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 reflect that this wire transfer from Taurus was used to satisfy Zarubezhneft’s surcharge obligations under contract M/08/02. 250 Finally, in Phase VIII, Machinoimport entered into a contract to purchase approximately seven million barrels of oil. Taurus Nassau financed at least four of the six letters of credit issued in connection with this contract. Surcharges were levied on two of these four Taurus-financed liftings in amounts of $130,000 and $161,985, respectively. As it had with the Zangas and Zarubezhneft contracts, Taurus Nassau paid the surcharges on these liftings directly to SOMO. On October 16, 2000, one day before one of the two liftings occurred, Taurus issued a wire transfer in the amount of $130,000 to a SOMO account at Fransabank. Ministry of Oil records show that the wire transfer was applied as a surcharge payment on contract M/08/37. On October 25, 2000, Taurus transferred $160,000 to a SOMO account to cover the surcharge imposed on the second lifting. As with the Zangas surcharge payment, the wire transfers to the SOMO account did not identify Taurus’s name and included information that the transfers were for “loading fees.” 251 3. Taurus and the Creation of Alcon and Fenar In 1999 and again in 2000, Mr. Schenker hired ReviTrust, a Liechtenstein financial services firm, to form two companies: Fenar and Alcon. Fenar was incorporated on June 15, 1999. Mr. Schenker directed ReviTrust to name Musbah Ladki as the beneficial owner of Fenar. 252 The 250 SOMO sales contract, no. M/08/02 (June 21, 2000) (contracting with Zarubezhneft); Committee oil surcharge table, contract no. M/08/02 (noting surcharges of $200,000 paid to Fransabank by “Taurus Petroleum”); Records of SOMO surcharge invoices (Nov. 4 and 16, 2000) (translated from Arabic) (showing $96,302 levied on 963,022 barrels and $105,000 levied on 1,050,000 barrels under M/08/02); Committee oil financier table, contract no. M/08/02 (showing Taurus financing liftings of 963,022 barrels and 1,050,000 barrels); UEB Geneva record, Taurus Nassau account, bank statement (Oct. 31, 2000) (reflecting a debit of $200,019); Fransabank record, SOMO account, SWIFT message (Oct. 26, 2000) (reflecting a payment of $200,000); SOMO bills of lading, ck/4919 (Part 1) and ck/4919 (Part 2) (Nov. 4, 2000) (identifying the New Vitality as having lifted 1,050,000 and 963,022 barrels). 251 SOMO sales contract, no. M/08/37 (June 23, 2000) (contracting with Machinoimport); Committee oil financier table, contract no. M/08/37 (showing that Taurus financed liftings of 900,000 barrels, 1,092,607 barrels, 1,619,856 barrels and 1,300,000 barrels); Records of SOMO surcharge invoices (Sept. 4 and Oct. 17, 2000) (showing $161,985 levied on 1,619,856 barrels and $130,000 levied on 1,300,000 barrels under M/08/37); UEB Geneva record, Taurus Nassau account, bank statement (Oct. 31, 2000) (reflecting debits of $130,019 and $160,024.76); Fransabank record, SOMO account, SWIFT message (Oct. 16, 2000) (reflecting a payment of $130,000); Fransabank record, SOMO account, SWIFT message (Oct. 25, 2000) (reflecting a payment of $160,000); SOMO bills of lading, bbl/2943 (Sept. 4, 2000) (identifying the Violet as having lifted 1,619,856 barrels), bbl/2982 (Oct. 17, 2000) (identifying the Berge Ingerid as having lifted 1,300,000 barrels); Committee oil surcharge table, contract no. M/08/37 (noting surcharges of $160,000 and $130,000 paid to Fransabank by United European Bank). 252 Patrick Hilty interview (Apr. 13, 2005); BNP Geneva record, Fenar Petroleum account, articles of incorporation (June 15, 1999). Mr. Hilty is President of ReviTrust and personally oversaw the creation of both Fenar and Alcon. In the course of his interview, Mr. Hilty described the actions of the beneficial owners of Fenar and Alcon, but did not provide the identities of these persons. Patrick Hilty interview REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 130 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS following year, Niels Troost, a senior employee of Taurus Petroleum Services Limited (“Taurus London”) had power of attorney and signed SOMO contracts on behalf of Fenar for a six-month period. 