By Aram Roston, NBC News Producer
A massive fire that destroyed the records of Iraq's Central Bank last week, while causing no fatalities, is being investigated as a possible arson, two American officials familiar with the case tell NBC News.
The fire on January 28 was reported to have killed no one, but it consumed large parts of the Central Bank building in Baghdad, and destroyed key records. It reportedly started around 2 am.
The investigations are being conducted by the Ministry of Interior and the Commission on Public Integrity, which probes Iraqi government corruption, an official familiar with the case says.
The possibility that it may be arson is of concern because of the significant corruption that has plagued Iraq, according to insiders in both the Iraqi and the U.S. governments. There are concerns that "they may be covering up corruption by destroying the records," as one American official put it. The Central Bank of Iraqi functions in the same way as the U.S. Federal Reserve Bank, buying and selling currency, and regulating and licensing banks.
The U.S. Treasury Department, which has close ties to the Central Bank of Iraq, refused to comment for this story. Warren Coats, a senior advisor to the Central Bank of Iraq, says that the Bank was in the middle of reconciling differences between its records and various international institutions. "The loss of physical records will make impossible some of the reconciliations that were under way," he says. He says one back-up computer server was destroyed in the fire, but a main server survived.
Auditors with Ernst & Young previously have criticized the accounting problems at Iraq's Central Bank.
Some American officials believe the fire at the Central Bank may be in some way connected to a well-planned kidnapping last May at Iraq's Finance Ministry. In that case, a British computer expert for Bearing Point, an American company, was snatched in a raid by 40 men dressed in police uniforms. The man's four-person security team also was kidnapped.
Coats, who advises the Central Bank on monetary policy through a contract administered by the U.S. government, says that the computer expert had been in the process of computerizing Iraq's financial records. He says there was considerable resistance to the process by Iraqis. "There are some who don't like making all the records electronic," Coats says, because electronic data can make corruption more difficult to conceal.
Coats says he believes the Bearing Point employee was kidnapped as an effort to block the computerization of the records. Other officials speculate that the fire may be a similar effort.
