PRT BAGHDAD: CORRUPTION AND BLACK MARKETEERING

C O N F I D E N T I A L BAGHDAD 001014 SIPDIS SIPDIS E.O. 12958: DECL: 03/23/2016 TAGS: PGOV PINR ECON EPET IZ SUBJECT: PRT BAGHDAD: CORRUPTION AND BLACK MARKETEERING IN THE FUEL DISTRIBUTION SECTOR OF BAGHDAD'S KARADA DISTRICT. Classified By: PRT Leader Joe Gregoire for reasons 1.4 (B) and (D). ¶1. (C) During a meeting with PRT representative, Karada District Council (DC) Chairman Mohammed Al- Rubiey commented with concern the high degree of corruption in the fuel distribution sector, notably that of heating oil, cooking oil, and benzene (gasoline),in his district. ¶2. (C) According to Al-Rubiey, Neighborhood Councils (NC)'s in Karada were appointed by the DC to oversee the distribution of Benzene, heating oil, and cooking oil at the seven Petrol Stations in the district. The seven stations are selling gasoline at the government standard of 250 Iraqi Dinar (ID) per liter. Heating and cooking oil are sold at their respective government standard prices. ¶3. (C) The average wait to obtain benzene at one of the seven petrol stations in Karada is seven hours. However, petrol station managers, working with black market dealers, sell benzene to local citizens waiting in line for 1000 ID per liter. This allows people to avoid waiting in the long lines. ¶4. (C) A portion of the benzene sold at black market rates is passed to various Rusafa Director Generals (DG)'s at the Ministry of Oil (MoO). Senior level officials in the MoO are aware petrol stations and DG's are involved in corrupt activities. The MoO overlooks this activity and believes this is the cost of doing business. ¶5. (C) The Baghdad Provincial Council's (PC) Oil Committee, headed by Nazar Thamer Hatem Al-Tammimi, is attempting to address the concerns of the DCs. The PC oil committee meets with representatives from the 15 councils of the province weekly to discuss fuel issues. Nazar meets often with representatives of the MoO to encourage improvements in the fuel distribution system. He also advises the ministry of corruption in its ranks. In early March, the PC assisted the Karada District Council with the removal of the manager of Horria Petrol Station for mismanagement and incompetence. According to Al-Rubiey, assistance from Nazar, to date, is first rate. ¶6. (C) NC's are forwarding reports of their daily observations of petrol stations in Karada to the DC. The DC is forwarding daily capacity and quantity reports to the PC. The Karada DAC also forwards weekly reports to the PC informing the PC of developments in the fuels sector. ¶7. (C) Al-Rubiey said the Iraq Police (IP) are aware of the corrupt activities at petrol stations in Karada. However, he says they have done little to stop these activities. Al-Rubiey has received reports a number of IP's receive kickbacks from petrol station managers. In contrast, the Iraqi Army (IA) has responded much more forcefully to reports of black marketeering at petrol stations. The IA has arrested suspects and dumped black market gasoline into the streets. ¶8. (C) In response to the city wide corruption the PC has a new requirement for petrol station managers. The managers must now obtain written approval from DCs prior to getting additional fuel supplies. ¶9. (C) Comment. Though it appears corruption is rife within the fuel sector of Karada, the active involvement by the PC to address the issue and the responsiveness of the PC to the concerns of the Karada DC is encouraging. The interaction between the PC's Oil Committee and representatives from the DC's may be a model for other committees of the PC to emulate. KHALILZAD