report on programme manipulation - Independent Inquiry Committee

INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME
REPORT ON PROGRAMME MANIPULATION
CHAPTER TWO
OIL TRANSACTIONS AND ILLICIT PAYMENTS
In Phase VIII, Zangas entered into a contract to purchase six million barrels of oil. Taurus
Nassau financed at least two of the five liftings of Zangas’s oil contract. Ministry of Oil records
show that surcharges in the amounts of $230,220 and $37,500 were levied on these two Taurusfinanced
liftings. 247
Taurus Nassau paid the first surcharge on contract M/08/38 directly to a SOMO account. On
September 18, 2000, four days after a Taurus-financed lifting occurred, Mr. Schenker sent a fax
directing UEB Geneva to transfer $230,221 from a Taurus Nassau account to a SOMO account at
Fransabank. Mr. Schenker requested that UEB Geneva not mention Taurus in connection with
the transfer of funds. The instructions on the fax requested to “[k]indly effect this payment
without any mention to Taurus Petroleum Ltd. - and effect it by one of our customers only.”
Ministry of Oil and bank records reflect that the wire transfer from Taurus was used to satisfy the
first surcharge obligation on the Zangas contract. 248 The surcharge on the second lifting by
Taurus was paid through Zangas. 249
247 SOMO sales contract, no. M/08/38 (June 23, 2000) (contracting with Zangas); Committee oil financier
table, contract no. M/08/38 (showing that Taurus financed liftings of 2,302,209 barrels and 375,000
barrels); Committee oil surcharge table, contract no. M/08/38 (showing surcharge payments of $230,220.90
on September 2, 2000 and $73,210 on June 14, 2001); Records of SOMO surcharge invoices (Sept. 14 and
Nov. 16, 2000) (showing $230,220 levied on 2,302,209 barrels and $37,500 on 375,000 barrels under
contract M/08/38, both rates of $0.10 per barrel) (translated from Arabic).
248 SOMO bill of lading, bbl/2953 (Sept. 14, 2000) (reflecting the lifting of 2,302,209 barrels in relation to
contract M/08/38); UEB Geneva record, Taurus Nassau account, payment order (Sept. 18, 2000); UEB
Geneva record, Taurus Nassau account, bank statement (Sept. 30, 2000); Committee oil surcharge table,
contract no. M/08/38 (noting a surcharge of $230,221 paid into SOMO’s Fransabank account from United
European Bank); Records of SOMO surcharge invoices (Sept. 14, 2000) (translated from Arabic) (showing
$230,220 levied on 2,302,209 barrels under M/08/38).
249 SOMO record, Iraq Embassy in Moscow payment receipt, no. 14 (June 14, 2001) (translated from
Arabic) (reflecting Zangas’s payment of $73,210 to the Embassy of Iraq in Moscow in connection with
contract M/08/38); Committee oil surcharge table, contract no. M/08/38 (noting a surcharge of $73,210
paid to the Embassy of Iraq in Moscow by Zangas); BNP Geneva record, Taurus Nassau account, bank
statement (June 30, 2000) (reflecting a payment of $73,519 to “JSC ‘ZANGAS’”). From these records, it
appears that Taurus also may have provided funds for a third surcharge payment of $35,706 for 357,063
barrels lifted under contract M/08/38. Records of SOMO surcharge invoices (Sept. 22, 2000) (showing
$35,706 levied on 357,063 barrels under M/08/38).
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