Iraq says 300 officials charged with corruption

BAGHDAD (Reuters) - Iraq has charged more than 300 officials with corruption this year and courts handed down 86 convictions, its corruption watchdog said on Tuesday, as a nation awash in oil money fought back against graft.

Iraq is perceived as being the world's third most corrupt country, with only failed state Somalia and Myanmar's military junta below it, according to the Transparency International index measuring perceptions of graft in 180 nations.

U.S. officials say corruption is a threat to Iraq's fledgling democracy and could undo recent security gains.

The government of Prime Minister Nuri al-Maliki has been preoccupied with restoring security, but as violence falls it is seeking to match battlefield successes with political reforms.

"In 2008 we referred 337 cases to the court. This year has seen the biggest achievement," Rahim al-Ugaili, a judge and head of the Iraqi Integrity Commission, told journalists.

He added that courts had successfully convicted 86 people. Most were low-level officials, especially those involved in selling fake passports to Iraqis fleeing the country.

"In Iraq, the battle against terrorism has been tough and bloody, but the battle against corruption will be more prolonged," Ugaili said, adding that perceptions of corruption were deterring already jumpy foreign investors.

"Big companies do not come to a corrupt environment. The foreign investor does not give his money to be stolen," he said.

He added that an amnesty law passed by parliament in February, opening the way for a release of mostly Sunni Arab prisoners, had "negatively affected the work of the commission" by effectively pardoning 1,721 officials suspected of graft.

(Reporting by Ahmed Rasheed and Aseel Kami; Writing by Tim Cocks; Editing by Michael Roddy)