Billions of dollars and 100, 000 barrels of petrol from Iraq to China daily in exchange for unsafe schools for students!
An incident feared by those following the construction of Chinese schools in Iraqi governorates has recently taken place. The incident was expected due to suspicions surrounding the details of this business deal where corruption meets a blatant disregard for the safety and the lives of students.
The collapse of a school building’s roof while it is still under construction is no ordinary event to discuss. The roof of the school being built in the city of Samawah, in south Iraq, collapsed due to a construction defect. The image below highlights the severity of the situation. Immediately, one question comes to mind: what if the construction of the school had been finalized and students were attending school in this building and while in class, the roof had collapsed on their heads? Imagine the magnitude of this catastrophe had it happened!
What are the details of this construction deal to build thousands of schools in Iraq? And what is the intention behind this complete lack of quality in the construction of the buildings? Why doesn’t China pay meticulous attention to quality when building schools in Iraq as it would in China? Another question of vital importance is why Iraqi constructors don’t provide standards for durability and prime quality as it is the children of Iraq who will attend these schools.
In the context of responding to the collapse of the school’s roof, the General Secretariat for the Council of Ministers in Iraq declared that the contractor company is prohibited from constructing any more school buildings. The General Secretariat for the Council of Ministers also sent a technical committee to determine the reasons that led to the partial collapse of a school building while under construction.
All this takes place within the framework of official procedures which are often a mere formality. The cause for alarm, however, is that experts have considered the partial collapse of this school building an indicator of the poor quality of materials used for construction and have thus traced the collapse back to the factor of traditional building methods.
Iraq’s Needs for School Buildings
On the 18th of June 2022, the head of the Caretaker Government at the time, Mostafa Al-Khadimi, stood in front of a black stone flanked by several officials, to declare the laying of the foundation stone for the project to build 1000 out of 8000 schools. This came as part of the contract signed by his government with two companies, Power China, and Sinotech Holdings, as part of the cooperation agreement between the Iraqi and Chinese governments commonly known as ‘Oil for Reconstruction’.
At that time, political conflict was raging in Iraq over the results of the elections between the two Shiite rivals: the Sadrist Movement and the Coordination Framework. It is stated that the conflict later escalated to armed fighting.
It goes without saying that the Caretaker Government has no authority to sign strategic agreements, and this is according to legal expert Muhammed Al-Kadi who spoke to Akhbar AlAan. Al-Kadi explained that at the time the agreement was signed, the Cabinet had no authority to sign it as this was not included in the tasks set for the limited government. This is in accordance with Article 42 of the internal regulations of the second Council of Ministers for the year 2019, which stipulates that signing agreements fall under jurisdictions. There is, however, a difference between jurisdictions and tasks and the Caretaker Government has the right to perform tasks but does not have full jurisdiction according to Al-Kadi. He describes the Iraqi Caretaker Government signing an agreement to build schools by Chinese entities as a legal and constitutional violation. This was the first debatable, controversial, and legal note to be made about the Chinese schools project that was signed by Al-Khadimi’s government.
The Map for Building Schools
The official spokesperson for the General Secretariat for the Council of Ministers, Haider Majeed, explained to Akhbar Alaan that the distribution of school buildings in the governorates was done according to 3 criteria designated by the Supreme Council for Model School Buildings. These criteria are population density, mudbrick schools, and school buildings that host a double school day.
He also added that the distribution of the model schools will be as follows: 144 schools in Baghdad; 44 in Karbala; 106 in Dhi Qar; 40 in Najaf; 86 in Al Basra; 52 in Maysan; 48 in Wasit; 53 in Al Muthanna; 61 in Al Diwaniyah; 45 in Babylon; 51 in Al Anbar; 56 in Diyala; 78 in Salahdin; 44 in Kirkuk and 92 in Ninawa.
The Central Statistical Organization affiliated with the Ministry of Planning in Iraq has explained that the number of governmental, religious, and private primary schools was 15,965 for 2017-2018. The CSO has indicated that governmental schools made up 93.3% while private schools made up 6.5% and religious schools made up 0.2%. The Ministry of Education states that Iraq needs more than 12,000 schools to accommodate the number of students which is almost 11 million in all educational levels.
