Returning to a post-Saddam Hussein Iraq after nearly four decades in exile, the self-appointed US-endorsed Iraqi opposition leader Ahmad Chalabi is at the center of controversy in his homeland and elsewhere throughout the Arab world.
Chalabi, an American-trained mathematician who chairs the Iraqi National Council (INC), an overseas Iraqi resistance movement that emerged in the early 1990s, spent most of his exile years have in neighboring Jordan.
Born into one of Baghdad’s elite Shiite families, who have fled the country after the fall of the monarchy in 1958, Chalabi rose to prominence in the Hashemite kingdom of Jordan, where he served a four-year tenure as the chairman and general manager of Petra Bank, Jordan's third largest.
However, Chalabi left scorched earth behind him when he fled Jordan in 1989, disguised in a Bedouin woman’s dress, having been accused of defrauding the bank and playing a lead role what to date remains the largest ever financial corruption scandal in Jordan’s history.
Chalabi, who refused to return to Jordan to appear before the court in 1994, was found guilty on two counts of embezzlement, two counts of violation-of-trust and one count of fraud, and sentenced in absentia to 22 years in prison. In addition to a jail term, the court also demanded Chalabi return the $30 million that were embezzled from the bank.
Petra Bank, which was registered as a Jordanian public shareholding company since 1977, with paid-up capital of three million Jordanian dinars, elected Mohammad Touqan as its chairman of the board. After Touqan passed away in 1982, Chalabi, who had been the bank’s deputy chairman and general manager, assumed Touqan’s position as chairman of the board while continuing to serve as the general manager.
Chalabi remained in his new post until the Economic Security Committee, the government’s watchdog overseeing financial activities in the country, issued an order in August 1989 dissolving the bank’s board and ousting Chalabi from his managerial and executive functions.
Although Chalabi was approved as a member of the oversight committee that was to manage the collapsing bank, he fled the country. After two and a half years of police investigation and trial, the Jordanian courts issued a verdict indicting Chalabi and another 47 people for their involvement in the scandal.
According to court documents, obtained by menareport.com, a prosecution testimony incriminated Chalabi of adopting a financial plan that went against the commercial interests of Petra Bank, while tailor suited to benefit his personal interests, as well as those of his relatives’ who also held key positions at Petra.
The court files show how Chalabi and his associates schemed with overseas financial institutions closely affiliated to Petra Bank—among them Mebco Bank in Beirut, Socovi in Geneva, Petra Bank in Washington, Remal Trading Company and London’s Investment Group—to facilitate fraudulent loans.
Another testimony heard by the Jordanian court pointed the finger at Chalabi for having deceived both Petra Bank’s shareholders and the Central Bank of Jordan (CBJ) through the use of forged documents and fictitious accounts, and by concealing incriminating documents.
Chalabi’s accomplices helped him smuggle large sums of money outside the kingdom, under the guise of “investment decisions” that included the purchase of bad debts and by using the bank’s cash for speculative gold/commodity and currency trading. The money ended up in Chalabi’s bank accounts in London, Geneva, Beirut and Washington.
Jordanian court documents also offer a invaluable insight into the man’s character. Chalabi’s verdict describes him as a very “influential”, “persuasive” and “intelligent” individual. All charismatic traits that enabled him to convince his subordinates that he was “honest,” “fair” and “devoted to his work”. Chalabi’s employees, the court asserts, competed for “his blessing,” and followed his directives, whether they were legal or not.
Chalabi burdened Petra Bank with financial guarantees, commitments and loans to “bleeding” companies, and knowingly purchased bonds of financial bankrupt governments of Sudan and Poland, all of which were paid for in hard currency.
In an attempt to avoid a full-blown liquidity crunch, Chalabi resorted to accepting large deposits from the local banks in Jordan, borrowed larges sums of money from foreign banks at high lending rates, as well as borrowing from Jordan’s central bank to increase his reserve of local currency. He also applied for large sums of money through letters of credit fronted by his local clients, unbeknown to them, all guaranteed by the central bank.
Court documents also reveal another eyebrow raising incident involving the charter of two aircrafts from the local airline to carry the bodies of Chalabi’s deceased parents from London to Damascus, at the expense of Petra Bank.
Court documents also proved that the years 1980-1989 saw some two million JDs worth of Chalabi’s embezzlement acts within the Petra Bank. Additionally, the court files detail a business connection made by Chalabi between Petra Bank and a the Sudanese Bank of Khartoum, a joint venture between the Petra bank and local Sudanese partners, which was established in 1984 with $1.75 million in Petra Bank funds.
A condition of the venture was that the Sudanese partners pay Petra Bank a yearly management fee for consultancy and expertise. Between the 1983 and 1986, $2.62 million were accumulated by Petra Bank. They were however never paid to the Jordanian institution. Instead, these funds were wired to Petra Group—a company who Chalabi was the sole signatory to—through the Geneva-based Socofi bank, also owned by Chalabi.
Throughout his tenure as chairman of Petra Bank, between 1984-1989, Chalabi was able to convince the Central Bank of Jordan of Petra Bank’s ‘good’ financial health despite the losses it was incurring throughout this period.
He was able to do so by instructing the bank’s financial department to show mock accounts with large, yet fictitious, balances, held with foreign banks outside the kingdom earning interest and thus offsetting the P&L statements.
Investments he made during his time at the bank involved those usually banned by the Jordanian law. He was able to hide these investments, which included the purchase of the Sudanese government’s bad debts in 1988 and the Polish governments bad debts one year prior to that. Total losses accrued by Petra Bank by these investments include $250,000 for the Sudanese purchase and $2.2 million for the Polish. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
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