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
for the purchase of a significant amount of oil. Two weeks later, Petrogaz, acting as an agent for
Glencore, also signed a SOMO contract. Surcharges were levied on both contracts. 292
3. Glencore and Surcharge Payments in Phase IX
Mr. Abu-Reyaleh paid the surcharges levied on the Glencore and Petrogaz contracts in Phase IX,
as well as outstanding surcharges on an earlier contract financed by Glencore in Phase VIII.
Ministry of Oil records show that a total of approximately $6.6 million was levied and paid on all
three contracts. 293 As detailed below, Mr. Abu-Reyaleh received sufficient funds from Glencore
to cover the surcharge payments.
Glencore made its records relating to the three contracts, among others, available for review (but
not copying) by the Committee. The Glencore records showed that the company kept track of
payments made to Mr. Abu-Reyaleh in connection with contracts M/08/91, M/09/44, and
M/09/60. The Committee also obtained some of the bank records used to transfer funds, which
confirm many of Glencore’s payments to Mr. Abu-Reyaleh. These records show that between
August 2000 and September 2001, approximately $9.1 million was wire transferred from
Glencore’s account at Credit Suisse (Geneva) and UBS (Zurich) to Mr. Abu-Reyaleh at four
accounts at the Arab Bank Geneva, Arab Bank Dubai, Deutsche Bank A.G. (Munich), and
Commercial Bank International (Dubai) (“Commercial Bank”). These funds were sufficient to
cover the approximately $6.6 million owed on surcharges. 294
The records for two of Mr. Abu-Reyaleh’s accounts show that during the same time period that
Glencore transferred money to his accounts, he in turn transferred money to SOMO accounts for
292 Luis Alvarez interview (Sept. 13, 2005); SOMO sales contract, no. M/09/44 (Feb. 1, 2001); Saddam Z.
Hassan fax to oil overseers (Mar. 9, 2001) (amending contract M/09/44 by increasing amount of oil under
contract to 12.6 million barrels); Petrogaz record, Glencore International AG and Petrogaz agreement,
addendum (Feb. 19, 2001) (extending Petrogaz’s agency agreement with Glencore to cover SOMO sales
contract M/09/60); SOMO sales contract, no. M/09/60 (Feb. 17, 2001) (contracting with Petrogaz for two
million barrels of oil); oil overseers fax to Petrogaz (May 14, 2001) (approving increase in oil contracted
under M/09/60 to nine million barrels of oil); Committee oil company table, contract nos. M/09/44,
M/09/60. An Iraqi official has shown Committee investigators a document showing that Glencore was
originally placed on a list of companies “considering” paying the surcharges and later moved to the list of
companies that “agreed” to pay the surcharge. Iraq official interview.
293
Committee oil company table, contract nos. M/08/91 (showing $853,474 in surcharges assessed and
$286,573 paid), M/09/44 (showing $3,222,781 in surcharges assessed and $3,222,781 paid), M/09/60
(showing $2,549,154 in surcharges assessed and $3,115,692 paid).
294 Committee note-to-file (Aug. 30-31, 2005). Glencore records reflect that Glencore transferred
$5,099,885 to Mr. Abu-Reyaleh’s account at Arab Bank Geneva, $881,634 to Mr. Abu-Reyaleh’s account
at Deutsche Bank Munich, $770,553 to Mr. Abu-Reyaleh’s account at Arab Bank Dubai, and $2,148,913 to
Mr. Abu-Reyaleh’s account at Commercial Bank International Dubai. The recipient account for a Glencore
transfer to Mr. Abu-Reyaleh in the amount of $200,000 was not identified. Committee note-to-file (Aug.
30-31, 2005).
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