Double the Cost in China’s Treasuries
According to the contract made between the Iraqi government and the Chinese company, the cost of building a single school is between 2 and 3 billion depending on the number of classes in every school. Contractors believe this cost to be quite exaggerated which leads them to wonder whether there are serious suspicions in this contract. The Chinese companies assigned the job to subcontractors immediately after signing the contract at a cost that amounts to half the sum paid to the Chinese company. This has also raised many question marks regarding why the contracts were made with Chinese companies to begin with.
Engineer Abdul Rahman Al-Azirjawy, a former general manager at the Ministry of Construction and Housing, estimates that building a single school costs between 1 and 1.5 billion. This is considered an appropriate price for building a school with the highest specifications. Moreover, the price assigned by the government to build schools in 2011 was between 1 and 1.25 billion and there were many objections at the time because the price was considered to be quite high. Al-Azirjawy explains that the subcontractors agreeing to half the value of the awarded contract is proof that the real cost does not exceed half that sum, considering that the subcontractor accepted this sum with the calculation of profit revenues.
On the 7th of November 2022, almost 5 months since the start of the Chinese school project, the Iraqi member of Parliament representing Karbala governorate, Diyaa Hindy, appeared in a video with a local contractor who had landed a contract for building schools before the Chinese project. The video was posted online under “Uncovering corruption in the Chinese building contracts for school projects signed by Al-Khadimi”.
Hindy’s conversation with the contractor uncovers the high cost of construction in the Chinese contract. Hindy also exposes how the local contract was signed for only 1 billion and 237 million Iraqi dinars. This includes the cost of the whole building as well as school furniture. On the other hand, the value of the Chinese contracts reached 3 billion dinars without the furniture as per the conversation between the parliament member and the local contractor.
The Subcontractor
Akhbar Alaan was able to procure a confidential recording of a conversation between an employee of the General Secretariat for the Council of Ministers during Al Khadimi’s government in 2022 and a local contractor before the date set for signing the contract. In the said recording, the government employee informs the contractor that he must have the power of attorney and the required paperwork ready to land the secondary contracts from the Chinese companies once they sign their contracts. This confirms that the Chinese contracts were distributed between certain influential entities and political parties even before the contract for Chinese schools was signed and put into action. This thereby contradicts prior decisions taken by the Iraqi government, specifically during the time of the Al-Abbadi government 2014-2018. The said decisions prohibit the transfer of a contract to a subcontractor with a history of failed models and previously delayed projects that depended on the subcontractor’s methods.
Therefore, the relevant authorities and the Chinese companies breached the contract before signing it since the contract clearly states that it is prohibited to assign the contract to a second party. Furthermore, it is prohibited to assign parts of the contract to subcontracts without the approval of the Iraqi government. According to the recordings and documents Akhbar Alaan was able to obtain, however, it appears that most of the project was sold through a transfer to subcontractors even before the contract was signed. What’s more, is that the Chinese companies were merely a front that acquired a percentage profit. The projects then were handed over to subcontractors and companies before the contract was signed or the construction process had started.
The government employee tells the Iraqi contractor, “Hajj, you must bring a CV for every company, two paper copies, and with them, bring a letter of intent to begin work for the two companies immediately, one for Power China and the other for Sino Tech. Put a letter of intent with every copy of the CV. Also, add a letter of agency and the official transfer letter according to the formats followed by their two companies. The same goes for the contract. Add a copy of each contract, one for Power China and the other for Sino Tech. That way we have two folders, each with a contract, letter of intent, letter of agency, transfer letter, and a company CV. This way we guarantee work with both parties in Diyala governorate and the governorates of Al-Furat Al-Awsat. Alright, Hajj? We must hurry to finalize the paperwork and land the contract because we don’t have much time; the contract was signed today.”
Dreams of the Awaited Chinese Expertise and Specifications
The Chinese agreement and the first of its fruits, the school project, was promoted as a leap in quality that will bring the “exceptional experience of China” to Iraq to develop new skills and present the latest technologies and specifications. However, once the Chinese schools project commenced and the subcontractor companies began the construction process, it was apparent that Chinese personnel were completely absent. Months into the project, many complaints arose about specifications and methods of construction.
