American Contractor

Fake ‘Financial Investment’ Companies Invade Southern Iraq, And The Government Warns About Them

Al Hajj Ali Hassan will spend the rest of his life with a ‘half disabled body’. There are people who owe him more than a half a billion Iraqi Dinars $410,000. This debt is not because he is a company owner or a financial investor; rather, it is because one of his sons ‘fell into a trap’ was tricked. This trap involved a huge (bad/fake) investment he made that had promised huge returns.

According to the Interior Ministry, a huge amount of money, so huge that no one can imagine, is being smuggled from Iraq thru such ‘false’ investments and is being smuggled out of the country.

Meanwhile, the Iraqi Central Bank has warned that the potential destruction of the Iraqi economy could be the final outcome of such practices.

One of Al Hajj’s sons told Asharq Al Awsat Newspaper that one of his brothers began to trade with a ‘financial investment’ company… and at first he actually received huge benefits. So, he was able to buy a large home and a recently made late model car. This success encouraged him to mortgage everything he owned, and to take the money to a person, in ‘the projects’ area of Babil Province, who claimed that he is a ‘financial investor’.

This brother of the duped investor added, “My brother is not the only one to fall into this trap. There are thousands of other people …from various areas and Provinces in Iraq… that gave their money to this person. This individual currently owes the ‘investors’/victims a total more than 450 billion Iraqi Dinars approx. $370 million.”

He clarified, “For a year, the dealings with this investment maker were normal successful…Then, the number of people demanding that he pay them their returns grew too large, and he could not pay them back…and now he is somewhere outside Iraq. The problem is: there is nothing to use as evidence ‘against’ him. There are no written contracts. All that happened was: he would take money from any person who wanted to ‘invest’…and then he’d write the person’s name in his own small notebook…And, then, he’d say:
• ‘Listen, I will take your money and invest it…And, you will receive ‘investment returns’ of 200% to 300% from me every six months.’
• ‘Now, if something should happen, like if I die, then you can not come after my family. I am the only one responsible’ for these investments/promises.”

Al Hajj’s son added, “The rights of the investors are ‘dropped’ nonexistent; because, they gave him their money willingly ‘without being forced’. My brother also convinced a lot of people to join him in this investment… but they the new investors convinced him, the brother to guarantee their investments…and he did! Now, we our family have to pay them…Even though their money went to a different person. I admit that my brother is guilty of making a mistake being tricked. Because of these problems my father has suffered a ‘mental disease’ a stroke, and now his body is 50% disabled.”

Nihad Hajwal, the Director of the Rafidain Bank branch in Suwayra, said, “We can not call these ‘fake entities’ companies. The term and objective of a ‘company’ requires that there be some rules regulations. I believe these ‘rules’ are very strong in Iraq. However, some ‘bad guys’ and ‘illegal activities conducted by small, private banks’ have resulted in huge ‘mistakes’ which have begun to impact Iraq’s economic situation.”

Hajwal told this newspaper, “Everybody knows that the establishment creation of a ‘company’ requires:
• Security and banking agreements,
• Sponsorship, and
• Guaranteed accounts collateral, underwriting, insurance/bonding.
- These accounts should be opened in a well known and established bank.
- We provide them the new company with a receipt/certificate which proves that they have such an account.
- And, only then, does the paperwork to establish create the company begin to move forward.”

He added, “What has happened is: some individuals through the use of paying ‘bribes’ to small ‘private banks’ obtained fake ‘guarantees’ certificates of deposit/letters of credit…And then, using these fake documents the ‘company’ was able to become officially ‘registered’ and start carrying out its ‘illegal operations’ criminal schemes as a ‘legally registered company’.”

Hajwal continued, “There is another type of ‘companies’ which are not really ‘companies’. All that happens in this case is: there is a person who claims to be a ‘financial investor’ and he ‘pays it back in a circle/cycle’ like a pyramid or ‘Ponzi’ scheme, thus tricking more investors to give him money.”

He pointed out: the value of these fake investment fund monies has now reached billions of dollars. He added, “This will destroy the national economy.”

He added, “We the ‘governmental banks’ warned against these types of investments. However, the investors did not prefer to deal with us because of our lower rates of return, and the usual/ordinary routine. Recently, we have improved our dealings/process, and have raised the benefits returns which we provide. This is good for us and will increase the number of people who choose to deal invest/save with us.”

Regarding the appearance of these types of fake/bad investment ‘companies’ in Iraq, he Hajwal said, “There are many reasons, such as:
• the weak organization of Iraq’s banking sector,
• and branches of banks are few and hard to find…
…in Iraq, there is only one bank per every 54,000 people. In some other Arab countries, there is one bank per every 10,000 people. While in Germany, there are six banks per every 10,000 people.”

The Media and Public Relations Director for Iraq’s MOI, BG Allaa Al Taie, said: these ‘companies’ may be part of the projects to finance/fund terrorism in Iraq. He said, “Terrorist groups are trying to use every tool/method with which they can help carryout their plans to target a specific target or government. They use many methods including: ‘money laundering’ and corruption financial crimes. In carrying out their terrorist goals They use many procedures, such as: recruiting suicide bombers. Citizens are worried by the recent trend use of ‘silenced’ weapons in the assassinations of well known individuals. These groups are trying to use as much as they can to ‘save’ build up/gather a lot of money which they can use to carryout their operations.”

The spokesman for Iraq’s Supreme Judicial Council, Judge Abd Al Sattar Birqidar, confirmed: there is no item in the law which ‘blames’ a victim for becoming a victim of fraud. The law is created to protect the citizens and their money property. Iraqi Law Article # 456 identifies the ‘bad guys’ who defraud the citizens as ‘criminals’ even if the people ‘willingly’ invested their money with him the ‘bad guy’/fraud.

After the phenomenal growth of investments in Iraq’s southern Provinces which have a Shiite-majority, the Shiite religious authorities warned against dealing with these types of ‘companies’.

An Islamic Fadhila Party leader, Ghazi Samaraie, said, “These ‘companies’ are working secretly deviously and suspiciously. They transfer the money they take in outside of Iraq…which has a negative impact on Iraq’s local economy. There a growing number of companies in Iraq’s Provinces; companies such as: ‘Gold Quest, V-Max, Monaco, and Guam Com’. In Basrah Province, the number of citizens dealing with these companies is 8,000.”