Oil Ministry immersed in fraud, corruption – sources

 

By Nidhal al-Laithi

 

Azzaman, February 12, 2006

 

Iraq’s oil ministry is immersed in fraud and corruption, informed sources said.

 

They said major political figures and factions were involved as the ministry’s vulnerability to corruption was seen as ‘extremely tempting.”

 

Iraqi politicians are believed to have set up front-companies in Baghdad which are negotiating oil sales, future oil development and fuel imports and distribution in return for hefty commissions, the sources said.

 

The sources, refusing to be named for fear of retribution, said many of these companies were not even registered with the Trade Ministry and therefore could not be scrutinized by regulators.

 

Corruption was rampant in fuel distribution licenses, the sources said.

 

The country’s oil export arm, SOMO, was involved, since it is the body in charge of both domestic and external trade in fuel and crude, they added.

 

Iraq imports nearly $250 million worth of fuel every month and there is no transparency at all in the granting of the licenses to distribute the fuel, they said.

 

Despite the surges in fuel prices and the removal of fuel subsidies, the country still faces chronic shortages despite being the world’s second largest in oil reserves.

 

Iraqi oil wells still lack verifiable metering systems and the ministry is reported to be reluctant or unable to have them in place despite U.N. insistence.

 

Nobody knows what happened to a deal for the purchase of meters to gauge the exact amounts of oil produced in the country, the sources said.

 

In the absence of reliable measuring equipment, the industry is vulnerable to smuggling in addition to fraud and corruption, they added.