ANTI-CORRUPTION EFFORTS IN IRAQ: UPDATE BY UN

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 001495

SIPDIS

E.O. 12958: DECL: 06/06/2019
TAGS: PGOV KCOR KDEM IZ
SUBJECT: ANTI-CORRUPTION EFFORTS IN IRAQ: UPDATE BY UN
OFFICIAL

REF: BAGHDAD 828

Classified By: ACCO Joseph Stafford, reason 1.4 (b and d)

SUMMARY
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1. (C) UNODC official provided update on the GOI's request to
join the Stolen Asset Recovery (StAR) Initiative,
highlighting the late May UNODC/World Bank conference here to
familiarize GOI stakeholders with the Initiative. The UNODC
official also noted the GOI's growing interest in
strengthening its anti-money laundering (AML) capacity; The
Embassy's Treasury Attache Office recently conducted an AML
workshop, and Iraq's Central Bank has agreed to a visit,
tentatively scheduled for late July, by a State-led Financial
Sector Assessment Team. The UNODC official rated Iraq's
anti-corruption institutions as "middle of the pack"
worldwide. The GOI's evident eagerness to move forward on
the StAR Initiative is good news, as is its concern to
strengthen its AML capabilities. Action request in para 9.
END SUMMARY.



STOLEN ASSET RECOVERY (StAR) INITIATIVE
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2. (U) Reftel reported the GOI's formal request March 17 to
the UN Office of Drugs and Crime (UNODC) to join the StAR
Initiative, a joint effort by UNODC and the World Bank. This
initiative, unveiled in 2007, is aimed at strengthening
developing countries' capability to recover public assets
lost through criminal activities -- corruption, tax
evasion,etc. -- and transferred overseas. The initiative,
involving implementation of relevant provisions of the United
Nations Convention Against Corruption (UNCAC),envisages a
pilot program of legal and technical assistance for
developing countries in such areas as investigation, tracing,
prosecution, and repatriation of assets.

UPDATE BY UN OFFICIAL
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3. (SBU) In recent meeting with ACCO, visiting UNODC official
Erik Larson provided an update on the GOI's involvement in
the StAR Initiative. He stated that, to follow up on the
GOI's request to join the StAR initiative, he and World Bank
official Heba Shams had conducted a several-day conference to
familiarize key Iraqi stakeholders with the StAR Initiative.
He described the event as well-attended, with GOI
participants including officials from, inter alia, Iraq's
lead anti-corruption agency, the Commission on Integrity
(COI),the Interior Ministry (MOI),and the Central Bank
(CBI). According to Larson, the Iraqi attendees made clear
their desire for an extensive program of technical and other
assistance so as to develop their capacity to recover the
estimated billions of dollars that corrupt Iraqi officials
have shipped abroad, both during and after Saddam's regime.
The UNODC official indicated that, in the aftermath of the
conference, his headquarters and the World Bank would look
into possible follow-up assistance efforts.


4. (SBU) Larson stated that the GOI was still awaiting word
on its acceptance into the StAR Initiative. While he added
that he foresaw no problem in the GOI's being accepted, he
nonetheless requested that the USG weigh in on Iraq's behalf;
he asked, in particular, that we approach the World Bank's
StAR Initiative Secretariat in Washington. ACCO undertook to
relay the request to Washington.


INCREASED FOCUS ON ANTI-MONEY LAUNDERING
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5. (C) UNODC official Larson indicated that, besides the
specific focus on the StAR Initiative, the conference had
also covered the anti-money laundering (AML) dossier. Noting
that AML efforts were a crucial element of any country's
anti-corruption regime, he remarked approvingly that, unlike
past AML-related gatherings here, the May conference had
Qpast AML-related gatherings here, the May conference had
featured the joint participation of the three vital players
mentioned above -- COI, CBI, MOI, and the judiciary. Larson
said that in the discussions the GOI participants highlighted
the need for greater coordination on AML activities among
their respective institutions and with, in particular, the
Counter-Terrorism Bureau (an element of the Prime Minister's
office),given Iraqi terrorist elements' implication in
money-laundering activities as part of their financing
operations. Larson said that UNODC would write up the
highlights of the AML-related discussions at the conference
and forward to COI head Judge Raheem Al-Ugaili to be factored

BAGHDAD 00001495 002 OF 002


into the draft AML legislation he was preparing.


6. (U) Indicative of the GOI's growing interest in
strengthening its AML capabilities, we note that the Treasury
Attache's office recently held a several-day workshop on AML
for COI officials. In May, two CBI officials attended a
meeting in Bahrain of the Middle East regional grouping of
the Paris-based Financial Action Task Force (MENA/FATF); the
GOI had previously been absent from the group's meetings for
two years. The CBI has agreed to a visit, tentatively
scheduled for late July, by a USG Financial Sector Assessment
Team (FSAT) led by State. In the past, the IMF has given AML
seminars for the GOI and plans additional sessions. As for
the private sector, JP Morgan and CITI have offered AML
training.

OVERALL ASSESSMENT OF IRAQ'S ANTI-CORRUPTION INSTITUTIONS
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7. (C) As ACCO's conversation with Larson drew to a close,
he provided an overall assessment of the capacity of Iraq's
principal anti-corruption institutions -- COI, Board of
Supreme Audit (similar to GAO),and corps of Inspectors
General -- compared to others worldwide, based on his
consultations in numerous countries. He judged that Iraq's
institutions were "in the middle of the pack;" they had far
to go to match the capabilities of western counterparts, but
had established themselves to the point that they were at
least on par with those in most developing countries, and
considerably ahead of some in terms of effectiveness. In the
Middle East, he asserted that Jordan's anti-corruption
institutions were perhaps the best developed, although he
added that in one area -- bringing senior officials to
account for corrupt activities -- their record of achievement
was thin.


COMMENT
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8. (C) The COI's evident eagerness to move forward on the
StAR initiative is a welcome development. The GOI is
currently hampered in its efforts at asset recovery by an
inadequate legal framework as well as lack of practical
experience; the StAR Initiative holds the prospect of
offering the GOI much-needed capacity-building assistance.
The GOI's growing recognition of the need to strengthen its
AML capacity is also good news -- as is its receptivity to
assistance from the USG, UN, and others in this area. We
have no basis for challenging UNODC official Larson's
characterization of Iraq's anti-corruption institutions as
"middle of the pack" internationally, but note that Iraq's
abysmal 2008 ranking (tied for second as most corrupt) by
Transparency International continues to detract from the
GOI's progress to date in establishing an effective
anti-corruption regime. END COMMENT

ACTION REQUEST FOR DEPARTMENT
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9. (SBU) We fully share UNODC official Larson's view that the
GOI's request to join the StAR Initiative is worthy of
support, and, accordingly, we request that the Department
weigh in on Iraq's behalf with the World Bank's StAR
Initiative Secretariat.

FORD