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 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). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 128 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS Figure: Martin Schenker letter to UEB Geneva (Sept. 18, 2000). In Phase VIII, Zarubezhneft entered into a contract to purchase approximately 15 million barrels of oil. Taurus Nassau financed at least five of the eleven letters of credit issued in connection with this contract. Two of the five Taurus-financed lifts had surcharges imposed on them in amounts of $96,302 and $105,000, respectively. Again, Taurus Nassau directly paid these surcharges into an account controlled by SOMO. In late October 2000, nine days before these two Taurus-financed liftings occurred, Taurus Nassau transferred $200,000 from its UEB Geneva bank account into a SOMO account at Fransabank. On this occasion, Taurus Nassau was identified in the wire transfer document. The wire transfer details also included information that the transfer related to “loading fees” purportedly incurred by the New Vitality, the vessel used for the two liftings on which total surcharges of $201,302 had been imposed. Ministry of Oil records REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 129 OF 623
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report on programme manipulation - Independent Inquiry Committee

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