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Inner City Press Global Inner Cities Report - December 28, 2005

Watching the Detectives: Oversight of the Overseers of the Development Fund for Iraq

On December 28, the oversight board of the Development Fund for Iraq meets at the United Nations. Following the meeting, the International Advisory and Monitoring Board will hold a press conference and take questions, apparently for the first time since July 2004. The Board’s mandate was extended for a year, by UN Security Council Resolution 1637 on November 8. That day, UN spokeswoman Marie Okabe told reporters that }the United Nations is, as you can see, one part of the Board, so we really do need to refer you to the Board. We can see if there's anybody from the Board that could brief you.” Responding to a question of whether long-time UN Comptroller (and IAMB board member) Jean-Pierre Halbwachs could provide a brief,” Ms. Okabe said, “I can certainly ask.” On November 22, Annan spokesman Stephane Dujarric answered another question about the IAMB, stating that “If there has been a fault, and that has been to provide live briefings for you, and that's something that we would like to see corrected.”

And now, between Christmas and New Years, this “correction” finally comes. The Development Fund for Iraq’s outside auditor KPMG’s review of the second half of 2004 found among other things that the DFI was used for commercial purposes by Iraqi banks, by providing international wire transfer services to customers. "The use of the DFI for nongovernmental payments should cease immediately," the report warned, specifying that such transactions may result in money laundering: criminals or associates being able to conceal the source of funds and their identity. KPMG also said that, contrary to the procedure that disbursements for all letters of credit should be made directly from the DFI account at the Federal Reserve Bank of New York to JP Morgan Chase, and charged against the relevant Iraqi ministry budget, the trade ministry arranged for the issue of letters of credit through three other banks.

Perhaps relatedly, comments submitted to the Central Bank of Iraq regarding expansion into that country by HSBC have yet to be responded-to.  The question seems to be, who’s watching the watchers?

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