Iraq's trade minister has refuted claims made in a British newspaper article that secrecy motivated his ministry's decision to use Lebanese banks instead of the Iraq Trade Bank (ITB) to open letters of credit (L/Cs) for food imports (DC World News, 7 January 2005).

Mohammad al-Jibouri confirms and denies aspects of the article in a letter to the Financial Times (FT), which published the story earlier this year.

45 day delays

Al-Jibouri says the article correctly conveys his ministry's sense of urgency to improve food procurement processes in Iraq. These procurements must be awarded and financed months in advance to ensure a steady and uninterrupted national food supply he says.

The minister also concedes that the banking system within Iraq is heavily dependent on manual creation of paper documentation. He says this results in a typical delay of 45 days even to open a standardised L/C.

SWIFT access

These delays prompted ministry officials to travel with ITB officers to select banks better able to open L/Cs necessary to fund these purchases according to al-Jibouri.

The minister says it was ITB officers who suggested using outside commercial banks to issue L/Cs because of their superior access to the faster SWIFT electronic system.

Denial

But al-Jibouri denies the claim made in the FT article that the ministry chose commercial banks in Beirut as a means of ensuring secrecy.

"Nothing could be further from the truth," concludes al-Jibouri who notes that the FT previously reported that the trade minister had in the past taken leave of absence from the occupation government when he took "a principled, unrelated stand against the sale of Iraq's crude oil to pre-selected intermediaries".

The minister's denial of secrecy relates to claims in the original FT article that by using banks other than ITB, the ministry could bypass the need for food import transactions to be audited, which they must be if the ITB handles the transactions.

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