LABOR IG DETAILS MASSIVE SOCIAL WELFARE FUND FRAUD

S E C R E T SECTION 01 OF 02 BAGHDAD 004047 NOFORN SIPDIS STATE FOR INL/C/CP, INL/I, NEA/I AND S/I E.O. 12958: DECL: 12/28/2018 TAGS: KCOR KCRM PGOV EAID PREL IZ SUBJECT: LABOR IG DETAILS MASSIVE SOCIAL WELFARE FUND FRAUD Classified By: Anti-Corruption Coordinator Lawrence Benedict, reasons 1.4 (b) and (d). ¶1. (C) SUMMARY: Hameed al-Zaidi, the Inspector General of the Ministry of Labor and Social Affairs, announced to the Iraqi press the widespread corruption within his ministry in which, he estimated, 70 percent of funds allocated to the ministry's social welfare program were siphoned off. Al-Zaidi claimed that officials within the ministry, up to Minister al-Radi himself, had stymied his investigation. He claimed that he had narrowly escaped an assassination attempt, which killed his driver, and had been personally smeared with allegations that he was tied to extremists as a result of conducting the investigation. The Board of Supreme Audit (BSA) launched a review of the ministry's social welfare program as a result of al-Zaidi's work. Without sharing a copy of the report, BSA chief Dr. Abdulbasit Turki suggested there was rampant abuse of the social welfare system throughout Iraq. END SUMMARY. LABOR IG DETAILS WIDESPREAD ABUSES -------------- ¶2. (U) Hameed al-Zaidi, the Inspector General (IG) at the Ministry of Labor and Social Affairs, told al-Sabah newspaper December 16 that 50 percent of the employees in his ministry were suspected of corruption. He did not reveal names of the allegedly corrupt officials to the press but said more than 3,000 police officers illegally obtained welfare benefits. He also said local officials and the heads of district councils received funds designated for those below the poverty line. ¶3. (C) Al-Zaidi provided ACCO with further details of the alleged corruption within the Labor and Social Affairs Ministry. Al-Zaidi estimated 70 percent was siphoned from the ministry's social welfare program, which provides assistance to poor families, widows, and the disabled. The 2008 budget for the program was 800 billion dinars, or roughly USD 667 million. Al-Zaidi accused Layla Kadel Aziz, a Director General in the Social Work Department of the Ministry, of being the ringleader of the embezzlement scheme. Al-Zaidi claimed to have documentation showing Aziz had overseen the creation of roughly 70,000 fictitious names on the rolls of the social welfare program. He also said a charity owned by Aziz's cousin had paid recipients of the program USD 500 to sign over their benefits for a full year. After al-Zaidi informed Minister Mahmud Muhammad Jawad al-Radi of this fraud in September, the minister reassigned Aziz to another department. Besides evidence of fictitious aid recipients, al-Zaidi claimed he had uncovered proof of dozens of Iraqi politicians putting their families on state welfare rolls. Al-Zaidi said those who had been caught were generally granted amnesty. ¶4. (C) Al-Zaidi said despite the removal of Aziz, fraud remains widespread in the program and he has not received sufficient support from the ministry to investigate offenders. Further investigation in Diyala, he claimed, had been thwarted by insufficient security resources. He said he had been confronted at gunpoint in Kirkuk. Finally, he claimed the trail had gone cold in Tikrit after receiving a letter from Minister al-Radi that the investigation be stopped. ¶5. (C) Dr. Abdulbasit Turki, head of the Board of Supreme Audit (BSA),told the Anti-Corruption Coordinator December 24 that his organization had just finalized a report in the last few days for the Prime Minister on the Ministry of Labor and Social Affairs' social welfare program. He did not share a QSocial Affairs' social welfare program. He did not share a copy of the report with us but said it had been based on information BSA had received from al-Zaidi's office. Abdulbasit did not elaborate on details of the report other than to say he believed abuses of the social welfare program were widespread throughout the country. CLAIMS LIFE THREATENED, REPUTATION SMEARED -------------- ¶6. (S/NF) Al-Zaidi told us that during a visit to Malaysia earlier this month, he had loaned his car and driver to his chief investigator. The investigator narrowly escaped an explosion caused by a bomb placed in the vehicle that killed his driver. Al-Zaidi told us his name had further been smeared because of his candor in addressing fraud at the ministry. He said rumors had begun to circulate that he had murdered a colleague at the Ministry of Labor and embezzled funds. He explained that at the time he had allegedly murdered this "colleague," he was in fact employed as a Director General at the Ministry of Housing. Al-Zaidi told BAGHDAD 00004047 002 OF 002 us previous efforts had been made to slander his name by linking him to Jaysh al-Mahdi (JAM). (Note: Al-Zaidi has been refused on numerous occasions an International Zone badge on the basis of intelligence reporting linking his bodyguard and brother to JAM members suspected of kidnapping five British nationals at the Ministry of Finance in May ¶2007. End Note.) COMMENT -------------- ¶7. (S/NF) We have no additional information one way or the other regarding the allegations of al-Zaidi's ties to JAM. In the execution of his official duties, however, al-Zaidi's outspokenness and courage are welcome in comparison to the usual reticence of Iraqi IGs to speak out about corruption in their respective ministries. He is the first IG we are aware of to take such a stand in publicly denouncing corrupt acts. ACCO, in turn, plans to send al-Zaidi a letter of support for his courage in denouncing what BSA chief Turki clearly suggested was rampant, widespread abuse of Iraq's social welfare system. CROCKER