a vessel that enters Iraqi territorial waters is searched several times by the US forces, and it is then searched by the Iraqis, and the same occurs on its departure.
Asked if he is denying there are thefts and corruption in the oil establishment, and reminded that he had made statements to the world press in which he said there are contractors who turn to influential Iraqi personages and political parties to win oil contracts, Al- Lu’aybi says that is another subject. Al-Lu’aybi says smuggling is to transport goods from one country to another, be it stolen or not. He says what is happening is that there are thefts from the oil pipelines extending from northern to southern Iraq, for Iraq has a 7,000 km network of pipelines used only for petroleum products, and there are “organized gangs” that steal from those pipelines. He says the problem faced by the ministry is thefts, not smuggling. He says the export of oil is carried out legally and under international supervision.
Turning to Shafiq in London, the moderator asks him for his view of what Al-Lu’aybi said. Shafiq says he agrees that smuggling is different from thefts. He says it is an exaggeration to say that 100,000 to 300,000 barrels are smuggled daily although there are thefts, and he cites Col Khalaf Badran (not further identified) as saying that pipelines are pierced and the oil is stolen and transported on land and then in the sea through Shatt-al-Arab, but the quantities stolen are estimated at 10 per cent to 30 per cent of production. He says it is difficult to accurately estimate the amounts stolen by this method. Shafiq concludes: “Are there thefts? Yes, but it is difficult to determine how much is stolen.”
The anchor then asks parliament’s Al-Hasani about the reports that companies or contracts turn to influential Iraqi quarters to win oil contracts, Al-Hasani says financial and administrative corruption is a world phenomenon. He says the former regime’s system of coupons and commissions has created a desire by some people to reach agreements with foreign companies so as to gain commissions, and this past practice persists. He says in the present “climate of pressure it is possible to have such cases” of seeking commissions, but the practice has not been clearly diagnosed. He says the companies export one third of their oil production to America, one third to Europe, and the remainder to east Asia, at varying prices in view of the different distances, and the companies “try to pay a certain commission to facilitate their affairs in Iraq’s present difficult circumstances”, but that is part of a world situation. He acknowledges that this is corruption if practiced by someone in the company. He says if security is established the corruption could be stopped. He says oversight is the responsibility of parliament, the inspector general, and the Integrity Commission, but the present circumstances are not conducive to activating such mechanisms, and the priorities today are the elimination of terrorism and issues that directly affect citizens’ lives.
Asked where does the corruption begin, Shafiq says Iraq now suffers from great maladministration because appointments are not necessarily made on the basis of competence, for there is a sectarian and ethnic inclination in appointments, and “as a result it is not possible to ascertain that the professional, capable, and sincere person is in the right position, and consequently we have to expect corruption in State departments.” He says the oil ministry does not differ much from other State departments and therefore “it is difficult to say there is no administrative corruption in the oil ministry.”
Asked in view of reports confirming corruption exists in the oil ministry, how many persons have been brought to justice on the charge of corruption and theft of oil, Al-Hasan says he represents an oversight establishment and not a judicial or executive establishment, and the Integrity Commission should be better informed on this matter. Told that the Integrity Commission submits its reports to parliament, and government officials are questioned by MPs. Al-Hasani says parliament oversees the government, not how many people the judiciary arrested, adding that many personages have been referred to the Integrity Commission. He says parliament’s concern is how to eliminate the phenomenon which, if it becomes rampant, it will stunt economic and social advancement in Iraq.
Asked how the phenomenon can be tackled if it is not known who is responsible for it, Al-Hasani says there are influential people “who carry out actions here and there.” He says he went on a fact- finding mission to see if there are thefts through the Basra Port or through Al-Faw, and he went to the export points and found that it would be very difficult to smuggle oil. He says in Iraq today one is presumed innocent until his guilt is proven, not guilty until his innocent is proven. He stresses the importance of having the evidence that proves a person’s guilt before accusing them.
