Iraq suspends central bank governor in forex probe

Ammar Karim
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Sinan al-Shabibi has been suspended from his post by Iraq's anti-corruption watchdog

Iraq's cabinet named an interim central bank chief on Tuesday after the bank's well-respected governor Sinan al-Shabibi (seen here in 2004) was suspended while on an overseas trip amid a currency manipulation probe.

Iraq's cabinet named an interim central bank chief on Tuesday after the bank's well-respected governor was suspended while on an overseas trip amid a currency manipulation probe.

The move followed the announcement of an inquiry into allegations that officials at the Central Bank of Iraq (CBI) had intentionally weakened the value of the Iraqi dinar against the US dollar.

"The cabinet decided to authorise Abdelbassit Turki, the head of the Board of Supreme Audit, to run the central bank indefinitely," Prime Minister Nuri al-Maliki's spokesman Ali Mussawi said, adding that Sinan al-Shabibi had been suspended from his post by the country's anti-corruption watchdog.

Mussawi said that the investigation had been launched because of "what happened with the dinar exchange rate with the dollar" and said a parliamentary report had blamed "the chief of the bank and several other people".

"The Integrity Commission (Iraq's anti-corruption watchdog), based on this report, decided to suspend Sinan al-Shabibi... The government, faced with this fact, decided to appoint someone who everyone agreed on, Abdelbassit Turki."

Mussawi declined to comment on whether arrest warrants would be issued for any CBI officials, but Baha al-Araji, chairman of the parliamentary anti-corruption committee, said 30 warrants had been issued, including for Shabibi and his deputy Mudher Saleh.

Araji said that the investigation was "not about money, but about procedures that led to the weakening of the dinar against the dollar."

The Integrity Commission confirmed earlier on Tuesday that it had recently opened an inquiry into the bank, after receiving the parliamentary report.

"I can confirm that we received the Central Bank dossier from the integrity committee in parliament," said Hassan Aati, spokesman for the Integrity Commission.

"It is currently under investigation. The investigation has just started."

Shabibi, who had been in Tokyo for a meeting of the International Monetary Fund, was now in Europe, Deputy Governor Mudher Saleh told AFP. He did not provide details of which country or when precisely Shabibi was due to return.

Iraq's currency has been largely stable at around 1,200 dinars per dollar for the past few years.

Concerns have been raised, however, that currency auctions organised by the central bank were being used by neighbouring Iran and Syria to shore up foreign currency reserves, allegations the central bank has denied.

It nevertheless tightened its rules on the purchase of US dollars earlier this year, requiring banks to provide the identity of individuals or organisations that placed orders to purchase US dollars, and other such information.

In 2010, the Iraqi central bank sold about $100 million per day, according to Saleh. That increased to between $150 and $160 million in the first 10 months of 2011, and reached around $200 million early this year, before peaking at $300 million.