Plans for Iraq to host football's Gulf Cup in 2013 ran into problems as a senior MP claimed to have proof of graft Saturday, while participating states have asked Baghdad for assurances over safety.
The head of parliament's anti-corruption committee alleged that contracts to build luxury hotels in the southern port city of Basra had not satisfied tender rules, and said there were discrepancies between the size of the overall contract and subsequent sub-contracts signed.
"We have discovered corruption in the project of the sports city in Basra," Baha al-Araji said in a statement. "We have sent a letter to the Minister (of Youth and Sports) Jassim Mohammed Jaafar and we told him it was necessary to void this contract."
The statement said corruption in the deal amounted to around $2 million. It added that Jaafar had agreed the contract be stopped, and was cited as saying that he would present the issue to the cabinet.
A ministry of youth and sports spokesman, contacted by AFP, declined to comment on the allegations.
Iraq is rated by Transparency International as among the world's four most corrupt countries, and Baghdad's former anti-corruption chief said after leaving his post last month that graft was "part of the struggle for power".
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Separately, Gulf states participating in the tournament have given Iraq until October 20 to receive assurances from FIFA that it will allow matches to be hosted in Basra.
On a visit to Basra last month, a delegation led by Qatari football association secretary general Saud al-Mohannadi made the request.
Gulf states have also asked Iraq to provide assurances of a stable security situation in Basra province, and to ensure the surrounding environment is free of any chemicals left over from wars fought in the region, from the 1980-88 Iraq-Iran war, to the 1990 invasion of Kuwait, and the 2003 US-led invasion.
Iraq was last month barred by FIFA from hosting qualifying matches for the 2012 Olympics and the 2014 World Cup, and the Qatari football association said in a statement on its website on Friday that Iraq's national team would play its qualifiers in Doha.
"The Qatar Football Association (QFA) will host the official matches of the Iraq senior national team and the Olympic team in the qualifications for the FIFA 2014 World Cup and the 2012 Olympic Games," it said.
Iraq Football Association secretary Tareq Ahmed said the decision to bar Iraq from hosting matches was taken after a September 2 defeat to Jordan at Francois Hariri Stadium in the northern city of Arbil.
In particular, the match was delayed for 10 minutes because of a power cut, and the stadium appeared to have significantly more spectators than its capacity of 12,400.