The team of “With the Naked Eye” (a program of Akhbar Alaan) contacted a contractor in Karbala governorate who supplied raw materials used in building these schools to get to the bottom of what goes on in these projects. The contractor, who requested to remain anonymous for security reasons, informed us that “the Chinese companies gave the contracting agreements to a Chinese subcontractor which commissioned another Iraqi subcontractor.” He confirmed that the representatives for the Chinese companies in Karbala are very few and some are not even engineers nor could be called technicians.
When in contact with the Chinese personnel while reviewing their backgrounds for the contracts, he discovered that “some of them worked in services, as far from construction projects as possible”. “They didn’t have any experience or technical skills for construction or even administration” he added. He could recognize “major defects in the work whether in the structure or the foundation of the building.”
“During their visits to the project sites, the local engineers corrected the errors made by the Chinese personnel in the foundations, structures, and materials used for construction. The Chinese were for using the cheapest materials regardless of specifications and quality.”
Collapse Before Completion
At the time of this investigation, other parts of a Chinese school under construction collapsed in Samawah, south of Iraq. Consequently, the General Secretariat for the Council of Ministers announced that the company responsible for the structure of the building would not be permitted to work on other school buildings. Moreover, a technical team was sent by the Council to discover the reasons for the partial collapse of the school building.
Saeid Yassin, an expert on matters of integrity and issues of corruption and former member of the Supreme Council for Fighting Corruption formed by Adel AbdelHady’s government in 2018, spoke with Akhbar Alaan. Yassin explained that “this issue raises many suspicions and confirms the connections that lead to an intent for corruption”. He wonders, “If Iraqis designed the schools and supervised the construction process, then what’s the point of bringing in Chinese companies and why do they get the school projects for such a high cost? Were they only a middleman to grant all this money and give the accounts to certain entities?”
The Subcontractor and Payment Delays
Yassin confirmed that he constantly receives the same complaint from subcontractors who work with the Chinese companies about not receiving the installments agreed upon in their contracts with the Chinese companies. “They struggle when they don’t receive financial compensation for several months. The pretext for the late installments is a government delay in paying from the account that receives the money paid for the oil sold to China within the strategic framework of the Iraqi-Chinese agreement.”
The subcontractor in Karbala, whom Akhbar Alaan was in touch with, has confirmed what Yassin said. He complained and expressed his frustration at not getting paid for more than 6 months. The contractor explained that the Chinese company uses a different excuse every time, the last of which was that they were not able to make the payments directly to him in cash. The company stated that he must present a bank account or a company with a bank account for them to make the transfer. This was not included in the terms of the contract he signed with the Chinese company.
The subcontractor also stated that he met many other contractors with the same complaint when he was at the Chinese company’s offices to ask for his payments; they had grouped at the company offices to demand being paid.
The contractor confirmed that the previous payments that he received after great difficulty were in US dollars which is against the Iraqi Council of Ministers’ decision that all payments are to be in Iraqi dinars. This cost him severe losses because he bought the raw materials in Iraqi dinars at a high price but was paid in US dollars. The price of the dollar is constantly caught between sharp rises and falls, and so his struggles were exacerbated as he lost even more money.
Unfair Contracts and Double the Cost
The contracts signed by the Iraqi government and the Chinese companies – which are managed by the Chinese government – are surrounded with complete secrecy. This is the case with all contracts signed by China and any other country, like the airport contract with Uganda which the “With the Naked Eye” program was able to procure a copy of. In Iraq, several copies of the same contract are signed separately, as each governorate has its contract. After research and investigation, Akhbar Alaan was able to get one of the signed contracts between the General Secretariat for the Council of Ministers and Power China to build 44 schools in Karbala in southwest Iraq for more than 126 billion Iraqi dinars (86 million USD). The cost is regarded as overly extravagant by Diaa Hindy, Member of Parliament for Karbala governorate.
Hindy confirms that the “cost of building the same schools did not exceed 1,5 billion Iraqi dinars (almost 1 million USD) when they were offered to Iraqi contractors. Therefore, the cost of building schools in Karbala should not have exceeded 44 million USD yet it doubled. This is a sign of corruption and squandering of public funds with a margin that exceeds 50 billion Iraqi dinars (almost 34 million USD). The result is that the children of Karbala were deprived of 20 additional schools if the schools were built at a reasonable cost according to approved prices.”
