report on programme manipulation - Independent Inquiry Committee

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INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS he told Mr. Aziz that he was unable to pay surcharges unless he was allocated additional oil at a sufficiently discounted price. 216 216 Sandi Majali interview (June 30, 2005). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 114 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS VI. OIL TRADERS AND THE PHASE IX CRISIS A. INTRODUCTION Four traders and companies financed and lifted over 60 percent of the Iraqi crude oil during the exporting crisis in Phase IX. The top financiers of Iraqi crude oil in that phase were Bayoil, Taurus, Glencore, and Vitol. 217 B. BAYOIL Bayoil and Bayoil (USA) Inc. (hereinafter “Bayoil”), oil trading companies based in the Bahamas and the United States, respectively, received only two direct allocations of oil in the initial phases of the Programme. After the Government of Iraq imposed a general ban on selling crude oil to companies from the United States, Bayoil did not obtain another Programme contract to purchase Iraqi crude oil. Nonetheless, Bayoil was responsible for lifting over 403 million barrels of Iraqi oil sold under the Programme. In the initial eight phases, Bayoil purchased most of its oil from Russian companies. Later, David B. Chalmers, Jr., President of Bayoil, and a former business associate, Augusto Giangrandi, used a front company, Italtech SRL (“Italtech”), to solicit oil allocations in Iraq. 218 When the Ministry of Oil initially faced strong resistance to the imposition of surcharges immediately preceding Phase IX, it turned to oil traders to keep exports flowing. The Government of Iraq allocated nearly 30 million barrels of oil within the first three months of that phase to Italtech. Through Italtech, Bayoil managed to finance 8.1 percent of the Iraqi oil sold in Phase IX. Although attempts were made to avoid the payment of surcharges imposed in that phase, Bayoil and Italtech eventually paid over $6 million in surcharges to the Iraqi regime through the Al Wasel & Babel General Trading LLC (“Al Wasel & Babel”). Bayoil also used the Al-Hoda International Trading Co. (“Al-Hoda”) as a conduit for paying some of the surcharges owed on other Iraqi oil contracts during the surcharge phases. 219 Bayoil employees denied Committee requests for formal interviews. 217 Committee oil financier table. Some companies lifted the oil contracted under previous phases in phase IX. This chart reflects only contracts executed in Phase IX, as opposed to the quantity of oil lifted in Phase IX, as mentioned in other parts of the <strong>report</strong>. 218 Committee oil company and financier tables, contract nos. M/01/07, M/02/04; Committee oil financier table. Bayoil Supply & Trading Limited is based in Nassau, Bahamas. Bayoil record, power of attorney agreement (Sept. 7, 1999). 219 Committee oil company and surcharge tables, contract no. M/09/07; TaR (Dec. 1996 to Mar. 2003). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 115 OF 623
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