Thu, Apr 17, 2003 page12

• Iraqi government bank accounts stripped of funds

  SADDAM'S BILLIONS US investigators are trying to track down the missing money but experts believe much of it is gone forever, possibly to al-Qaeda and other groups

  • THE GUARDIAN
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  In the days before the fall of Bagh-dad, and the explosion of looting on the streets of the capital, a far more damaging form of looting was already under way as Iraqi bank accounts were ransacked and millions of dollars were transferred into private accounts abroad, Mid-dle Eastern banking sources said on Monday.

  The flurry of transfers that have been spotted, going mainly through Europe to accounts in Jordanian and Palestinian banks, are thought to be the tip of a vast financial iceberg, kept afloat by President Saddam Hussein, his family and his regime for more than two decades.

  US investigators are scrambling to track down the missing money, estimated at between US$5 billion and US$40 billion, but some financial experts believe much of it has gone for good, and may have slipped into the hands of extremist groups such as al-Qaeda.

  One official who has seen reports from Middle Eastern banks said he had seen information on at least five transfers of between US$100,000 and US$1 million going to a single bank whose name he provided but did not want published.

  "We saw it pick up right at the beginning of the shooting war. Then it really peaked the day before and the day of the fall of Saddam's statue [in Baghdad]. We haven't really seen anything since," the official said.

  "My impression is there is a lot more going on, because this is not something we were looking for particularly. It just went across our radar. And as far as I know there is nothing illegal about the transfers," the official said.

  Officials in Washington are worried that Iraq's highly centralized economy makes it particularly prone to asset-stripping.

  One Middle Eastern banking expert, who did not want to be named, criticized the Bush administration for failing to set up an interim fund that would have formally taken ownership of Iraqi state banks and other institutions, stemming the hemorrhage of funds.

  "What you've got is special forces going through documents and when they come to bank accounts they just stick them in a box for people to look at later. Meanwhile, they're [the accounts] being emptied of funds," the expert said.

  The transfers could have been completed by anyone with access to the right bank account details and passwords.

  In the cases cited, instructions for the transactions were sent by telephone, e-mail or fax to correspondent banks in Europe with counterparts in Iraq. Once in private accounts the money can easily be converted into untraceable commodities such as gold and diamonds.

  John Fawcett, an investigator who co-authored a study last year, Sources of Revenue for Saddam and Sons, for the Coalition for International Justice said the transfers could be made by trustees appointed by the Iraqi leadership in Switzerland, Liechtenstein and other banking capitals.

  In some cases, he said, the same middlemen were being used by al-Qaeda, and other extremist groups, who may now have access to the Iraqi money.

  "These trustees have no protection now. They're open to one of these groups contacting them and saying transfer the money now there's no one looking, and if they say they can't, they're open to pressure," Fawcett said.

  Fawcett is investigating the funding of al-Qaeda for the New York law firm Kreindler & Kreindler on behalf of families of Sept. 11 victims. He has tried to calculate how much money the Iraqi regime hid in foreign bank accounts by estimating how much revenue it took in from illegal oil sales and other smuggling operations, and subtracting the costs of maintaining its power and standard of living.

  He believes some of the higher estimates of the missing Saddam fortune may be an exaggeration and puts it at somewhere between US$5 billion and US$10 billion.
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