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Endemic Iraqi corruption has again hit the headlines this week as a probe is launched by the US justice department to determine whether American corporate payoffs to Iraqi officials with access to government contracts cost the US taxpayer billions.

The inquiry may also shed light on how American bribes to high-ranking and powerful Iraqi politicians could have opened the door for the rise of the Islamic State group by creating a "deep state" built on corrupt business deals with senior pro-Iran politicians.

With corruption still a significant problem in Iraq, there have been warnings that IS may take advantage of the situation as they did just before they took over a third of the country in 2014.

American diplomats in Iraq have even suggested that IS could be as powerful today as when they first burst onto the scene following a year of demonstrations against sectarian government policies.

It is now widely accepted that corruption, sectarianism and ultimately disproportionate levels of violence against largely peaceful Sunni Arab protesters allowed IS the opportunity they needed to wage their campaign. With these root problems still intact, there are fears that a cautiously patient IS will simply wait for the right opportunity to unravel the Iraqi state as they did almost five years ago.

US probes payoffs to Iraqi officials

In a report released on Tuesday, The Daily Beast revealed how US justice department officials had launched an investigation into American military contractors regarding their business deals in Iraq, and to see if these US companies played a role in which may have cost the American taxpayer billions.

Crucially, the actions leading to Iraqi contracts being provided to Sallyport Global Services - one of the military contractors in question - to assist in the logistics, training, security and management of Iraqi military bases could have contributed to the rise of IS.

According to the investigation, Sallyport made a deal with a company called Afaq, registered in Kuwait. Afaq is controlled by former Iraqi Prime Minister Nouri al-Maliki, who had been premier since 2006 up until his government collapsed in the face of IS' lightning advance that saw the militant group at Baghdad's gates in 2014.

Documents filed with the Securities and Exchange Commission (SEC) alleged that Afaq would essentially control access to lucrative defence contracts in exchange for payoffs and kickbacks. An Iraqi defence ministry official alleged that Afaq promised top officials a cut in exchange for Sallyport being named as the service provider for military bases, such as the one at Balad, north of Baghdad.

US justice officials are now investigating potential violations of the Foreign Corrupt Practices Act and other American laws arising from Sallyport's relationship with Afaq that has reportedly hauled in profits of $1.1 billion to date for the American firm, according to The Daily Beast.

Working alongside the Government Accountability Project, an NGO working towards greater government transparency, The Daily Beast previously reported in September that Sallyport had received $1 billion from the US government to keep Balad Airbase "orderly, safe and secure".

Instead, an revealed security personnel pushing white supremacist agendas, negligent or otherwise intentional facilitation of the theft of military and other equipment, and for overseeing a base where Iraqi military personnel threatened "to murder [Iraqis] and their families" if they were not given satisfaction.

A former Sallyport employee said that the lax standards allowed particularly Iraqi intelligence officers to enter restricted areas at will, while a pro-Iran militia, Kataib al-Imam Ali, also set up shop in the airbase completely unhindered.

A former senior Western official told reporters that these shady business deals allowed Maliki to build a "deep state", adding: "There's a recipe for seizing and retaining power in Iraq: absolute command of the military, absolute control of the intelligence services, financial dominance."

Such corruption "directly contributed to the rise of [IS]", the official concluded.

Away from the fighters, the lovers of Baghdad celebrated Valentine's Day this week [AFP]

IS 'as strong now as in 2013' 

Areas that were once part of the IS "caliphate" in Iraq are once again being visited by militants keen to show their organisation "still rules the night", and sending a message that government control is "only surface-deep", a disturbing released on Thursday has revealed.

Despite suffering catastrophic land and territory losses to the US-led anti-IS alliance, Iraqi security forces and pro-Iran Shia militias, IS militants have been able to continue to visit remote villages and towns where they once held sway.

The militants have been exacting bloody vengeance on those they deemed to have helped Baghdad re-establish control including through assassinations of local officials, security personnel and informers.

Speaking in Baghdad, US chargé d'affaires Joey Hood said the physical caliphate would soon be rolled up in Syria, as promised by US President Donald Trump, but that "does not mean they don't have sleeper cells, that they don't have…financial networks. They do. They may be just as strong now as they were in 2013".

This official US assessment has been repeated several times since IS was officially declared defeated in December 2017 by academics, intelligence operatives, and media organisations, including in several editions of °®Âþµº’s Iraq Report.

The conditions that led to the rise of IS are tragically still present, with normal Iraqi citizens, and especially the Sunni demographic, suffering the worst of the fallout.

Speaking to , a Western official said of the sectarian violence and extortion being inflicted on the Sunnis by government security personnel and allied Shia Islamist militias: "They're doing it again. You would think the whole [IS] experience would have convinced them [to stop the abuses]."

According to figures released by the United Nations, 1.2 million Iraqis are still internally displaced and living in refugee camps, some of whom have been subjected to humiliating conditions and extortion at the hands of security forces. A further 200,000 people, mostly women and children, have been subjected to the stigma of being "IS families" and are held in conditions that have been likened to concentration camps, with sexually predatory security forces and militia personnel routinely raping women in the camps.

Again, the vast majority of these people are Sunni Arabs who will have relations not only in former IS strongholds, but across Iraq. Without a programme to reintegrate these people into society and to return IDPs to their homes and livelihoods and, most importantly, strong action taken against sectarian militias and military units, many will not see what the difference is between IS and the government they hoped would protect them.

Speaker's Louis Vuittons and economic disparity

In another sign of the growing chasm between the common Iraqi and the politicians that are supposed to represent them, social media has been ablaze with criticism of Parliamentary Speaker Mohammed al-Halbusi after he was spotted wearing "obscenely expensive" shoes.

In several posts circulated by Iraqi social media users, Halbusi can be seen sat in luxurious surroundings apparently giving a television interview. Closer inspection reveals that he is apparently wearing Louis Vuitton loafers, causing outrage in a country where many do not have access to clean water or reliable electricity.

One Twitter user provided a link to the product on Louis Vuitton's website and complained the speaker's shoes were worth $950. By comparison, a skilled government employee with a university degree earns approximately $400 per month, making the speaker's shoes worth more than double a civil servant's monthly income.

One activist, Layla al-Sultani, compared Halbusi with the pre-Saddam Hussein Baathist leader, Ahmed al-Bakr, who reportedly refused to wear foreign-made shoes and asked: "What's wrong with 'Bata' shoes? They're cheap and locally produced."

Speaking to °®Âþµº’s Arabic-language daily, Fawzi al-Shibli, a member of the Iraqi Teachers' Union, said Halbusi's shoes were "considerably more expensive than the salaries of four newly appointed schoolteachers".

Such flamboyance and exuberant tastes have become characteristic of the political and government-linked religious elite in the country. While clerics preach about austere lifestyles, they have been criticised for wearing expensive watches and clothes and for living in standards that separate them completely from those in their flocks.

With a lack of jobs available and a system of patronage that encourages politicians to use public funds to provide employment for family members and loyalists, this divide can only grow. In the public's eye, they will feel a sense of abandonment and will be tempted to look elsewhere for support when their families need it most.

It is in these kinds of environments that "states within states" grow and, judging by very recent Iraqi history, that could have catastrophic regional and global effects.