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
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).
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