Wednesday, April 09, 2008

"The auditors from Arthur Andersen found the Petra Bank books were a massive compilation of lies or mistakes. They found enormous losses: 40 percent of the bank’s outstanding loans, about 126 million dinars ($176 million), were not being paid back, they said. The euphemism they used was “non performing.” Instead of 104 million dinars ($140 million) in cash on hand, as its books claimed, Petra had only 8.6 million dinars (about $12 million). The auditors said the bank was undercapitalized for its size. While there were 30 million dinars in capital at the bank, or $42 million, the auditors said that was short to the tune of about 157 million dinars, or $220 million. Another interesting thing the audit found was very similar to what the auditors would find at Socofi: a vast web of insider deals. Forty-four million dinars had been lent to what was dryly called “related parties,” meaning borrowers connected to the Petra management. Meanwhile, there was a morass of deposits crossing over between Petra, Socofi and MEBCO. By that time Ahmad Chalabi had already fled to London."