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Sinan al-Shabibi, Iraq’s central bank governor, suffered a dramatic reversal of fortune last week.
He began it rubbing shoulders with his peers around the world at the International Monetary Fund’s annual meeting in Tokyo. He ended it – according to his deputy, Mudher Salih Kasim – holed up in Geneva, facing an arrest warrant issued by the Iraq authorities after a parliamentary investigation attacked the central bank’s supervision of foreign exchange auctions.
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Yet, for all the questions facing Mr Shabibi – who hasn’t been reachable for comment – even more now confront Nouri al-Maliki’s Iraqi government. The handling of the probe into the governor and 15 other bank officials has – not for the first time – revealed what critics argue are the Iraqi administration’s disdain for due process and its roughhouse approach to the rule of law.
In their bald statements shorn of explanation, the authorities have also shown little regard for the need to reassure Iraqi citizens and the business community that the economy will not be destabilised by the ructions from this allegedly wide-ranging scandal at one of the country’s most important financial institutions.
“The ‘take no prisoners’ culture in this country can be overwhelming sometimes,” said one businessman in Iraq wistfully, as he speculated on the likely outcome of the affair. “What gets to me is that it didn’t have to be like this.”
While rumours about the action against Mr Shabibi were swirling from early last week, it took days for any official acknowledgment first of his suspension and then that a criminal case against him had been launched. Iraq’s Supreme Judicial Council said the governor and the other officials were being sought for arrest after MPs issued a report criticising the bank’s handling of the foreign exchange auctions held several times a week, at which several hundred million dollars are sometimes sold. The authorities tightened up identification rules for auction customers in April, amid longstanding suspicions – shared by the deputy governor – that some applicants were using bogus identification to obtain money they then deployed in deals to evade sanctions on neighbouring Iran and Syria.
The targets of the official investigation have suggested they are facing allegations of Kafkaesque opacity. One of Mr Shabibi’s lawyers said he had been told the inquiry was secret. The deputy governor Mr Kasim, who denies wrongdoing, said late last week that he’d heard he was being probed, but had been given no other information.
Some analysts see the affair as more evidence of a growing autocracy established by Mr Maliki, particularly since the withdrawal of US troops in December. The paradox of power in his administration is that, while his coalition grouping controls well under half the parliamentary seats, he has steadily increased his authority over important security and financial institutions. In December, Tareq al-Hashemi, vice-president, fled the country after a warrant was issued for his arrest on terrorism charges, claims he says were orchestrated by the premier. Mr Maliki’s supporters deny this and also allegations that the government is now attempting a putsch against the central bank governor so it can wrest control of the country’s substantial foreign exchange reserves.
A second troubling dimension of the central bank case is its potential impact on Iraq’s economy, which is still fragile after the 24-year Saddam Hussein dictatorship, almost nine years of US occupation and a bloody civil war. The bank governor’s admirers at home and abroad say he has done a good job of keeping the dinar stable and controlling inflation. His replacement, Abdul-Basit Turki, head of the Board of Supreme Audit, a government spending watchdog, is seen as reassuring to the extent that he is not viewed as a political apparatchik – but the government has made little or no effort to explain his appointment, or to issue assurances about the central bank’s continuing independence.
Without any evidence so far from either side on the facts of the foreign exchange claims, it is impossible to conclude whether there is any substance in the government’s charges against Mr Shabibi. But it is fair to say that the way the authorities have launched the case against him give serious grounds for concern about its fairness. The responsibility is now on Mr Maliki’s administration to show quickly that this is a well-grounded inquiry– and not a power-grab aimed at eliminating a troublesome obstacle to its control of the country.
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He began it rubbing shoulders with his peers around the world at the International Monetary Fund’s annual meeting in Tokyo. He ended it – according to his deputy, Mudher Salih Kasim – holed up in Geneva, facing an arrest warrant issued by the Iraq authorities after a parliamentary investigation attacked the central bank’s supervision of foreign exchange auctions.
More
Yet, for all the questions facing Mr Shabibi – who hasn’t been reachable for comment – even more now confront Nouri al-Maliki’s Iraqi government. The handling of the probe into the governor and 15 other bank officials has – not for the first time – revealed what critics argue are the Iraqi administration’s disdain for due process and its roughhouse approach to the rule of law.
In their bald statements shorn of explanation, the authorities have also shown little regard for the need to reassure Iraqi citizens and the business community that the economy will not be destabilised by the ructions from this allegedly wide-ranging scandal at one of the country’s most important financial institutions.
“The ‘take no prisoners’ culture in this country can be overwhelming sometimes,” said one businessman in Iraq wistfully, as he speculated on the likely outcome of the affair. “What gets to me is that it didn’t have to be like this.”
While rumours about the action against Mr Shabibi were swirling from early last week, it took days for any official acknowledgment first of his suspension and then that a criminal case against him had been launched. Iraq’s Supreme Judicial Council said the governor and the other officials were being sought for arrest after MPs issued a report criticising the bank’s handling of the foreign exchange auctions held several times a week, at which several hundred million dollars are sometimes sold. The authorities tightened up identification rules for auction customers in April, amid longstanding suspicions – shared by the deputy governor – that some applicants were using bogus identification to obtain money they then deployed in deals to evade sanctions on neighbouring Iran and Syria.
The targets of the official investigation have suggested they are facing allegations of Kafkaesque opacity. One of Mr Shabibi’s lawyers said he had been told the inquiry was secret. The deputy governor Mr Kasim, who denies wrongdoing, said late last week that he’d heard he was being probed, but had been given no other information.
Some analysts see the affair as more evidence of a growing autocracy established by Mr Maliki, particularly since the withdrawal of US troops in December. The paradox of power in his administration is that, while his coalition grouping controls well under half the parliamentary seats, he has steadily increased his authority over important security and financial institutions. In December, Tareq al-Hashemi, vice-president, fled the country after a warrant was issued for his arrest on terrorism charges, claims he says were orchestrated by the premier. Mr Maliki’s supporters deny this and also allegations that the government is now attempting a putsch against the central bank governor so it can wrest control of the country’s substantial foreign exchange reserves.
A second troubling dimension of the central bank case is its potential impact on Iraq’s economy, which is still fragile after the 24-year Saddam Hussein dictatorship, almost nine years of US occupation and a bloody civil war. The bank governor’s admirers at home and abroad say he has done a good job of keeping the dinar stable and controlling inflation. His replacement, Abdul-Basit Turki, head of the Board of Supreme Audit, a government spending watchdog, is seen as reassuring to the extent that he is not viewed as a political apparatchik – but the government has made little or no effort to explain his appointment, or to issue assurances about the central bank’s continuing independence.
Without any evidence so far from either side on the facts of the foreign exchange claims, it is impossible to conclude whether there is any substance in the government’s charges against Mr Shabibi. But it is fair to say that the way the authorities have launched the case against him give serious grounds for concern about its fairness. The responsibility is now on Mr Maliki’s administration to show quickly that this is a well-grounded inquiry– and not a power-grab aimed at eliminating a troublesome obstacle to its control of the country.
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