BAGHDAD, (Reuters) – Iraq’s government removed central bank chief Sinan al-Shibibi on Tuesday over a corruption inquiry opened by lawmakers into bank officials suspected of abusing dollar sales.
Shibibi’s dismissal will do little to reassure investors who fear the government is trying to curb the autonomy of financial institutions from the central bank to the stock market. Last year Prime Minister Nuri al-Maliki won a court ruling that put the bank and other independent entities under cabinet supervision.
The cabinet appointed Abdul-Basit Turki, the head of the government spending watchdog, Iraq’s Board of Supreme Audit, to run the central bank “until further notice” over the corruption charges, Maliki’s media adviser Ali al-Moussawi said.
Lawmakers investigating corruption in the central bank say they found violations in dollar sales by the bank for importing goods, false documents for importers, and a lack of control of how dollar auctions were monitored.
An independent watchdog is now studying those findings, but no official charges have been filed, according to the spokesman of the Integrity Commission.
“The government knows its interests and what it sees as best for its interests, this is up to the government and we are not objecting,” Mudher Kasim, deputy governor of the central bank, said on Tuesday.
The corruption charges are the latest chapter in a long-running dispute between the government and its allied lawmakers and the central bank board over the institution’s autonomy.
Since an inconclusive 2010 election, opponents of Maliki, a Shi’ite, have accused him of failing to fulfill power-sharing agreements in Iraq’s delicate sectarian and ethnic balance among Shi’ite, Sunni and Kurdish political blocs. He accuses them of blocking his attempts to make the government work.
Some lawmakers said the central bank should stay independent despite the dismissal.
“The government attempted to put this important body under its supervision and its administration,” said Sharif Sulaiman, a Kurdish lawmaker in the financial committee. “This institute is under parliament supervision and it should stay like that.”
Maliki dismisses criticism among Sunnis, Shi’ite and Kurdish parties in his power-sharing government that he is shoring up his own position by trying to control government institutions, including the central bank and security ministries.
Since the U.S.-led invasion that ousted Saddam Hussein in 2003, Iraq has struggled to crack down on corruption especially as oil revenues increased as the petroleum industry benefited from foreign investment and bolstered production.
Despite its oil wealth, Iraq still needs investment in almost every sector from housing to power generation and hospitals.