Turning to Faraj of the Integrity Commission, the anchor says the former Commission chairman (who has left Iraq) had said there are 21 cases before the Commission pertaining to corruption in the oil establishment and asks if there are more or less than 21 cases now. Faraj says some of those 21 cases are minor cases, such as the case of one truck carrying oil or oil derivatives, but it is another matter when the quantities are large. He says that unlike Mosul or Al-Ramadi, Basra is right on the border and there is smuggling of oil from there in special vessels. Asked about the quantity of oil that has been stolen or smuggled, Faraj says oil smuggling in Basra takes place in the open and citizens see the means used to smuggle it, but there is no specific information in figures regarding the quantities smuggled “because the security and administrative situation in Basra is not normal.” He says in the past crude oil and oil derivatives used to be smuggled, and the government tackled the problem by raising the prices of oil derivatives which rendered the smuggling not worthwhile. He says the smuggling takes place from the export outlets, adding that the oil ministry talks a great deal about meters, but meters are installed only on the vessels and not on the oil wells, and there is no control over how much oil is drilled from the well.
Asked for specific figures for the stolen oil, Faraj notes that in 2005 oil ministry officials said the waste in the oil sector amounted to $18 billion and that included the difference in exchange rate for selling and buying prices. Asked again for 2007 figures, Faraj says the oil minister has the figures. Faraj says he has photographs of the holes pierced in the pipelines, the locations of smuggling, and the names of smugglers, and the anchor says he hopes the photographs will reach the programme’s website on programmes@al- shariqyah.com[1].
Asked why those responsible for oil thefts are not brought to justice, Faraj says the present security situation in Basra is unstable, and he has asked parliament to hold an extraordinary session so that the facts can be put to it, for the solution begins with solving the situation in Basra and purging oil installations of the corrupt. Faraj apologizes for not conveying the real picture of oil smuggling on the telephone, and says he has to leave.
Asked about the contradiction between what Al-Lu’aybi and Faraj said regarding oil smuggling, Shafiq, quoting a Dow Jones bulletin, says Abd-al-Basit Sa’id, head of the Iraqi Auditing Council, said the smugglers pierce the pipelines and load the oil which in turn is loaded on to the vessels, and he estimated the value of oil stolen at $40 million a month, adding that “the ability of those thieves and smugglers is greater than the government’s influence, and consequently they are the winners.”
Asked about what Shafiq said earlier that a sectarian tendency in appointments contributes to the corruption, Al-Hasani says he believes such a matter does not exist. Commenting on what Faraj said, Al-Hasani says a parliamentary group visited the export terminals in Basra and found two types of measurement and saw the big security measures, adding that smuggling would be very difficult. Contact with Al-Hasani is lost as he is speaking.
Asked how Iraq can develop its oil establishment in light of the thefts and smuggling of oil, Shafiq says that is another issue and it is more important than the issue of corruption. He says Iraq’s oil industry suffers from the lack of agreement on an oil law that regulates its affairs and defines the powers of the provinces. Shafiq says the oil thefts issue “is not the big obstacle to the development of oil industry.”
Asked about the accusation by the former Integrity Commission chairman, Radi al-Radi, that some parliamentary officials are responsible for oil thefts in southern Iraq, and that their brothers have a connection with such operations, Al-Hasani says it is difficult to determine the accuracy of such accusations, and notes that the MP concerned has defended himself in parliament against such accusations and refuted them.
Asked about the responsibility of Iraqi officials for the oil thefts, Al-Hasani says one reason other than the security situation is the weakness of the administration, and notes that administrative corruption has a greater effect than financial corruption. He maintains that time is the more important factor in developing the oil industry, yet there is indifference in many official departments to the process of awarding contracts.
Originally published by Al-Sharqiyah TV, Dubai, in Arabic 1217 29 Nov 07.
(c) 2007 BBC Monitoring Middle East. Provided by ProQuest Information and Learning. All rights Reserved.