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 produce any written document memorializing the increase in the premium. None of the Glencore records on payments to Mr. Abu-Reyaleh show that this increased commission rate was being used to calculate the disbursements to Mr. Abu-Reyaleh. Additionally, an analysis of the payments shows that Glencore would have had to apply the increase in commission retroactively for Mr. Abu-Reyaleh ultimately to have received amounts that translate to approximately $0.31 per barrel on contract M/08/91, $0.34 per barrel on contract M/09/60, and $0.39 per barrel on contract M/09/44. 300 4. Glencore and Split Premium Payments In Phase IX, Glencore also purchased oil through other companies, including Zangas Petroleum (“Zangas”), a Russian-based company, and Marbel Resources Limited (“Marbel Resources”), a United Kingdom company. With these two companies, Glencore split the premium, paying the sales commission to the contracting company separately from the surcharge payment. Glencore financed and lifted approximately 3.9 million barrels of oil under a contract signed by Zangas. The surcharges levied on the contract amounted to $1,166,654, which corresponds to a $0.30 per barrel surcharge. Glencore made two sets of split premium payments on the Zangas contract. Glencore records show that it wire transferred two payments to Zangas’s bank account in amounts that corresponded to $0.07 per barrel on the liftings financed by Glencore. Shortly after each payment to Zangas, Glencore wire transferred a payment to a Swiss bank account of an entity named Verplank Holding Ltd. in an amount that corresponds to $0.30 per barrel. 301 300 Luis Alvarez interview (Sept. 13, 2005). A review of Glencore documents has not revealed any subsequent agreement or amendment to the original agreement between Glencore and Al-Khaled Engineering. In addition, when asked whether there was any agreement to document the increased premium, Mr. Alvarez recalled that Al-Khaled Engineering may not have signed an agreement. Luis Alvarez interview (Sept. 13, 2005). Glencore records show that $1,487,954.80 was paid to Mr. Abu- Reyaleh under contract M/08/91 and that 4,756,718 barrels were lifted under the contract. This payment amounts to $0.31 per barrel. Committee note-to-file (Aug. 30-31, 2005) (detailing the review of terms for contract no. M/08/91); Committee oil company table, contract no. M/08/91. Glencore records show that $4,711,396.20 was paid to Mr. Abu-Reyaleh under contract M/09/44 and that 12,106,613 barrels were lifted under the contract. This amounts to payment of $0.39 per barrel. Committee note-to-file (Aug. 30- 31, 2005) (detailing the review of terms for contract no. M/09/44); Committee oil company table, contract no. M/09/44. Glencore records show that $2,901,634.00 was paid to Mr. Abu-Reyaleh under contract M/09/60 and that 8,609,000 barrels were lifted under the contract. This amounts to payment of $0.34 per barrel. Committee note-to-file (Aug. 30-31, 2005) (detailing the review of terms for contract no. M/09/60); Committee oil company table, contract no. M/09/60. 301 Committee oil company and financier tables, contract no. M/09/77; Committee note-to-file (Aug. 30-31, 2005) (detailing the review of terms for contract no. M/09/77). Glencore records show the following payments to Zangas’s account: $132,110.86 on August 8, 2001 (corresponding to $0.07 per barrel financed by letter of credit no. N729460) and $140,108.29 on September 11, 2001 (corresponding to $0.07 per barrel financed by letter of credit no. N730093). Glencore records show the following payments to Verplank Holding’s account at Credit Suisse Geneva: $556,179 on August 15, 2001 (corresponding to $0.30 per barrel financed by letter of credit no. N729460), and $600,464.10 on September 5, 2001 (corresponding to $0.30 per barrel financed by letter of credit no. N730093). Committee oil company and financier tables, REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 150 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS Ministry of Oil records show that within a week of receiving the money from Glencore, Verplank Holding Ltd. transferred the same amounts to a SOMO account at the Jordan National Bank. The funds deposited by Verplank Holding Ltd. were used to satisfy the surcharge on Glencore’s liftings under the Zangas contract. 302 Glencore also split its premium to Marbel Resources. Glencore purchased approximately two million barrels of oil under a contract signed by Marbel Resources. A total of $593,510 in surcharges was levied on the oil financed and lifted by Glencore, corresponding to a $0.30-perbarrel surcharge. Glencore records show that the company paid a $0.36-per-barrel premium and split its payments to Marbel Resources between: (1) a wire transfer to Century Marketing Associates’ bank account on May 25, 2001 in an amount that corresponds to $0.06 per barrel; and (2) a transfer to Aamir Mansour’s bank account on May 31, 2001, in an amount that corresponds to $0.30 per barrel. Ministry of Oil records show that within a short period of time after the transfer to Mr. Mansour’s account, cash deposits were made at the SOMO bank account in Jordan in satisfaction of the surcharge imposed on Glencore’s lifting under the Marbel Resources contract. 303 5. Glencore and Surcharge Payments on Incomed Trading’s Contracts In May 2001, after allegations surfaced that Glencore had diverted a cargo of oil from one destination to another without notice, the 661 Committee referred the company to Swiss authorities to investigate irregularities in Glencore’s purchases of Iraqi oil. The 661 Committee also notified Glencore that future applications for oil purchases would be scrutinized if any irregularities with the transactions were noted. SOMO was not pleased with Glencore as a result of the diversion claim and did not contract with Glencore for the remainder of the Programme. 304 contract no. M/09/77; Committee note-to-file (Aug. 30-31, 2005) (detailing the review of terms for contract no. M/09/77). 302 Committee oil surcharge table, contract no. M/09/77. Verplank Holding transferred from its account at Credit Suisse Geneva to SOMO’s account at Jordan National Bank Amman $556,179.40 on August 10, 2001 and $600,464 on September 12, 2001. Jordan National Bank record, SOMO account, credit advices (Aug. 15 and Sept. 12, 2001). 303 Committee oil company and financier tables, contract no. M/09/76 (showing that Glencore financed and lifted 1,978,367 barrels of oil); SOMO bill of lading, bbl/3110 (May 12, 2001) (relating to SOMO sales contract M/09/76 and showing that lift occurred on May 12, 2001); Records of SOMO surcharge invoices, contract no. M/09/76 (indicating that $593,510 had been levied); Committee note-to-file (Aug. 30-31, 2005) (detailing the review of terms for contract no. M/09/76); Jordan National Bank record, SOMO account, credit advices (June 20, 2001) (showing a cash deposit of $583,000 on behalf of Marbel Resources), (Aug. 20, 2001) (handwriting on advice notes that $10,510.90 out of the cash deposit of $253,473.00 relates to Marbel Resources’s Phase IX contract). 304 Morten Buur-Jensen note-to-file (Apr. 4, 2001) (summarizing interaction of Mr. Buur-Jensen with Glencore staff regarding the matter); Glencore UK Ltd. fax to oil overseers (Apr. 23, 2001) (explaining Glencore’s position and providing a copy of the holding and title certificate); 661 Committee Chairman letter to Switzerland Permanent Observer (May 8, 2001) (explaining the irregularity, attaching a summary REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 151 OF 623
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