Investigators are trying to figure out how piles of U.S. currency ended up in Iraq despite economic sanctions against the country since 1990, and whether the greenbacks are in fact genuine.p. Hundreds of millions of dollars’ worth of new $100 bills were recently found in Iraq. The $100 bill is the most counterfeited U.S. note outside the United States.
“We are working with the military to authenticate the seized currency,” said John Gill, a spokesman for the Secret Service, which handles counterfeiting investigations.
If the bills are genuine, experts say there are plenty of ways they could have made their way into Iraq, including oil and cash smuggling schemes, illegal trade deals, sham businesses and a web of middlemen located outside the country to conceal the true destination of the funds.
Still, tracking the money to its origins is a Herculean task, government officials and outside experts say.
“It is so essential that some documentation of financial records is discovered. Then investigators can go backward and trace the movements of the funds,” said Jimmy Gurule, a law professor at the University of Notre Dame who until February was the Treasury Department’s undersecretary for enforcement in charge of pursuing terrorists’ financiers.
In Baghdad, U.S. soldiers – trying to stop looting – discovered more than $600 million in packets of new $100 dollar bills hidden behind a false wall, U.S. military officials said Tuesday.
The Los Angeles Times reported that $656 million in U.S. currency was found last week in a neighborhood along the Tigris River, where senior Baath Party and Republican Guard officials lived, and said in Wednesday’s editions that an additional $112 million was found sealed inside seven animal kennels in the same neighborhood.
It was not clear if the find described Tuesday by military officials was the same as the one reported last week by the Times.
The Bush administration wants any genuine, U.S. currency found in Iraq to be used to help the people of the country, Treasury Department officials said.
Tracing the movement of cash is difficult. A recent report by the Treasury Department and the Federal Reserve found that of the $620 billion of U.S. currency in circulation in late 2002, around 55 percent was circulating outside the United States.
Serial numbers on U.S. currency are sometimes useful, but their help is limited, experts said. Information exists to track bills’ movements from the Federal Reserve to their first destination, but not beyond that, a Treasury official explained.
Separately, roughly $1.2 billion in illicit Iraqi assets have been recently uncovered abroad, said Treasury Department officials, who wouldn’t disclose details. U.S. officials believe there is more Iraqi money that hasn’t been found.
A General Accounting Office report last year said that Iraq generated $6.6 billion in illegal revenue from oil smuggling and other schemes from 1997 to 2001.
The United States and the United Nations imposed a range of embargoes on Iraq following its August 1990 invasion of Kuwait, but in 1995, the United Nations approved an “oil-for-food” program which allowed the sale of a limited amount of Iraqi oil. The proceeds were meant to buy food, medicine and other humanitarian supplies.
Gurule said a close look at this program might provide clues to the stash of U.S. currency.
“I would want to look at the records that pertain to this particular program, what the U.N. authorized and when, and see if I could match that up with Iraqi records and see if there are some glaring discrepancies,” Gurule said. “For instance, a good is extraordinarily overpriced or the quantity of the product seems to be way out of line.”
Some of the currency may have come from legitimate sources, said experts.