Identifier
Created
Classification
Origin
05BAGHDAD4786
2005-11-30 14:22:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Baghdad
Cable title:  

CENTRAL BANK OF IRAQ FUNDS IN LEBANESE BANKS

Tags:  EFIN PREL PGOV LE IZ 
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UNCLAS SECTION 01 OF 02 BAGHDAD 004786 

SIPDIS

SENSITIVE
NOT FOR INTERNET DISTRIBUTION

E.O. 12958: N/A
TAGS: EFIN PREL PGOV LE IZ
SUBJECT: CENTRAL BANK OF IRAQ FUNDS IN LEBANESE BANKS

UNCLAS SECTION 01 OF 02 BAGHDAD 004786

SIPDIS

SENSITIVE
NOT FOR INTERNET DISTRIBUTION

E.O. 12958: N/A
TAGS: EFIN PREL PGOV LE IZ
SUBJECT: CENTRAL BANK OF IRAQ FUNDS IN LEBANESE BANKS


1. (U) This is an action request. Please see para 9.


2. (SBU) SUMMARY: The Central Bank of Iraq (CBI) has
reported that despite progress toward the repatriation
of CBI funds deposited in banks in Lebanon, the
balance of such funds held by banks there is USD
197,858,652.82. The CBI is in communication with each
of these banks and has provided documentation of its
correspondence to the U.S. Embassy. Ten banks have
completed the transfer of funds to the Development
Fund for Iraq (DFI). END SUMMARY.


3. (SBU) During the last weekend of November, Sinan
Shabibi, governor of the CBI, traveled to Beirut and
had a meeting with the governor of the Central Bank of
Lebanon, Riad T. Salameh. Upon his return to Baghdad
on November 28, Shabibi spoke to the Treasury Attach
Office about the meeting. Sinan stated that his
Lebanese counterpart assured him that all of the CBI
funds in Lebanon would be returned to Iraq but that
the Lebanese banks holding CBI balances want to
reschedule the payments in a manner not adversely
affecting their liquidity. Sinan agreed that the
payments could be rescheduled over the next six
months.


4. (SBU) Sinan also stated that he would like to
discontinue the practice of placing CBI deposits in
banks in Iraq and abroad and that he is considering
dissolving the CBI Investment Department. Ernst and
Young is reviewing the Investment Department and funds
held abroad in its current audit of the CBI.


5. (SBU) The following five banks have been most
resistant to a transfer of CBI balances to the DFI
despite numerous CBI requests:

--Beirut Bank, balance of USD 44,208,491

--Al-Mawrid Bank, balance of USD 29,406,876

--Biblos Bank, balance of USD 11,388,726

--Arabic National, balance of USD 42,187,777

--Beirut Bank and Africa, balance of USD 10,413,441


6. (SBU) The following banks have responded
positively to the CBI request and have transferred a
part of the CBI funds they were holding to the DFI:

-- Franca Bank, last transfer 16 August 2005,
remaining balance USD 8,095,742.

-- Intercontinental Bank, last transfer 11 October
2005, remaining balance USD 4,197,323.

-- Private International Bank, last transfer 28
September 2005, remaining balance USD 6,341,614.

-- United Bank, last transfer 1 July 2005, remaining
balance USD 590,719.

-- Lebanon and the Gulf Bank, last transfer 19 October
2005, remaining balance USD 17,236,801.

-- United Credit Bank, last transfer 4 October 2005,
remaining balance 5,436,356.

-- Al-Madina, last transfer 3 October 2005, remaining
balance USD 2,706,365.

-- Rafidain Bank Beirut, remaining balance USD 75,740
(transfer date not provided).

-- Jamal Trust Bank, last transfer 6 October 2005,
remaining balance 15,572,675.


7. (SBU) The following banks have completely
transferred the outstanding CBI balances they had to
the DFI:

-- Al-Etimad Lebanese Bank, final transfer on 30 June

2004.

-- Auda Sardar Bank, final transfer on 1 June 2005.

-- Mediterranean Bank, final transfer 2 June 2005.

-- Lebanon Trade Bank, final transfer on 2 June 2005.

-- Canadian Lebanese Bank, final transfer on 1 July

2005.

-- Al-Lati Bank, final transfer on 5 July 2005.

-- First National Bank, final transfer on 12 August

2005.

-- Lebanese Swiss Bank, final transfer 12 September

2005.
-- Lebanese Syrian Bank, final transfer 14 October

2005.

-- Lebanese Swiss Bank, final transfer 11 Oct 2005.


8. (SBU) CBI's action to recover funds from Lebanese
banks have been spurred in part by the ongoing audit
of the CBI's books by Ernst and Young. The CBI is
under pressure to put its financial house in order. A
representative of the U.S. Treasury Attach's Office
and the IRS CI Attach have arranged a follow-up
meeting with the Investments Department of the CBI in
order to assist in tracking the closure of all
accounts in Lebanese banks.


9. (SBU) ACTION REQUEST: Embassy Baghdad requests
that the Department of State instruct Embassy Beirut
to seek the assistance of Central Bank of Lebanon
Governor Salameh in the recovery of these assets,
according to the agreed extended payment schedule.
Embassy Beirut might remind Salameh of the assurances
he gave Governor Shabibi that all of Iraq's funds in
Lebanon would "soon be returned" to Iraq.


SATTERFIELD
D