Bad Saddam. Bad Kofi. And shame on the rest of youse, too

Oil-for-food. That's gotta be bad for your cholesterol.

"More than 4,500 companies took part in the U.N. oil-for-food program and more than half of them paid illegal surcharges and kickbacks to Saddam Hussein, the committee investigating the program is to report. The country with the most companies involved in the program was Russia, followed by France, the committee says in a report to be released Thursday US time. The inquiry was led by Paul A. Volcker, former chairman of the U.S Federal Reserve Board.

"In my mind," he said, "this part of our investigation, looking at the manipulation of the program outside the U.N., strongly reinforces the case that the U.N. itself carries a large part of this responsibility and needs reform. "Even though we are looking at it from the outside, it kind of screams out at you, 'Why didn't somebody blow a whistle?"

"Those manipulating the program ranged from established trading companies to front companies set up for the purpose, and included some companies of international reputation as well as many well known in their home countries, the investigators said.

"Saddam received $1.8 billion in illicit income from surcharges and kickbacks on the sales of oil and humanitarian goods during 1996-2003, when the program ran, the committee concluded in its last report in September.

"Earlier Volcker committee reports summarising the year and a half of inquiries have examined the activities of the United Nations, finding the institution's management inept and corrupt, and providing evidence that the program's former director, Benon V. Sevan, received kickbacks himself. He has denied any wrongdoing. The $64 billion program was set up by the Security Council to help ease the effects of U.N. sanctions on the 27 million Iraqis by supplying food and medicines in exchange for letting the Saddam government export oil." (http://smh.com.au/news/world/report-names-top-firms-that-bribed-saddam/2005/10/27/1130400311224.html)

"The final report from the Independent Inquiry Committee aims to show how companies all over the world, as well as individuals and governments, rorted the program on a grand scale, sabotaging diplomatic efforts to bring Saddam under control. The country with the most companies involved was Russia, followed by France, the report is expected to reveal. The surcharges on oil were finally stopped in 2001 by the United States and Britain in the UN Security Council." (http://www.heraldsun.news.com.au/common/story_page/0,5478,17056405%255E663,00.html.)

"Among companies the report names in connection with a variety of illicit payment schemes are DaimlerChrysler, French carmaker Renault and some of the world's biggest pharmaceutical companies, including Glaxo Wellcome, SmithKline Beecham and Eli Lilly.

"[The report] says the Iraqis received a total of nearly $643,000 in "service fees" when they made four purchases of medical equipment totalling $7.6 million from [Minnesota based] St. Jude's Austrian subsidiary. St. Jude is a global leader in making and selling heart valves and other cardiac devices.
St. Jude issued a statement saying only: "We are studying the report."

"[Minnesota based] Cargill's Malaysia subsidiary sold the Iraqis $1.2 million in palm oil -- vegetable oil used for cooking -- in two contracts in 2000 and 2001, it said. Lori Johnson, a spokeswoman for the privately held agribusiness giant, said company officials were "surprised by the report.

"Cargill's U.S. operations also sold $19.5 million in wheat to Iraq, and its French subsidiary sold $27.4 million in sugar and wheat to Saddam's government, the report said, but it listed no Iraqi records of improper fees in connection with those sales." (http://www.startribune.com/stories/722/5693747.html)

"Australian wheat exporter AWB is defending its role in the Iraqi oil-for-food program after adverse findings from a United Nations (UN) inquiry. The report found no evidence to show AWB knew of the kickbacks, but suggests it should have realised. After the first Gulf War, AWB became the single largest provider of goods to Iraq under the United Nations oil-for-food program.

"In the final report, the now privatised AWB has been found to have paid more than $200 million for transport services that went straight back to the Iraqi regime instead. AWB managing director Andrew Lindberg rejects the inquiry committee's suggestions that at least some AWB employees should have picked up on the illicit activity. "We were an unwitting participant in an elaborate scheme of deception devised by the regime." Mr Lindberg says there were good reasons for not questioning the sharp increase in transport costs for its wheat. AWB says at no time did it know that the money it paid to a Jordanian trucking company was being diverted to the Iraqi Government.

