ERBIL, Kurdistan Region - Iraq has censured a US Treasury decision to sanction a publicly-owned construction company and several other entities over reported ties to Iran-aligned armed groups. Baghdad described the measures as "extremely unfortunate,” announcing a ”supreme national committee” to review them.
In a late Saturday statement, Iraqi government spokesperson Bassem al-Awadi said Baghdad is “following with great interest” the recent US decisions regarding “the imposition of American sanctions on al-Muhandis General Company [MGC] and some other entities on the pretext of their connection to parties subject to American legal procedures.”
Stressing Baghdad's adherence to international law, Awwadi criticized the lack of prior consultation, stating, “Taking such a decision without prior consultation or dialogue constitutes a negative precedent in the approach to dealing between allied nations.”
The Iraqi government in November 2022 approved the establishment of the MGC with a capital of 1 billion Iraqi dinars (around $68.5 million). The company notably draws its name, Muhandis - Arabic for engineer - from the name of the slain Popular Mobilization Forces (PMF) deputy chief, Abu Mahdi al-Muhandis, who was killed in a US airstrike in January 2020.
MGC’s creation has long drawn comparisons to Iran's massive engineering firm, Khatam al-Anbia, which is owned by Tehran’s Islamic Revolutionary Guard Corps (IRGC).
Awwadi on Saturday urged international partners, “foremost among them” the US, to “cooperate in the exchange of technical and banking information,” highlighting Iraq’s ongoing reforms to its banking and financial systems.
Notably, Prime Minister Sudani has ordered the formation of “a supreme national committee” - comprising representatives from the finance ministry, the Federal Board of Supreme Audit (FBSA), the Commission of Integrity (COI) and the Central Bank of Iraq (CBI) - to investigate the sanctions and “submit its report and recommendations within 30 days, including the necessary legal and administrative procedures.”
Awadi reiterated Iraq’s opposition to “any economic or financial activity that falls outside the national legal framework or is exploited to fund armed groups,” while stressing the state’s duty to protect civil servants and public projects. He warned against measures that could harm employees unconnected to any alleged wrongdoing or disrupt public services.
Miniature economy under fire
The US Treasury had on Thursday announced new sanctions on MGC, citing its role in diverting Iraqi state funds to Iran-backed armed groups. The Treasury accused the company of providing “financial, material, or technological support” to Kata’ib Hezbollah and the IRGC’s Quds Force.
While publicly-owned, the US Treasury says MGC is controlled by Kata’ib Hezbollah - a powerful Iraqi armed group that operates under the umbrella of the PMF. The armed group uses MGC to “divert funds from Iraqi government contracts” and smuggles weapons under the cover of an agricultural company, Baladna Agricultural Investments, the US Treasury said.
In addition to MGC, the Treasury sanctioned three Iraqi bankers, Ali Mohammed Ghulam Hussein al-Ansari and brothers Ali and Aqeel Meften Khafeef al-Baidani. The trio reportedly laundered money and generated revenue for Kata’ib Hezbollah, as well as another Iran-aligned Iraqi armed group - Asa’ib Ahl al-Haq - and the IRGC.
“For decades, the Meften brothers have laundered tens of millions of dollars for Iran, and smuggled oil and drugs and abused Aqeel Meften’s position as president of Iraq’s National Olympic Committee to engage in corruption,” the Treasury stated.
The Olympic committee released a statement on Thursday responding to what it called “fake news” seeking to “undermine the committee’s sporting and financial policies.”
“We, at the National Olympic Committee, affirm that the committee president is far removed from these untrue allegations. The lies being spread are part of malicious campaigns aimed at undermining the committee's balanced and transparent institutional work,” it said, without mentioning the US Treasury accusations.
For his part, the military commander of Kata’ib Hezbollah, Abu Ali Al-Askari, described the US sanctions as "laughable, evidence of weak intelligence and fragility in their intelligence system."
In a Saturday statement on his official channel on Telegram, Askari "categorically" affirmed that the group has no connection to the names mentioned in the US Treasury report.