253 Mr. Schenker then requested that ReviTrust create another company. Alcon was incorporated on November 9, 2000. Mr. Schenker instructed ReviTrust to name Amr Abdul Sattar Bibi as Alcon’s director and beneficial owner. Prior to his involvement with Alcon, Mr. Bibi had been a trader with Taurus. In connection with both incorporations, Mr. Schenker introduced Mr. Ladki and Mr. Bibi to the president of ReviTrust as “business partners” of Taurus who were able to obtain Iraqi crude oil but needed financing for the transactions. 254 After being installed as the legal owner of Alcon, Mr. Bibi traveled on numerous occasions to Baghdad to negotiate oil contracts with SOMO on behalf of the company. Iraq officials involved in the oil contracts stated that they understood Taurus was using Fenar and Alcon as front companies to purchase Iraqi crude oil. According to Iraqi officials, on several occasions, Mr. Pollner, as well as Andrew Walker, Taurus’s General Manager of crude and products trade, accompanied Mr. Bibi to SOMO to discuss allocations and the payment of surcharges. 255 (Apr. 13, 2005). The Committee was able to identify independently the beneficial owners of the two companies through official correspondence from the government of Liechtenstein and through documentation contained in bank records. Liechtenstein Financial Intelligence Unit letter to the Committee (Dec. 2, 2004); BNP Geneva record, Fenar account, account administration documents (July 2001); BNP Geneva record, Alcon account, account administration documents (July 2001). 253 Martin Schenker letter to Switzerland Observer Mission (May 6, 1998) (noting Niels Troost as “active in the international crude trade as well as managing [Taurus’s] internal Russian business”); Banque Bruxelles Lambert Geneva record, Taurus Nevis account, power of attorney (Aug. 14, 2000) (empowering Mr. Troost to “sign and conclude contracts on behalf of the company [Fenar], especially to sign and to conclude contracts for Iraqi crude”). Two days after this power of attorney was authorized by Mr. Hilty, Mr. Troost signed Fenar’s first contract. SOMO sales contract, no. M/08/67 (Aug. 16, 2000) (contracting with Fenar). On December 12, 2002, Mr. Troost received $100,025 out of Taurus Nevis’s Banque Bruxelles Lambert account. Banque Bruxelles Lambert Geneva record, Taurus Nevis account, bank statement (Dec. 31, 2002). 254 Patrick Hilty interview (Apr. 13, 2005); BNP Geneva record, Alcon account, articles of incorporation (July 2, 2001); BNP Geneva record, Alcon account, account opening documents (July 2001) (reflecting Mr. Bibi’s prior association with Taurus). In November 2001, Mr. Bibi left Alcon in order to assume responsibilities as a full-time employee of Western Petroleum. In January 2002, he was succeeded as beneficial owner by Ali Ozer Balikci, a Turkish national who lived in Iraq for 18 years and had received a diploma from the University of Baghdad. Opening documentation for Alcon’s BNP Geneva account also noted Mr. Balicki as having been introduced to the bank by Martin Schenker. Patrick Hilty interview (Apr. 13, 2005); BNP Geneva record, Alcon account, account opening documents (Jan. 25, 2002) (supplemental form) (reflecting that Mr. Balicki assumed beneficial ownership of Fenar on January 25, 2002). Mr. Bibi was also affiliated with the Turkish firm Delta Petroleum Products Trading Company (“Delta”), and signed for Delta on the company’s contracts with SOMO. SOMO sales contracts, nos. M/01/29 (Feb. 17, 1997), M/02/07 (Aug. 9, 1997), M/03/24 (Jan. 12, 1998), M/07/38 (Dec. 14, 1999), M/08/47 (June 25, 2000) (all contracting with Delta Petroleum). 255 Iraq officials interviews; Martin Schenker fax to Switzerland Observer Mission (May 6, 1998) (noting Mr. Walker as the General Manager of Taurus’s crude and products trade). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 131 OF 623
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