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the great zloty fraud
a tale of money changers in karbala

Mohammed Hamid al-Sawaf
Unofficial money changers are common in Iraq – and trade is particularly brisk in the tourist town of Karbala. But recently a gang of fraudsters swapping outdated Polish zloty have caused fear and…
11.10.2012  |  Karbala
Karbala\'s markets in action.
Karbala\'s markets in action.

A licensed currency exchange office delivered the bad news: yes, the money that Karbala woman, who wished only to be known as Umm Mahmoud, or the mother of Mahmoud, had brought was real. But, no, unfortunately, this version of the currency – Polish zloty – was no longer in use. The woman had been duped.

Umm Mahmoud began to cry – she realized that she had become the victim of a gang of con men operating in Karbala. And she has not been the only one.

Because of the amount of tourists coming to Karbala – the city boasts some of the most holy sites in the world for Shiite Muslims and attracts millions of pilgrims every year – it has been easier for fraudsters to fool local traders and merchants here. Local police say that they recently arrested the gang who outwitted Umm Mahmoud but, judging by other complaints, it seems likely that more than one of these gangs is working in Karbala.

Umm Mahmoud told NIQASH how she was tricked into exchanging about IQD5 million (around US$3,000) for worthless paper. Most of the time she buys and sells used clothes in Karbala city but occasionally she has dabbled in unofficial currency exchange, selling Iraqi currency to, for example, visitors from Asia or the Gulf States.

It’s common to see currency exchangers on Iraq’s streets, often near markets. In a country where banks can sometimes be hard to find and often closed, the market exchangers often give customers a better deal than licensed money changers. They’re also more readily available during holidays or when banks are closed in the afternoons.

A few months ago, money changers on the streets of Karbala began talking about what they called “the Polish currency gang”. Local police even warned market vendors about the gang. So Umm Mahmoud says she knew the risks she was taking.

“One of the gang members was wearing a dishdasha, one of the long robes that Arab men traditionally wear in the Gulf States and he was speaking the Arabic from that area,” Umm Mahmoud says. “I saw him coming – he was searching the market for somewhere to change money but it was noon and all the exchange shops were shut. So I offered to change some money for him. As we were talking, another man came by. He claimed to be from one of the exchange shops and said that 100 Polish zloty were worth IQD260,000.”

Now, Umm Mahmoud says, she doesn’t doubt for a moment both men were part of the same gang. There was also a third, a taxi driver. To check the exchange rate, Umm Mahmoud and the two men took a cab to another official currency exchange. There, at the behest of the second men, the taxi driver left the car to ask, surreptitiously, about the exchange rate for Polish zloty.

“I was the victim of a well orchestrated trick. Even the taxi driver was part of this scheme. He came back and confirmed that 100 zloty is worth IQD260,000. So I gave the first man over IQD5 million – in exchange for a currency that doesn’t exist anymore,” Umm Mahmoud laments. A new version of the Polish zloty was released in 1995, because of redenomination of older versions.

Another local money changer, Jawad al-Zaidi, has a similar story to tell. A man approached him in paint splattered workman’s clothing, saying that he worked for a Polish company in Karbala and that he wanted to change zlotys. Al-Zaidi didn’t trust him and refused. However later, another man arrived, saying he worked for the same company.

“And I only changed his money after a long chat and after calling a currency exchange office in Baghdad,” al-Zaidi says “I even inserted his money into the counterfeit money detector and it accepted it.”

“Unfortunately, while these devices can detect counterfeits, they cannot tell you that it is no longer being used. In fact I only realized that the man’s money was no longer valid a few days later,” al-Zaidi exclaims.

Happily Karbala police have been able to arrest members of the “Polish currency gang”. The local Financial Crimes Unit recently jailed three men of Turkish origin after catching them in the act at a local money exchanger. “The men had large amounts of US dollars on their persons,” says Ahmed Umran of the Karbala police communications department. The police are now advising money changers to install surveillance equipment in their stores and to avoid customers who cannot provide proof of residency.

“There are a lot of foreign crooks here and they come to Karbala under the pretext of visiting the holy sites but they’re here for something else altogether. And some of them are extremely professional,” says Yasser Ulwan, another of Karbala’s money changers who’s been in the business for almost nine years now. “For instance, one Iranian thief managed to rob me of US$3,600 in a particularly tricky way.”

“It happened while we were counting out US dollars he wanted to change. He managed to hide some of the bank notes in his sleeves but I swear his hands never even left the table,” Ulwan explains.

Obviously counterfeiting, fraud and thievery is something that money changers all around the world are concerned about. But it seems that recently in Karbala things have been getting worse and more “wild west”. The success of the Polish currency gang, until they were apprehended, has led to confusion and paranoia in Karbala’s marketplaces.

Many of the money changers are becoming more and more reluctant to work with foreigners, says Mohammed Fadel, another local currency specialist.

“Counterfeits are not confined to just one currency,” he notes. “This whole exercise has taught us not just to check the actual bank notes but also to be aware of their status within their own countries. That’s why we’re rapidly becoming experts in international financial history,” he concluded with some irony.