US embassy cable - 05BAGHDAD4786

UNCLAS SECTION 01 OF 02 BAGHDAD 004786 
 
SIPDIS 
 
SENSITIVE 
NOT FOR INTERNET DISTRIBUTION 
 
E.O. 12958: N/A 
TAGS: EFIN, PREL, PGOV, LE, IZ 
SUBJECT: CENTRAL BANK OF IRAQ FUNDS IN LEBANESE BANKS 
 
1. (U) This is an action request. Please see para 9. 
 
2. (SBU) SUMMARY: The Central Bank of Iraq (CBI) has 
reported that despite progress toward the repatriation 
of CBI funds deposited in banks in Lebanon, the 
balance of such funds held by banks there is USD 
197,858,652.82.  The CBI is in communication with each 
of these banks and has provided documentation of its 
correspondence to the U.S. Embassy.  Ten banks have 
completed the transfer of funds to the Development 
Fund for Iraq (DFI). END SUMMARY. 
 
3.  (SBU) During the last weekend of November, Sinan 
Shabibi, governor of the CBI, traveled to Beirut and 
had a meeting with the governor of the Central Bank of 
Lebanon, Riad T. Salameh.  Upon his return to Baghdad 
on November 28, Shabibi spoke to the Treasury Attach 
Office about the meeting.  Sinan stated that his 
Lebanese counterpart assured him that all of the CBI 
funds in Lebanon would be returned to Iraq but that 
the Lebanese banks holding CBI balances want to 
reschedule the payments in a manner not adversely 
affecting their liquidity.  Sinan agreed that the 
payments could be rescheduled over the next six 
months. 
 
4.  (SBU) Sinan also stated that he would like to 
discontinue the practice of placing CBI deposits in 
banks in Iraq and abroad and that he is considering 
dissolving the CBI Investment Department.  Ernst and 
Young is reviewing the Investment Department and funds 
held abroad in its current audit of the CBI. 
 
5.  (SBU) The following five banks have been most 
resistant to a transfer of CBI balances to the DFI 
despite numerous CBI requests: 
 
--Beirut Bank, balance of USD 44,208,491 
 
--Al-Mawrid Bank, balance of USD 29,406,876 
 
--Biblos Bank, balance of USD 11,388,726 
 
--Arabic National, balance of USD 42,187,777 
 
--Beirut Bank and Africa, balance of USD 10,413,441 
 
6.  (SBU) The following banks have responded 
positively to the CBI request and have transferred a 
part of the CBI funds they were holding to the DFI: 
 
-- Franca Bank, last transfer 16 August 2005, 
remaining balance USD 8,095,742. 
 
-- Intercontinental Bank, last transfer 11 October 
2005, remaining balance USD 4,197,323. 
 
-- Private International Bank, last transfer 28 
September 2005, remaining balance USD 6,341,614. 
 
-- United Bank, last transfer 1 July 2005, remaining 
balance USD 590,719. 
 
-- Lebanon and the Gulf Bank, last transfer 19 October 
2005, remaining balance USD 17,236,801. 
 
-- United Credit Bank, last transfer 4 October 2005, 
remaining balance 5,436,356. 
 
-- Al-Madina, last transfer 3 October 2005, remaining 
balance USD 2,706,365. 
 
-- Rafidain Bank Beirut, remaining balance USD 75,740 
(transfer date not provided). 
 
-- Jamal Trust Bank, last transfer 6 October 2005, 
remaining balance 15,572,675. 
 
7.  (SBU) The following banks have completely 
transferred the outstanding CBI balances they had to 
the DFI: 
 
-- Al-Etimad Lebanese Bank, final transfer on 30 June 
2004. 
 
-- Auda Sardar Bank, final transfer on 1 June 2005. 
 
-- Mediterranean Bank, final transfer 2 June 2005. 
 
-- Lebanon Trade Bank, final transfer on 2 June 2005. 
 
-- Canadian Lebanese Bank, final transfer on 1 July 
2005. 
 
-- Al-Lati Bank, final transfer on 5 July 2005. 
 
-- First National Bank, final transfer on 12 August 
2005. 
 
-- Lebanese Swiss Bank, final transfer 12 September 
2005. 
-- Lebanese Syrian Bank, final transfer 14 October 
2005. 
 
-- Lebanese Swiss Bank, final transfer 11 Oct 2005. 
 
8.  (SBU) CBI's action to recover funds from Lebanese 
banks have been spurred in part by the ongoing audit 
of the CBI's books by Ernst and Young.  The CBI is 
under pressure to put its financial house in order.  A 
representative of the U.S. Treasury Attach's Office 
and the IRS CI Attach have arranged a follow-up 
meeting with the Investments Department of the CBI in 
order to assist in tracking the closure of all 
accounts in Lebanese banks. 
 
9. (SBU) ACTION REQUEST:  Embassy Baghdad requests 
that the Department of State instruct Embassy Beirut 
to seek the assistance of Central Bank of Lebanon 
Governor Salameh in the recovery of these assets, 
according to the agreed extended payment schedule. 
Embassy Beirut might remind Salameh of the assurances 
he gave Governor Shabibi that all of Iraq's funds in 
Lebanon would "soon be returned" to Iraq. 
 
 
SATTERFIELD 
D