Second suspect arrested in "Theft of the Century 2" in Diyala

Shafaq News/ A security source reported on Friday that a second suspect has been arrested in connection with the theft of billions of dinars in compensation funds from the Diyala local government.

The move comes just hours after a first suspect was apprehended.

The source told Shafaq News agency that "the security forces were able to arrest the defendant, who is suspected of embezzling funds estimated to be up to 30 billion dinars from the state treasury."

Earlier on Friday, a source close to the Diyala government revealed that one of the individuals involved in the "theft of the century 2" was captured by the security forces. The suspect was found in possession of seven safes containing money and archaeological artifacts.

Local officials estimated the embezzled amount to be 30 billion dinars.

The source told Shafaq News that "the arrest was made last night, following an arrest warrant issued by the judicial authorities at the urgent request of the acting governor of Diyala, Karim Ali Agha."

"A joint security force and a team from the Integrity Commission carried out a special operation to arrest him in the city of Baqubah. Seven locked safes containing money, as well as large sums of money packed in plastic bags and suitcases, and archaeological artifacts were found in his possession."

The source noted that "the arrested person is an employee of the Diyala Council."

"The raiding security force did not find any other accomplices in the crime, but they are tracking their movements and warned against covering them up, hiding them, or facilitating their escape." He stressed that "the arrestee confessed to the crime, and his initial statements were documented, pending the completion of the investigation and the documentation of his statements by the judiciary."

Meanwhile, officials at the Diyala Council confirmed to Shafaq News Agency that "the embezzled amount is likely to be 30 billion dinars, not nine billion dinars."

On Thursday, an insider revealed that nearly nine billion dinars had disappeared from the Diyala Council. The three employees involved in the theft fled to an unknown destination. The source noted that the theft was carried out through checks that were gradually cashed over a period of 8 months, the last of which was a sum of 3 billion dinars, cashed a few days ago.

Earlier on Friday, Raad al-Dahlaki, a member of the Integrity Committee of the Iraqi Parliament, pledged to open an urgent investigation into the details of this crime and to coordinate with the relevant bodies in the Integrity Commission to identify the parties involved.

The theft is reminiscent of the infamous "theft of the century," in which $2.5bn was allegedly spirited away from the country's tax authority between September 2021 and August 2022 through 247 cheques that were cashed by five companies. The money was then withdrawn in cash from the accounts of these companies, most of whose owners are on the run.

The scandal broke days before new premier Mohammed Shia al-Sudani's government was sworn in and he has said his administration will prioritize fighting corruption, which has "so brazenly spread through the joints of the state and its institutions." He has begun publicly purging acolytes of the former prime minister Mustafa al-Kadhimi.

Corruption in Iraq is endemic and has corroded state institutions, sanctioned by a political class that has governed the country since former president Saddam Hussein was toppled in 2003. The ethno-sectarian arrangement intended to foster power-sharing has instead entrenched a system of horse-trading between factions competing for top government jobs and sources of patronage within ministries.

In a public letter after the embezzlement was revealed, ex-finance minister Ali Allawi said that he had alerted Kadhimi's office about the scheme in November 2021 and ordered payments to be halted from the accounts without his approval, but the payments continued. A former senior adviser to Kadhimi said the premier’s office had not seen "official correspondence" from Allawi about the fraud.

The companies claimed to be acting on behalf of bigger firms, including several international oil companies, according to the ministry. Three of the companies were founded in the month before the scheme began, four people with knowledge of the investigation said.

In total, the ministry said 3.7tn Iraqi dinars ($2.5bn) were withdrawn from the accounts at Rafidain — or around 2.81 percent of the country’s 2021 budget. Some of the cash was then used to buy US currency through the daily "dollar auction" — a process in which the central bank provides dollars to a commercial bank in exchange for Iraqi dinars.