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The Iraqi government has taken a constructive step in efforts to settle its YTL 2 billion ($1.5 billion) in debt to Turkey's Central Bank, nominating US accounting and consulting firm Ernst & Young to negotiate its amount outstanding with the Turkish Treasury. As the central bank's biggest partner, the Treasury is dealing with the collection problem in the name of the bank and has also enlisted the help of the UN towards this goal.
The debt began accumulating before the US invaded Iraq in 1991. In accordance with commercial agreements between the two countries before the first Gulf war, the Turkish Central Bank was proceeding with payments to Turkish exporters and contractors that do business in Iraq. The funds expended were later collected from the Iraqi government. The system was working smoothly until it broke down after the US invaded Iraq 16 years ago. Iraq has been unable to pay the remaining debt since then due to internal disorder created after the war.
The central bank’s latest activity report for 2006 once more included the amount owing from Iraq in its “bad and irrecoverable debts” item. Of the bank’s YTL 2 billion in receivables, YTL 1.83 billion stems from notes, while the remainder originates from uncollected loans that resulted from the central bank providing funds for Enka Construction for the Bekhme Dam project that the Iraqi government couldn’t cover. The amount of this loan was YTL 130.12 million.
The Iraqis’ debt to the Turkish Central Bank is equal to 31 percent of the bank’s annual expenditures. The central bank’s spending climbed to YTL 6.25 billion in 2006, a 52.6 percent increase from YTL 4.1 billion in 2005. Interest payments, as an item of expenditure, were YTL 3.63 billion, whereas non-interest expenditures were YTL 2.24 billion.
Payroll expenses amounted to YTL 270 million, and the other spending was YTL 107.42 million. Although the bank is making allowances to hedge the risk for bad debts, it has not made any provision for receivables from Iraq since 2002, when it adopted international accounting standards.
Iraq owes $900 million to BOTAق,
The state-owned Turkish Pipeline Company (BOTAق) is also owed a significant sum by Iraq, totaling as much as $900 million. This debt stems from transportation costs through the Kirkuk-Yumurtalk oil pipeline.
BOTAق officials say they are waiting for the Iraqi government to settle its debt with the government since there is no appropriate authority to deal with the problem. They claim that the current situation of BOTAق, which is in serious financial trouble due to uncollected receivables from its domestic customers, the biggest of which is the Ankara Metropolitan Municipality, will be alleviated if they can obtain the money owing from Iraq...
In a senate hearing, Nelson Rockefeller was questioned. "Mr. Rockefeller, how much money did you make last year? Oh, 650 million or thereabouts. How much tax did you pay on that? Oh, I don't pay any taxes. How is that possible Mr. Rockefeller? His answer? I don't own any of it." Access without Ownership & Equity without Liability, legally.