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 5. The Surcharge Phases When the Iraqi Ministry of Oil was in need of oil purchasers in the face of mandatory surcharges imposed in the end of 2000, Taurus used Alcon and Fenar to purchase over 47 million barrels of oil in Phase IX. Consequently, Liechtenstein companies—which had not participated in the Programme prior to Fenar’s first contract—became the largest purchasers of Iraqi oil during Phase IX, exceeding even Russian and French firms. In the subsequent surcharge phases, Alcon and Fenar purchased an additional 55.1 million barrels of oil. Ministry of Oil and bank records show that the surcharges assessed and paid on the Alcon and Fenar contracts totaled over $26 million. 264 6. Taurus Funded the Surcharges on the Alcon and Fenar Contracts Most of the surcharges imposed on Alcon and Fenar contracts were paid through wire transfers from two accounts in the names of Petrocorp and Jabal at First National Bank in Lebanon (“First National Bank”). On opening bank records, Mr. Ladki, the same individual named by Taurus as the beneficial owner of Fenar, was named as the founder and owner of Petrocorp and Jabal and the sole signatory to both companies’ bank accounts. The Petrocorp bank account was opened in August 2000, and the Jabal bank account in March 2001. From the time that the accounts were opened until they became inactive in December 2002, they were funded primarily by Taurus or entities controlled by Taurus. Taurus Nassau, Fenar, and Alcon transferred at least $27.6 million of the total of about $32.6 million deposited in the Jabal and Petrocorp bank accounts. 265 As described below, the Alcon and Fenar surcharges were generally paid in three different ways: (1) out of the Jabal and Petrocorp accounts with funding from Taurus Nassau; (2) out of the Jabal and Petrocorp accounts with funding from Alcon and Fenar; and (3) out of a personal account belonging to Mr. Ladki, with funding from Jabal and Petrocorp. Prior to the opening of the Alcon and Fenar accounts, Taurus entities transferred money directly to the Petrocorp and Jabal accounts for subsequent transfers to a SOMO account. Between January and July 2001, Taurus Nassau directly transferred over $9.2 million to Petrocorp’s 264 “Programme Management Report,” vol. II, p. 32; Committee oil company, financier, and surcharge 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. 265 First National Bank record, Jabal account, account opening documents (Mar. 30, 2001); First National Bank record, Petrocorp account, account opening documents (Aug. 10, 2000); Banque Bruxelles Lambert Geneva record, Taurus Nassau account, debit advices (Feb. 7 to June 28, 2001); Credit Suisse record, Taurus Nassau account, debit advices (Jan. 23 to July 2, 2001); UEB Geneva record, Taurus Nassau account, bank statements (Jan. 31, Apr. 30, May 31, and June 30, 2001); BNP Geneva record, Fenar account, debit advices (Sept. 25, 2001 to Nov. 29, 2002); BNP Geneva record, Alcon account, debit advices (Aug. 31, 2001 to Nov. 16, 2002); Lebanon Financial Intelligence Unit record, Lebanon Department of Examiners and Investigators <strong>report</strong> (June 28, 2005) (translated from Arabic) (reflecting the total funds received by the Jabal and Petrocorp accounts). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 134 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS account and over $4 million to Jabal’s account through a series of wire transfers. Taurus Nassau was identified on the debit advices showing the withdrawals from its account, but it was not identified as the source of the funds on most of the actual wire transfer documents showing the money being deposited in the Jabal and Petrocorp accounts. 