"But the president of the Iraqi Islamic Council of Australia, Dr Mohamad Taha Al-Salami, has rejected the AWB's defence. "If it was a matter of a hundred dollars or $200 you know I would accept that, but when it is millions of dollars they have to justify it and it's naive, a naive defence in my opinion," he said.

"[Australian Prime Minister John Howard said,] "My dealings with the people in the AWB in the past have always been such that I've found them a very straight up and down group of people and I can't imagine for a moment that they would have knowingly been involved in anything improper." Trade Minister Mark Vaile has also defended AWB. "I wouldn't imagine for a moment that any of the management or the board of AWB would have knowingly been involved," he said. Mr Vaile says the AWB followed all UN guidelines while taking part in the program. Mr Vaile has blamed the United Nations, saying it oversaw the contract." (http://www.abc.net.au/news/newsitems/200510/s1492749.htm)

Personal observation: I've had a wee bit of experience in shipping commodities in bulk, and that small portal on the industry taught me that, generally, most shippers, especially the large ones, know every cent involved in the transport of the product and how it is justified and do a major job heavying the carriers to get costs down. But I have no knowledge of AWB or how it has operated and cast no aspersions, implicitly or explicitly.

"Tariq Aziz, who at the time was Iraq's deputy prime minister, told investigators that beneficiaries received oil barrel allocations based on their level of opposition to the sanctions. The report is filled with records of transactions kept by Iraqi officials who demanded special surcharges. DaimlerChrysler is listed as paying $7,000 for a $70,000 contract, while Volvo Construction Equipment in Brussels paid $317,000 in extra fees for a $6.4 million contract.

"The report also cited Banque Nationale de Paris, or B.N.P., for playing a double role in handling the oil-for-food escrow account, but not revealing knowledge about certain financial relationships that enabled the payment of illegal surcharges. B.N.P., however, issued a company statement that the illicit surcharges were detected only through the "enormous investigative efforts" of the Volcker committee and the C.I.A.. The bank called it "unjustified" to suggest that "alleged deficiencies in its screening of payments contributed to illicit surcharges."

"One-third of the oil exported from Iraq through the program ended up in the hands of Russian companies, the report said. Russia had argued for lifting the sanctions. An Iraqi document accompanying the report contended that Russian companies including Lukoil, the country's largest private energy company, and TNK, now merged in a joint venture with BP, paid surcharges in cash to the Iraqi Embassy in Moscow. The embassy accepted $52 million between March 2002 and December 2002, the report contended. The money was packed in red canvas diplomatic bags sealed with wax and sent by diplomatic courier, the report said. Each bag could hold $1.5 million in $100 bills.

"The report said that three Siemens companies Siemens-France, Siemens-Turkey and Osram Middle East knowingly paid kickbacks of at least $1.6 million. There was no response from Siemens in the report.

"Weir Group, an engineering services company based in Scotland, made about $4.5 million in illicit payments to the Iraqi government, the report said. The report said that when Iraq's regular customers balked in late 2000 at buying oil with surcharges, four oil traders merged to dominate the market.Bayoil Supply & Trading Limited from the Bahamas, Glencore International from Switzerland, the Vitol Group from the Netherlands and the Taurus Group from New Zealand employed intermediaries in Italy, Liechtenstein, Malaysia and Switzerland to purchase 60 percent of Iraqi oil until the overthrow of Mr. Hussein in 2003.

"Afiliates of other American companies were listed in the report, including Coastal Corporation and NuCoastal Corporation. "This was a report that came out with a conclusion they set out to come up with," said Catherine Recker, a lawyer for Bayoil U.S.A. Incorporated, a Houston-based oil trading company named as a defendant in an indictment brought by the United States attorney in New York. The company has pleaded not guilty.