Regarding the contract that Akhbar Alaan procured, Hindy stated that “Clause 17 greatly raised our suspicions and mistrust. There are grounds to suspect corruption as the clause indicates that both parties commit to contract confidentiality and non-disclosure of its contents to a third party.” He also added that “this clause goes against Iraqi law and denies the supervisory role played by the Parliament, the Iraqi Commission of Integrity, and Federal Board of Supreme Audit. The clause clearly shows that there is something the two parties are trying to hide, and this raises suspicions of corruption and squandering.”
Ink on Paper
The 8th article of clause 13 stipulates that the Chinese company does not refer parts of the contract to subcontractors without the approval of the first party. It also states the prohibition of forsaking part or all of the contract to a second party. However, according to the sources who spoke with the Akhbar Alaan team and based on their many visits to the construction sites, most of the implementation of the school project in Karbala and other governorates is done by Iraqi subcontractors.
Moreover, the letters of agency and contracts that we procured prove that the Chinese companies transferred the contracts for building the schools to Iraqi subcontractors since day one. This is confirmed by Hindy who says that “90% of the school projects are implemented by an Iraqi subcontractor.” He also confirms that he sent multiple queries to the General Secretariat for the Council of Ministers from the first day of the project. He questioned the approvals given to the Chinese companies to transfer the implementation of the contracts to subcontractors as per the aforementioned clause. However, until this day, he has not been provided with these approvals which gives reason to doubt their very existence.
Hindy questioned the purpose and the benefits of bringing Chinese companies into the deal when the Iraqi companies should have been given these contracts from the start.
He described the presence of the Chinese companies as merely ink on paper. Hindy also raised questions about the delay in completing any of the school buildings in Karbala to this day noting that the contract signed is for 720 days and almost a year has passed since it was signed, and the construction commenced.
Expanding Iraqi Expertise and Benefiting from Chinese Experience
Articles 10 and 15 of clause 13 in the contract state that Chinese engineers are to be appointed to the construction sites. It also states that modern building methods are to be implemented in construction and local employees are to be trained on these methods. However, it is the Iraqi employees of the subcontractors who work on most construction sites.
A source among the contractors working with these Chinese companies has confirmed to Akhbar Alaan that “the number of Chinese personnel working on sites is very limited.” In addition to that, he has learned through communications with some of them that “they are technicians and not engineers. What is even surprising is that some of them worked in fields very far from construction projects.”
He also said that “the building materials used in preparation for the projects are chosen for their low cost rather than their durability.” He also confirmed that he noted down multiple remarks about the specifications used for building these schools which he said were “terrible and unsuitable for the safety of students in the future.”
Lives in Exchange for Oil
In September 2019, a month before massive demonstrations took place against Adel Abdul Mahdi’s government, Abdul Mahdi visited China heading a large delegation to sign 8 agreements and memorandums of understanding. This is known as the Chinese-Iraqi framework agreement.
These agreements state that Iraq is to export 100, 000 barrels of oil daily to China. The money for this oil is placed in a bank account that pays for Chinese companies to come to Iraq and execute services and reconstruction projects. It was then that the government gave this agreement a resounding name: “Oil for building and reconstruction.” Yet it was this name that reminded the Iraqi people of a past and well-known agreement at the time of the US sanctions against Iraq that was called “Oil for provisions.”
The first initiative of the agreement with China was what Prime Minister Al-Kadhimi signed in 2020. Al-Kadhimi came into office after the demonstrations removed Prime Minister Adel Abdul Mahdi who had signed the framework agreement, when he was accused of corruption and the killing of demonstrators. Former member of the Integrity Committee of the House of Representatives, Rahim Al Diraji, describes this agreement as one made to legalize stealth and corruption and to seize Iraq’s power and pawn its oil.
A Demeaning Agreement
The school project is the first applied step of the Chinese agreement which some regard as enough evidence of everything the agreement stands for. Al Diraji describes the agreement as humiliating and its conditions as harsh and restricting to Iraq. He is surprised that the Iraqi negotiator signed this agreement and accepted its conditions that pawn the Iraqi economy and force it to pay almost two billion USD, and export 100,000 barrels of oil daily in return for obscure projects, the schools being the most notable example.
