Corruption Draining Iraq's Oil Industry

By Yaseen al-Rubai'I

BAGHDAD, Iraq, April 21, 2005 (ENS) - The Iraqi oil ministry has sacked more than 450 employees suspected of selling fuel on the black market.

The move is the most recent in a series of measures designed to crack down on corruption within the industry, the country’s most lucrative sector.

Iraq is thought to have the world’s second largest oil reserves after Saudi Arabia. But graft and attacks on fuel tankers and pipelines have led to disappointing 2004 revenues.

The oil ministry’s general inspector Ali Muhsin Ismael said that the government’s inability to provide a secure environment was partly responsible, but noted that his ministry accepted some of the blame for the situation.

"There is still corruption in the oil ministry and this cannot be [completely eradicated]," Ismael said.


Oil storage tanks in Iraq (Photo courtesy OSCO)
Ismael said that criminals used a number of methods to defraud the industry, including the manipulation of fuel pump gauges and incorrect measurement of tankers’ contents - both of which can result in an undeclared surplus that can then be sold on the black market.

In Basra, which is the site of Iraq’s southern oil fields, resident Hussein al-Sabti said that oil smuggling operations were now carried out in the open. "This has prompted the population of Basra to ask whether or not smuggling of petrol is a legitimate act," he said.

An official from the Iraqi army’s Border Forces 4th Regiment Command, which controls frontier crossings and the ports, claimed that some government officials had asked the authorities to turn a blind eye to oil smuggling.

"[We were ordered to] allow some citizens of a neighboring country to cross the border with the aim of visiting the holy shrines, without having official documents," the border official said.

"It appeared later on that they had something to do with oil smuggling operations."

Abdul Kareem Li’aibi, the oil ministry’s fuel distribution project manager, said that the government had recently discovered that one of its southern pipelines was peppered with more than 20 illegal taps, allowing tankers to top up their loads at will.

Li’aibi claims that organized gangs are behind these corrupt practices, and blames them for the fact that only 60 percent of trucks carrying oil products from wells to other areas reach their destination, while the remainder are attacked and hijacked.

He also said that many petrol station managers are selling their products on the black market - sometimes in cooperation with the police.


Truck loaded with propane is stopped for inspection by U.S. Army troops in the Ar Ramadi area. (Photo courtesy U.S. Army)
Yahia al-Rubai, supervisor of Baghdad’s al-Khalisa fuel station, said that days after he took charge, armed bandits had seized control of petrol distribution and started stealing fuel.

"When I confronted them, the bandits tried to attack me with their guns," he said. "The country’s economy and security is dependent upon catching those who engage in corruption and the criminals who collaborate with them."

The government as a whole is facing a struggle against corruption, according to Judge Radhi Hamza al-Radhi, chairman of the Commission on Public Integrity.

"This waste of public finances is worrying government officials in Iraq," he said.

"It is difficult to combat corruption due to the absence of a strong mechanism to control all the institutions' civil servants, and due to a lack of support from law enforcement bodies," said Judge al-Radhi.

In an effort to deal with the corruption problem, the Iraqi oil ministry rid itself of 450 employees suspected of selling fuel illegally.

But oil ministry official Li’aibi is not sure whether actions such as this will put an end to graft. "I can’t recommend any civil servants or workers," he said. "Today they are honest but, after one month, they are engaging in corruption. I can’t even guarantee that I won’t be joining them."

{Published in cooperation with the Institute for War and Peace Reporting.}