"Oscar S. Wyatt, a Texas oilman who was also named in the report and owns NuCoastal, was indicted Friday on charges that he paid millions of dollars in kickbacks to obtain rights to sell Iraqi oil. He pleaded not guilty Thursday in Federal District Court in Manhattan." (http://www.nytimes.com/2005/10/28/international/28companies.html)

"The individuals named as having profited from contracts with Iraq ranged from recognizable politicians like Vladimir V. Zhirinovsky, leader of the Liberal Democratic Party in Russia, and Charles Pasqua, a former French interior minister, to unfamiliar names like the Rev. Jean-Marie Benjamin, a Swiss priest who put his profits in his Vatican bank account.

"The abuses were geographically widespread. Kickbacks on humanitarian goods were traced to companies or individuals from 66 countries, while payments of surcharges were made by entities from 40 countries.

"At the center of this activity, according to the report, was Tariq Aziz, the former deputy prime minister who was Mr. Hussein's chief diplomatic emissary. Mr. Aziz now awaits trial in Baghdad, but during the program's life, from 1996 to 2003, he wooed friends for Iraq with profitable oil allocations.

"Among the people he dealt with, identified as "political beneficiaries" in the Volcker report, was Roberto Formigoni, president of the Lombardy region in Italy and onetime under secretary to the Ministry of the Environment. He was a longtime supporter of Iraq and an opponent of penalties, and Mr. Aziz arranged for him to receive 27 million barrels, recording it under "special requests for Italy," the committee said. Mr. Formigoni denied the charge.

"Claude Kaspereit, a businessman and son of a French member of Parliament, flew French men and women opposed to penalties on Baghdad and expressed solidarity with Mr. Hussein, and afterwards received allocations, the committee said. The report said he secretly sold oil rights for 4 million barrels to the financier Marc Rich, who is now a fugitive. The report reproduced a letter of credit from the transaction stamped with the words "Marc Rich and Co. Investment AG whose name must not be mentioned."

"Mr. Aziz was also the contact point for Father Benjamin, an antiwar activist who founded the Benjamin Committee for Iraq in 1999. The report says the priest facilitated an oil deal for a Swiss trader friend by introducing him to Mr. Aziz. The priest received what he called a donation of $140,000, and the committee said his Vatican bank account showed a $90,000 deposit the same day. Father Benjamin told the committee he had no idea of the source of the funds.

"Mr. Aziz also worked with George Galloway, a British member of Parliament, who was accused of receiving more than 18 million barrels of oil in his name or the name of a Jordanian associate, Fawaz Abdullah Zureikat. A portion of the profits went to Mr. Galloway's wife, Amineh Abu-Zayyad, a Palestinian biologist. In his letter denying the allegations, Mr. Galloway noted that his wife had announced on the front page of the Sunday Times of London in May that she was divorcing him.

"According to the report, companies often disguised surcharge payments by funneling them through offshore bank accounts or labeling them as legitimate oil-related expenses. One example the report gave was the substitution of the words "loading fees" for "commission" on payments of the Taurus Group, a large oil trader.

"The report said that putting disclaimers in contracts that no surcharges had been paid did little to lessen trade. "In one instance an agent for BayOil admitted to fabricating an after-the-fact disclaimer to help disguise the payment of surcharges," the report said in discussing a Houston oil trader.

"The committee said that companies it contacted to explain premiums they paid for oil often passed them off as the result of ordinary market forces.
Kickbacks were paid on contracts and disguised as "inland transportation fees" or "after-sales service fees." Contractors would then inflate prices and recover from the United Nations escrow account the money they had secretly paid to Iraq.