Al Diraji has explained that the value of the school project is almost 3 billion dollars. China was assumed to implement the project in a manner that matches that large sum. According to Al Diraji, however, there was a limited number of representatives from the Chinese companies who arrived at their stations in Iraq. Those who did began the process of selling the school building contracts to subcontractors for a specific percentage. And so, this project became a new space for corruption, extortion, and bribery. Al Diraji demanded that the Integrity Committee take steps to uncover the depth of corruption in this project. He points out that the “biggest catastrophe is that a year has passed on this contract and billions of dollars have been paid for schools on the verge of collapse because of the corruption that took place in this project and the building specifications.”
Expert Opinions…Problems Precede Solutions
Engineer Abdul Rahman Al-Azirjawi, a former general manager at the Ministry of Construction and Housing in Iraq, believes that “school buildings are the pillars of education in Iraq and the shortage in these buildings hinders the process of education.” He told Akhbar Alaan that “Iraq is in desperate need of 10,000 schools at the moment. The percentage increases yearly if we calculate the population growth rate, 3.8 %, which is equivalent to one million people annually. This requires swift solutions to address the issue of school buildings.” Nonetheless, he stressed that the solution should not come through a project clad with suspicions of corruption and which follows obsolete methods of building such as those used by the Chinese project.
Al-Azirjawi met with the committee overseeing the Chinese schools project at the General Secretariat of the Council of Ministers before the contract was assigned to the Chinese. As an expert, he suggested many ideas that depend on modern and sturdy technologies for building schools that can face natural factors. However, the committee insisted on assigning the project to Chinese companies regardless of the outcomes and the exceedingly high cost of construction.
He points out that the Iraqi companies could have built schools, each with 12 classes, and using modern technologies for an amount that would not have exceeded 700-800 million Iraqi dinars (around $551,000). The price in the Chinese contracts reached 132,1000 USD which is a large number, one that amounts to more than double the original sum. Moreover, using the Chinese company as a front and directly deducing its profits along with the other internally complicit parties then the transfer of the job to subcontractors was at the expense of the quality of construction. He noted that the companies relied on the traditional building methods that were used in Iraq after 2003 in building schools. The evidence that these methods are ineffectual is that most of the schools using these methods after 2003 are on the verge of collapse although not many years have passed.
He confirmed that the Iraqi people were hopeful that the Chinese companies would bring forth modern building technologies used in China. Instead, they took a step backward, and the work was referred to local companies at low prices after deducing the percentages. And so, the subcontractors resorted to traditional methods where implementation and prices are based on quality.
Al-Azirjawi has explained that “there are many solutions available to the government if it wanted to avoid problems of traditional construction and poor specifications in the construction of schools.” He stressed that “there are modern European construction methods and new technologies that contribute to the building of schools. There are also previous experiences that have proven successful.” He was referring to a method adopted by Iraq in the 1980s known as brick casting. The schools built using that method remain, to this day, as an important model of buildings that were not affected by temporal factors. This is quite different from school buildings now which are on the verge of collapse after a short time. This is a direct result of relying on a traditional building method for the floors of the buildings, use of cement and sand, and the simple local worker and acquiring substandard building materials due to the minimal budget because the contract was transferred to a subcontractor for half the price.”
Iraq does not learn from past mistakes
More than a decade ago, the Iraqi government signed contracts with Iranian and Iraqi companies to build more than 1700 schools across Iraq. At the time, they depended on direct invitations without bidding at a cost that varied between 1 and 1.25 million dollars per school. Many contractors and consultancy firms objected to the high cost. Some of these companies signed contracts with subcontractors and others procrastinated. Today, after paying direct operational advances of 60% of the project value which exceeded one billion dollars, the money was spent and very few schools were built.
Today, the Iraqi government is repeating the same experience with the Chinese companies to build more than 1000 schools in many governorates as part of what came to be known as the Chinese agreement. It is as if history is repeating itself at a higher cost and low completion rate and specifications that greatly differ from those stipulated in the contract terms. This poses many issues and problems that could escalate to being a threat to public safety, especially the lives of school children. We present all this in an expansive investigative report to prove how the Iraqi governments did not learn anything from the examples of school projects in the past.
