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
Ministry of Oil records show that surcharges on these two contracts were paid in part by cash
payments of $710,000 made by Mr. Lakhani at the Permanent Mission of Iraq to the United
Nations in Geneva from May 2002 to January 2003. According to Mr. Lakhani, he made the
payments at the Permanent Mission of Iraq to the United Nations in Geneva with cash that he
received from Glencore in Switzerland. He stated that he periodically received the cash from
Glencore for payment of the surcharges through various individuals he could not identify. Copies
of petty cash receipts obtained from Mr. Lakhani—some of which are produced below—show
that, from January 24, 2002 through March 3, 2003, a series of cash payments totaling
approximately $1.36 million were made from Glencore’s offices in Switzerland to Mr. Lakhani.
In particular, the petty cash receipts obtained from Mr. Lakhani reflect a cash payment from
Glencore on May 15, 2002 in the amount of $415,000. Documents obtained from the Iraqi
Mission to the United Nations in Geneva indicate that Mr. Lakhani made a surcharge payment of
$400,000 two days later. 308
When asked about cash payments to Mr. Lakhani, Mr. Alvarez stated that he orally
recommended, in 2001 or 2002, that Glencore pay Mr. Lakhani a “success fee” in the amount of
$300,000 or $400,000. Mr. Alvarez stated that his recommendation was approved by his superior
at Glencore. Glencore’s petty cash payments to Mr. Lakhani exceeded the amount of the
“success fee.” Additionally, Andy Gibson, head of Glencore’s Crude Oil Operations in London,
stated that he was unaware of Glencore awarding cash bonuses in the range of $300,000 to
$400,000. 309
to-file (Aug. 30-31, 2005) (detailing the review the Glencore and Murtaza Lakhani agency agreement (Jan.
23, 2001)); Luis Alvarez interview (Sept. 13, 2005). SOMO records reflect that one of the surcharge
payments on contract M/11/22 was made by an entity named Imranco. Mr. Lakhani has indicated that
Imranco was the trade name used by his company, Continental Oil, in Jordan. Murtaza Lakhani interviews
(Dec. 6-13, 2004).
308 Iraq Permanent Mission to the United Nations in Geneva record, Payment receipts (May 17, 2002)
(reflecting payment by Mr. Lakhani of $400,000), (June 12, 2002) (reflecting payment by Mr. Lakhani of
$250,000), (Jan. 10, 2003) (reflecting payment of $60,000); Murtaza Lakhani interviews (Dec. 6-13, 1994;
Aug. 7, 2005); Murtaza Lakhani record, Glencore cash vouchers (Jan. 24, 2002) (for €170,850), (Apr. 24,
2002) (for €230,000), (May 15, 2002) (for $415,000), (June 10, 2002) (for $190,000), (July 4, 2002) (for
$80,000), (Oct. 7, 2002) (for CHF205,000), (Nov. 4, 2002) (for €110,000), (Nov. 20, 2002) (for €45,000),
(Mar. 3, 2003) (for €35,000).
309 Luis Alvarez interview (Sept. 13, 2005); Andy Gibson interview (Sept. 14, 2005).
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