"The committee said companies confronted with evidence of illicit payments generally offered one of four justifications. Some said they had been unaware of side payments or the payments had been made by employees in Iraq without authorization; some said they thought inland transportation and after-sales service fees were legitimate expenses; some challenged the committee's evidence as untrustworthy because it came from Iraq; some admitted paying kickbacks, saying they understood it to be part of doing business in Iraq."
(http://www.nytimes.com/2005/10/28/international/middleeast/28food.html)

"Since Saddam was toppled in April, Iraq has paid out $1.8bn in reparations to the United Nations Compensation Commission (UNCC), the Geneva-based quasi tribunal that assesses claims and disburses awards. Of those payments, $37m have gone to Britain and $32.8m have gone to the United States. That's right: in the past 18 months, Iraq's occupiers have collected $69.8m in reparation payments from the desperate people they have been occupying. But it gets worse: the vast majority of those payments, 78%, have gone to multinational corporations, according to statistics on the UNCC website.Away from media scrutiny, this has been going on for years. Of course there are many legitimate claims for losses that have come before the UNCC: payments have gone to Kuwaitis who have lost loved ones, limbs, and property to Saddam's forces. But much larger awards have gone to corporations: of the total amount the UNCC has awarded in Gulf war reparations, $21.5bn has gone to the oil industry alone. Jean-Claude Aimé, the UN diplomat who headed the UNCC until December 2000, publicly questioned the practice. "This is the first time as far as I know that the UN is engaged in retrieving lost corporate assets and profits," he told the Wall Street Journal in 1997, and then mused: "I often wonder at the correctness of that."But the UNCC's corporate handouts only accelerated. Here is a small sample of who has been getting "reparation" awards from Iraq: Halliburton ($18m), Bechtel ($7m), Mobil ($2.3m), Shell ($1.6m), Nestlé ($2.6m), Pepsi ($3.8m), Philip Morris ($1.3m), Sheraton ($11m), Kentucky Fried Chicken ($321,000) and Toys R Us ($189,449). In the vast majority of cases, these corporations did not claim that Saddam's forces damaged their property in Kuwait - only that they "lost profits" or, in the case of American Express, experienced a "decline in business" because of the invasion and occupation of Kuwait. One of the biggest winners has been Texaco, which was awarded $505m in 1999. According to a UNCC spokesperson, only 12% of that reparation award has been paid, which means hundreds of millions more will have to come out of the coffers of post-Saddam Iraq." (http://babaklayeghi.blogspot.com/2004/10/why-is-war-torn-iraq-giving-190000-to.html)

" U.N. documents show that Halliburton's affiliates have had controversial dealings with the Iraqi regime during Cheney's tenure at the company and played a part in helping Saddam Hussein illegally pocket billions of dollars under the U.N.'s oil-for-food program. The Clinton administration blocked one deal Halliburton was trying to push through sale because it was "not authorized under the oil-for-food deal," according to U.N. documents. That deal, between Halliburton subsidiary Ingersoll Dresser Pump Co. and Iraq, included agreements by the firm to sell nearly $1 million in spare parts, compressors and firefighting equipment to refurbish an offshore oil terminal, Khor al Amaya. Still, Halliburton used one of foreign subsidiaries to sell Iraq the equipment it needed so the country could pump more oil, according to a report in the Washington Post in June 2001.The Halliburton subsidiaries, Dresser-Rand and Ingersoll Dresser Pump Co., sold water and sewage treatment pumps, spare parts for oil facilities and pipeline equipment to Baghdad through French affiliates from the first half of 1997 to the summer of 2000, U.N. records show. Ingersoll Dresser Pump also signed contracts -- later blocked by the United States -- according to the Post, to help repair an Iraqi oil terminal that U.S.-led military forces destroyed in the Gulf War years earlier."
(http://babaklayeghi.blogspot.com/2004/10/under-cheney-halliburton-helped-saddam.html)

An historical up-close-and-personal look at the program,"ground zero": http://archives.cnn.com/2002/WORLD/meast/09/30/sproject.irq.sanctions/