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 Figure: Glencore cash vouchers (Jan. 24, Apr. 24, May 15, and June 10, 2002). E. VITOL Vitol S.A., a Swiss corporation, is part of the Vitol Group (“Vitol”), a major oil trader with a refinery in Canada that can process Iraqi crude oil. Like other oil companies and traders that were not based in countries favored by the Government of Iraq, Vitol was forced to purchase Iraqi crude oil through other companies during the Programme—until it later hired a French diplomat, Serge Boidevaix, to represent it in Baghdad. Mr. Boidevaix is discussed in Section IV.E of this Chapter. With Mr. Boidevaix’s assistance, Vitol obtained a series of oil contracts directly from SOMO. Surcharges were assessed on Vitol’s contracts in Phases IX and X. Vitol REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 156 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS paid the surcharges assessed on its Phase IX contract through an entity named Peakville Limited. 310 Even after hiring Mr. Boidevaix, Vitol continued to acquire Iraqi crude oil through other agents and contracting companies. One of its most lucrative business relationships was with Mastek Sdn Bhd (“Mastek”), a previously dormant Malaysian company that had been revived by three individuals for the purpose of trading Iraqi oil allocations. During the Phase IX exporting crisis, the Ministry of Oil called upon Faek Ahmad Shareef, one of the Mastek partners, to help the country continue exporting crude oil and offered to sell him substantial amounts of oil. In Phase IX, Vitol financed 33 million barrels of oil through Mastek. SOMO assessed over $10 million in surcharges on Mastek’s Phase IX contract, the single largest assessment on any given contract during the illicit scheme. 311 Mr. Shareef and his partner, Jaya Sudhir, used commissions from Vitol to pay surcharges on the Mastek contracts. Vitol has denied paying any surcharges or knowingly financing them. When Mastek did not have sufficient funds to cover the surcharges assessed, it threatened to bring a lawsuit against Vitol. Vitol settled the dispute for $2 million, most of which was used by Mastek to pay the outstanding surcharge balance. 312 In addition, in Phase XI, Vitol made a direct surcharge payment of approximately $312,800 to one of SOMO’s accounts in Jordan with respect to oil that Vitol had purchased through Machinoimport, a Russian company. 313 310 Vitol, “Organization and structure,” http://www.vitol.com/general/organisation.php; Robin D’Alessandro interview (Oct. 10, 2005); Committee oil company table, contract nos. M/04/08, M/05/36, M/06/40, M/07/30, M/08/34, M/09/97, M/10/78, M/13/74; Committee oil company table, contract no. M/09/97 (showing that surcharges in the amount of $545,801 were assessed and paid); Fransabank record, SOMO account, credit advices (June 23, 2001) (showing transfer of $250,217.00 from Peakville Limited’s account at HSBC Hong Kong), (Aug. 31, 2001) (showing transfers of $108,000.00 and $187,583.70 from Peakville Limited’s account at HSBC Hong Kong). 311 Vitol Asia record, Vitol Asia and Mastek purchase/sale agreement (Dec. 2, 1999) (regarding the purchase of Iraqi crude oil under Phase VII) (hereinafter “Vitol and Mastek Phase VII agreement”); Committee oil financier and company tables, contract no. M/09/18 (showing that Vitol lifted over 33 million barrels of oil through Mastek in Phase IX and that surcharges over $10 million were assessed); Faek Ahmad Shareef interviews (Aug. 15-18, 2005). 312 Faek Ahmad Shareef interviews (Aug. 15-18, 2005); Jaya Sudhir interview (Aug. 19, 2005); Vitol Asia Pte Ltd, Mastek Sdn Bhd, Keppel Oil International Ltd Inc., and Jaya Sudhir settlement agreement (Feb. 26, 2002) (hereinafter “Vitol and Mastek settlement agreement”); Robin D’Alessandro interview (Oct. 10, 2005); Kho Hui Meng interview (Aug. 19, 2005). Mr. Hui Meng is president of Vitol Asia. Ibid. 313 Committee oil financier, company, and surcharge tables, contract no. M/11/17 (contracting with Machinoimport); Jordan National Bank record, SOMO account, credit advice (Jan. 17, 2002) (translated from Arabic) and SWIFT message (Jan. 15, 2002). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 157 OF 623
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report on programme manipulation - Independent Inquiry Committee

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