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 Beginning in Phase VIII, Fenar began receiving oil allocations in its own name and Alcon received allocations in the name of Amr Bibi. Alcon and Fenar also contracted to purchase oil allocated in the names of various individuals based in Europe and the Middle East, as well as from an Indian company, Reliance Petroleum. 256 During this initial period, the front companies did not have their own bank accounts. As will be discussed below, Taurus not only financed letters of credit for the oil contracts, but also funded the payment of surcharges through its own corporate bank accounts. In July 2001, after both companies had been formed and surcharges had been imposed by the Government of Iraq, Mr. Schenker directed ReviTrust to open bank accounts for Alcon and Fenar at BNP Geneva. 257 In the opening account records, BNP documented the relationship between Taurus and Fenar as it had been explained to the bank: This spring our client Taurus Petroleum Ltd introduced us to Mr. Ladki, with whom [Taurus] has entered into business relations under the Oil for Food Programme in Iraq. Taurus Petroleum ceded the company Fenar Petroleum to Mr. Ladki. 258 The opening records also showed that according to Taurus, although it claimed to have “ceded” its ownership of Fenar to Mr. Ladki, it had retained Fenar’s rights to oil contracts under the Programme: Mr. Ladki was introduced to us by our client Taurus Petroleum Ltd. Indeed, since the month of March, Fenar Petroleum has ceded to Taurus its contracts for the sale of Iraqi crude. 259 Other connections also linked Alcon and Fenar with Taurus. One of the United Nations contracts with Fenar noted a “corresponding address” for the company at 5 Prince’s Gate in London—the same address used by the offices of Taurus London, another Taurus entity of which Mr. Pollner 256 Committee oil company table, contact nos. M/08/67, M/09/01, M/09/04, M/09/35), M/10/03, M/10/09, M/10/17, M/10/59, M/10/96, M/11/25, M/11/43, M/11/65, M/11/67, M/12/35, M/12/39, M/13/07, M/13/19. 257 Patrick Hilty interview (Apr. 13, 2005); BNP Geneva record, Fenar account, account opening documents (July 2, 2001); BNP Geneva record, Alcon account, account opening documents (July 2, 2001) (indicating that Mr. Bibi was introduced to the bank by Martin Schenker). 258 BNP Geneva record, Fenar account, account opening documents (July 2, 2001) (translated from French). 259 Ibid. REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 132 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS was the director. 260 In addition, in December 2001, websites were created for both Fenar and Alcon. These websites were both registered under the name of a Pollner family member. 261 4. Taurus Financed Oil Contracts Involving Alcon and Fenar Between Phases VIII and XIII, Fenar entered into contracts directly with SOMO to purchase approximately 54 million barrels of oil. During the same period, Alcon purchased about 64 million barrels of oil. Taurus Nassau and Taurus Nevis collectively financed at least 73 of the 94 liftings made in connection with all of the Alcon and Fenar contracts. The Committee has not found any records indicating that either Alcon or Fenar financed any of their own letters of credit for oil liftings. Nor do Alcon and Fenar appear to have any financial resources independent of Taurus that would have made them eligible for bank financing on the oil contracts. 262 As a general practice, Taurus Nassau and Taurus Nevis drew upon their accounts at various Swiss banks, including Credit Suisse, Banque Bruxelles Lambert SA, and BNP/UEB, to finance the oil contracts. For each letter of credit, the banks obtained a power of attorney authorizing Taurus Nassau or Taurus Nevis to act on behalf of Alcon or Fenar with regard to that particular transaction. The banks were instructed by Taurus employees to open letters of credit. 263 260 SOMO sales contract, no. M/08/67 (Aug. 16, 2000) (contracting with Fenar); United Kingdom Mission letter to 661 Committee Chairman (May 12, 1995) (noting 5 Prince’s Gate, London, as the address of Taurus London); United Kingdom Companies House record, Taurus London annual return (Sept. 29, 2003) (noting Mr. Pollner as Director of Taurus London). 261 Register.com, “WHOIS lookup,” http://premiere.register.com/whois_lookup.cgi (showing registration information on http://www.fenarpetroleum.com and http://www.alconpetroleum.com). 262 Committee oil company and financier tables, contract nos. M/08/67, M/09/04, M/10/09, M/10/96, M/11/65, M/11/67, M/12/39, M/13/07, M/09/01, M/09/35, M/10/03, M/10/17, M/10/59, M/11/25, M/11/43, M/12/35, M/13/19; BNP Geneva record, Fenar account, bank statements (July 12, 2001 to May 31, 2004) and credit advices (Sept. 17, 2001 to Oct. 27, 2003) (reflecting that all funds received into Fenar’s account were from Taurus Nevis); BNP Geneva, Alcon account, bank statements (July 14, 2001 to Dec. 31, 2003) and credit advices (Aug. 28, 2001 to Oct. 27, 2003) (reflecting that all but $644,769 of the funds received into Alcon’s account were from Taurus Nevis). 263 Patrick Hilty interview (Apr. 13, 2005) (stating that Taurus provided financing for all of Fenar’s and Alcon’s letters of credit and that letters conferring power of attorney on a Taurus entity were sent to BNP Geneva in connection with each letter of credit issued in the name of Alcon and Fenar); BNP Geneva record, Alcon account, bank statements (Aug. 2001 to Dec. 31, 2003) (reflecting that Alcon did not finance any letters of credit); BNP Geneva record, Fenar account, bank statements (Sept. 2001 to May 2004) (reflecting that Fenar did not finance any letters of credit); Committee oil financier table; Banque Bruxelles Lambert Geneva record, Niels Troost letter to Banque Bruxelles Lambert Geneva (Nov. 14, 2000) (referring to Mr. Troost as an office of Fenar and authorizing Banque Bruxelles to issue a letter of credit “us[ing] our [Fenar’s] name in the issuance of this documentary credit as instructed by and under the full responsibility of Taurus Petroleum Ltd.”). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 133 OF 623
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