Arab Press

بالشعب و للشعب
Wednesday, Sep 17, 2025

Auditors in Iraq Uncover Staggering $2.5 Billion Tax Fraud 

Auditors in Iraq Uncover Staggering $2.5 Billion Tax Fraud 

Auditors in Iraq have uncovered a massive scheme in which a network of businesses and officials embezzled some $2.5 billion from the country’s tax authority, despite layers of safeguards.
The scandal poses an early test for Iraq’s new government, which was formed late last month after a prolonged political crisis. Prime Minister Mohammed Shia al-Sudani has vowed to crack down on corruption, but few expect any senior officials or political leaders to be held accountable.

The scale of the embezzlement -- around 2.8% of the 2021 state budget — is remarkable, even for an oil-rich country where corruption has been rampant for decades. Transparency International, a global watchdog, rated Iraq 157th out of 180 countries on its 2021 index for clean governance.

The auditors' report, obtained by The Associated Press and first reported by the Guardian, suggests the theft was orchestrated by a broad network of officials, civil servants and businessmen. In Iraq’s deeply-rooted patronage system, such individuals often have links to powerful political factions.

“It was a very organized and agreed upon process of theft,” said Jamal al-Asadi, a legal expert and retired judge familiar with corruption cases.

Three officials confirmed details of the scheme to the AP. All spoke on condition of anonymity, fearing reprisal.

The scheme came to light last month when an internal audit by the Finance Ministry alleged that the General Commission for Taxes — Iraq’s Internal Revenue Service — had fraudulently paid some 3.7 trillion Iraqi dinars, or around $2.5 billion, to five companies.

The payments were made through 247 checks cashed between Sept. 9, 2021 and Aug. 11 of this year, from a branch at the state-run Rafidain Bank located within the tax commission.

The account held billions of dollars in deposits made by companies that were supposed to be returned to them once taxes had been deducted and the companies had presented updated financial statements. The five companies are alleged to have fraudulently drawn refunds without depositing anything.

An audit was launched by the acting finance minister at the time, Ihsan Abdul Jabbar, who also served as oil minister. He discovered the theft after receiving complaints from an oil company unable to retrieve its tax deposits, according to a senior official close to the investigation.

When the minister inquired as to the remaining balance in the account, the tax authority said it held around $2.5 billion, but further inspection revealed the actual balance had been drained down to $100 million, the official said.

That was the first indication of the massive theft. A subsequent audit presented to parliament’s finance committee revealed the rest. The AP obtained a copy of that report this week.

Well before the audit, the money laundering department in the bank had expressed concern to the Finance Ministry over the high volume of cash withdrawals. Abdul Jabbar’s predecessor, former Finance Minister Ali Allawi, had asked that his office approve any large withdrawals, but key managers in the tax authority ignored the request, the official said.

Allawi resigned in August in protest over corruption and foreign interference in Iraqi affairs.

Weeks before the first checks were cashed, authorities removed a key layer of oversight, ostensibly because companies had complained of long wait times. The decision to remove the Federal Board of Supreme Audit from the process was triggered by a request from lawmaker Haitham al-Jibouri, who was then head of the parliamentary finance committee.

The audit found that the companies, three of which were established just weeks before the payments were made, submitted fake documents to be able to claim the payouts. Auditors were unable to follow the money further because it was withdrawn in cash.

“There is no doubt that these amounts were stolen,” the report concludes.

The findings suggest a broad network of tax officials and businessmen must have conspired.

The claim process requires lengthy paperwork and signoffs from at least three departments within the tax authority, as well as the director and deputy director of the financial department. Rafidain Bank contacted the tax authority to verify the checks before cashing them, as it was required to do.

But the money vanished anyway, and it’s unclear who — if anyone — will ultimately be held accountable.

Nour Zuhair Jassim, a well-connected businessman, was arrested in late October at Baghdad International Airport. He was named as the CEO of two of the companies and obtained over $1 billion from the account, according to the audit. His lawyer did not respond to a request for comment.

Two officials at the tax authority have also been detained, and the judiciary says it has seized several properties and millions of dollars in assets.

But officials say it's unlikely that an embezzlement scheme of this scale could unfold without the knowledge of higher-ups.

Political factions in Iraq have long jockeyed for control of ministries and other government bodies, which they then use to provide jobs and other favors to their supporters. A number of factions are linked to different government bodies implicated in the tax scheme.

The current government only came together in late October, more than a year after early elections. Bickering among powerful factions boiled over into deadly street fighting earlier this year, and the largest party in parliament, headed by influential Shiite cleric Moqtada al-Sadr, was consigned to the opposition.

Any attempt to hold political leaders accountable for the fraud could spark further unrest.
Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Saudi Arabia cracks down on music ‘lounges’ after conservative backlash
Saudi Arabia Signs ‘Strategic Mutual Defence’ Pact with Pakistan, Marking First Arab State to Gain Indirect Access to Nuclear Strike Capabilities in the Region
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
Kuwait opens bidding for construction of three cities to ease housing crunch.
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
Could AI Nursing Robots Help Healthcare Staffing Shortages?
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Tether Expands into Gold Sector with Profit-Driven Diversification
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
Israeli Airstrike in Yemen Kills Houthi Prime Minister
After the Shock of Defeat, Iranians Yearn for Change
YouTube Altered Content by Artificial Intelligence – Without Permission
Iran Faces Escalating Water Crisis as Protests Spread
More Than Half a Million Evacuated as Typhoon Kajiki Heads for Vietnam
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Trump Backs Putin’s Land-for-Peace Proposal Amid Kyiv’s Rejection
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
Iranian Protection Offers Chinese Vehicle Shipments a Cost Advantage over Japanese and Korean Makers
United States Sells Luxury Yacht Amadea, Valued at Approximately $325 Million, in First Sale of a Seized Russian Yacht Since the Invasion of Ukraine
Saudi Arabia accelerates renewables to curb domestic oil use
Cristiano Ronaldo and Georgina Rodríguez announce engagement
Asia-Pacific dominates world’s busiest flight routes, with South Korea’s Jeju–Seoul corridor leading global rankings
Private Welsh island with 19th-century fort listed for sale at over £3 million
Sam Altman challenges Elon Musk with plans for Neuralink rival
Australia to Recognize the State of Palestine at UN Assembly
The Collapse of the Programmer Dream: AI Experts Now the Real High-Earners
Armenia and Azerbaijan to Sign US-Brokered Framework Agreement for Nakhchivan Corridor
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
×