Iraqi oil gangs syphon off billions

A new class of grand mafiosi sucking billions of pounds out of Iraq's vital oil sector is crippling efforts to rebuild the nation, according to an official report published in Baghdad.
The findings of the Oil Ministry's independent inspector-general painted a sordid picture of massive abuses pervading every corner of the industry, from the well-head to the petrol pump. It said that since Saddam Hussein's overthrow in 2003, the spread of smuggling had turned Iraq from a major exporter of petrol products into an importer.

Smuggling and other rackets cost Iraq more than £10bn a year
"These problems have led to the loss of billions of dollars, both in direct actual losses and in lost opportunities," the report concludes.
"This is robbing Iraq of historic opportunities for revival and reconstruction and of basic necessities for a ruined nation and heavily-burdened people." It calls for "radical and urgent action" to stop the abuses and punish those involved, including new legislation and penalties to make oil smuggling a crime of "grand economic sabotage".
Walid Khadduri, economics editor of the pan-Arab al-Hayat newspaper, estimates that smuggling and other rackets in Iraq are costing the country more than £10 billion a year in direct losses and missed opportunities.
"There is no accountability, no punishment, and it goes all the way to the top - the smuggling gangs are in cahoots with local authorities and politicians because they need protection," he said. "There was corruption under Saddam but nowhere near this."
The ministry report says smuggling has created a "new class of grand mafiosi" and a corrosive environment of corruption that is affecting everybody in the oil business and destroying public faith in politicians. The report documents abuses ranging from direct theft from oil consignments and pipelines, to frauds involving false documentation for imported petrol.
Even roadside supplies of black-market petrol sold locally were worth an estimated £500 million a year to the illegal profiteers, the report says.



It estimates that 10 to 20 per cent of the refined products Iraq is now obliged to import from neighbouring Turkey, Syria and Jordan are being smuggled back to their countries of origin after receiving Iraqi government subsidies to bring the price down for local consumption.
This could be netting crooks up to £500 million a year.
Part of the problem is that product prices in those countries are significantly higher than Iraqi levels, which are government-subsidised to the tune of nearly £4 billion a year to keep them within reach of the distressed Iraqi consumer.