Former top Iraq financier denounces bank power grab

BAGHDAD Tue Jun 14, 2011 11:25am EDT

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BAGHDAD (Reuters) - Last month, top Iraqi banker Hussein Al-Uzri was telling foreign investors in London about why they should put their money in the "new Iraq."

Just over a week later, the head of the state-owned Trade Bank of Iraq had fled the country, accused by Iraq's government of committing "multiple violations" costing millions of dollars.

Uzri, 48, who had overseen the bank's development since 2003 into one of the largest and most profitable financial institutions in Iraq with assets of more than $15 billion, rejects the allegations as "unsubstantiated" and "fabricated."

He told Reuters that the bank, which partnered major U.S. and European banks to bring in billions of dollars for Iraq's post-war reconstruction, was the victim of a power grab by individuals close to Iraqi Prime Minister Nuri al-Maliki.

"It's about control of this bank," the U.S.-educated banker said by telephone in his first media interview since fleeing Iraq. For his own security, he did not want to say from which country he was speaking.

"Having control of the bank gives them control of substantial assets and they can basically utilize it," Uzri said, adding he felt a sense of "terrible betrayal" about his summary dismissal as chairman and president of the bank.

He believed the action by Maliki's government would damage Iraq's relations with the international banking community and set back the oil-producing country's efforts to rebuild after years of chaos, war and bloody sectarian conflict.

A top Maliki aide, cabinet general secretary Ali al-Alaq, has said authorities moved against the bank because its leadership was suspected of violating banking regulations and issuing improperly secured loans. Alaq said the irregular practices had cost the country "millions of dollars."

Earlier this month, Maliki ordered a judicial investigation into the bank over alleged "violations," and an arrest warrant was issued for Uzri.

Military vehicles and armed Iraqi security personnel surrounded and searched the bank on June 2, shortly after the prime minister had paid a personal visit to the institution.

A British adviser to the bank's board, Sir Claude Hankes, condemned the move as "political skulduggery." He told Reuters Uzri had resisted efforts by government officials to try to make it undertake "improper banking transactions."

Uzri scoffed at the government charges. He said the bank, which was regularly audited by international auditors, could never have obtained large credit lines from partners such as JPMorgan Chase, Deutsche Bank and Standard Chartered if it was engaged in irregular practices.

"If they were not sure, or suspected anything, they would not have been willing to give us such huge lines (of credit)," he said.

BLOW TO CONFIDENCE

Uzri, who in late May was one of the star speakers in London at an investment forum organised by the Iraq Britain Business Council (IBBC), said he believed his sudden removal after more than seven years at the head of the bank would make international bankers and investors wary.

"It will only damage the reputation of the bank and its employees and significantly set back 'normalization' of life for Iraq," Uzri said.

He said he was shocked by the way the government ordered the military raid against the bank on June 2. He said it followed immediately after a meeting he had held with Maliki at the bank, which he described as "cordial."

"The Prime Minister was there, he left and within half an hour they came and they roughed up some of the employees, some of the customers. They were looking for me, it seems," he added.

Alaq said Maliki had gone to give Uzri a chance to respond to the allegations before the formal arrest warrant was served.

It was not clear how Uzri managed to escape the security net and he gave no details of how he slipped out of the country.

The change at the high-profile Iraqi bank comes at a time when Maliki is facing pressures on his fragile cross-sectarian coalition government, which brings together representatives of the country's Shi'ite, Sunni and Kurdish ethnic groups.

Popular protests across the country have been demanding better public services and an end to official corruption as Maliki considers whether to ask some U.S. troops to stay on beyond a year-end deadline for their withdrawal.

Iraq has been no stranger to corruption scandals since the 2003 U.S.-led invasion that toppled Saddam Hussein, with U.S. and Iraqi authorities and transparency watchdogs denouncing the hemorrhaging of billions of dollars of missing funds.

Uzri acknowledged that his vision of a stable, prosperous "new Iraq" free from sectarian politics could be premature.

"There is a still a ways to go," he said, adding he would be working to clear his name from the allegations against him.

(Additional reporting by Waleed Ibrahim and Suadad al-Salhy; Editing by Louise Ireland)

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