266 Each wire transfer included a reference to a vessel chartered for the loading and transit of oil purchased under the Programme. Most of the vessels referenced in the wire transfers had shipped oil nominally purchased by either Alcon or Fenar, and the other vessels had shipped oil under contracts with Aredio, Zangas, and Zerich GmbH, a Swiss company that had oil contracts financed by Taurus Nassau. Most of the wire transfer payments equaled an amount of $0.25—a SOMO surcharge rate—per barrel lifted by the vessels. 267 266 Banque Bruxelles Lambert Geneva record, Taurus Nassau account, debit advices (Feb. 7 to June 28, 2001); Credit Suisse record, Taurus Nassau account, debit advices (Jan. 23 to July 2, 2001); UEB Geneva record, Taurus Nassau account, bank statements (Jan. 31, Apr. 30, May 31, and June 30, 2001); First National Bank record, Petrocorp account, credit advices (Jan. 24, 2001 to June 30, 2001); First National Bank record, Jabal account, credit advices (Apr. 21 to July 4, 2001). 267 Banque Bruxelles Lambert Geneva record, Taurus Nassau account, debit advices (Feb. 7 to June 28, 2001) (referencing the Berge Odel, New Vitality, Nord Millenium, Berge Tokyo, Berge Ingerid, Crude Med, Dorset, Murex, Crude Sky, Front Commander, and Opalia); Credit Suisse record, Taurus Nassau account, debit advices (Jan. 23, 2001 to July 2, 2001) (referencing the Diamond Iris, Eliki, Eaton, Berge Tokyo, Berge Phoenix, Crude Sky, Berge Helene, Jin Hua, Front Archer, Minerva Nounou, and Oriental Ruby); UEB Geneva record, Taurus Nassau account, bank statements (Jan. 31, Apr. 30, May 31, and June 30, 2001); First National Bank record, Petrocorp account, credit advices (Jan. 24 to June 1, 2001) (referencing the Crude Traveller, Panormos, Neon, Equatorial Lion, Crude Ena, Stena Companion, Nord Bay, Sailor, Crude Star, and Nord Millenium); First National Bank record, Jabal account, credit advices (May 11 and June 25, 2001) (referencing the Soro, Swan Sea, Nissos Christiana, Olympic Loyalty, and Rome); SOMO commercial invoices, b/35/2001 (Mar. 9, 2001), b/34/2001 (Mar. 8, 2001), c/20/2001 (Mar. 12, 2001), c/10/2001 (Feb. 15, 2001), b/10/2001 (Jan. 26, 2001), b/3/2001 (Jan. 13, 2001), b/98/2001 (May 29, 2001), b/101/2001 (June 1, 2001), b/72/2001 (May 23, 2001), b/72/2001 (Apr. 23, 2001) c/52/2001 (Apr. 24, 2001), b/70/2001 (Apr. 21, 2001), b/55/2001 (Apr. 5, 2001), c/45/2001 (Apr. 9, 2001), c/40/2001 (Apr. 4, 2001), c/36/2001 (Mar. 30, 2001), b/97/2001 (May 25, 2001), b/87/2001 (May 13, 2001), c/62/2001 May 6, 2001), c/66/2001 (May 11, 2001), c/67/2001 (May 12, 2001), b/49/2001 (Mar. 29, 2001), b/51/2001 (Mar. 31, 2001), c/41/2001 (Apr. 4, 2001), c/32/2001 (Mar. 26, 2001), c/13/2001 (Feb. 23, 2001), c/9/2001 (Feb. 15, 2001), b/18/2001 (Feb. 3, 2001), b/94/2001 (May 24, 2001), b/58/2001 (Apr. 9, 2001), b/54/2001 (Apr. 4, 2001), b/31/2001 Mar. 5, 2001), b/19/2001 (Feb. 12, 2001), b/305/2000 (Oct. 8, 2000), b/282/2000 (Sept. 22, 2000), b/373/2000 (Dec. 16, 2000), b/372/2000 (Dec. 15, 2000), b/78/2001 (Apr. 30, 2001) (reflecting that the vessels Berge Odel, New Vitality, Nord Millenium, Berge Tokyo, Berge Ingerid, Crude Med, Dorset, Murex, Crude Sky, Front Commander, Opalia, Diamond Iris, Eliki, Eaton, Berge Phoenix, Berge Helene, Jin Hua, Front Archer, Minerva Nounou, Oriental Ruby, Crude Traveller, Panormos, Neon, Equatorial Lion, Crude Ena, Stena Companion, Nord Bay, Sailor, Crude Star, Soro, Swan Sea, Nissos Christiana, Olympic Loyalty, and Rome were used to lift oil purchased under SOMO sales contracts M/08/35 (contracting with Aredio) (July 10, 2000), M/08/38 (June 23, 2000) (contracting with Zangas); M/08/102 (July 23, 2000) (contracting with Zerich GmbH); M/09/01 (Dec. 14, 2000), M/09/35 (Jan. 29, 2001) (contracting with Alcon); M/09/04 (Dec. 21, 2000) (contracting with Fenar)); Committee oil financier table, contract nos. M/08/35, M/08/38, M/08/102, M/09/01, M/09/04, M/09/35. REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 135 OF 623
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