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 1. Vitol’s Direct Contracts with SOMO In the initial three phases, Vitol purchased Iraqi oil only through other contracting companies. Beginning in Phase IV, Vitol signed the first of eight SOMO contracts that had been obtained with the assistance of Mr. Boidevaix. The contracts resulted in the purchase of almost 30 million barrels of oil and were signed by Mr. Boidevaix as President of “Vitol – France for and on behalf of Vitol S.A. Geneva – Switzerland.” No company called “Vitol France” existed. Vitol used the name simply to give it a “French angle” with SOMO. For his services, Mr. Boidevaix received a fee of $30,000 per phase and a premium of $0.01 per barrel, which was later raised to $0.03 per barrel, for any barrels that Vitol lifted over the first three million barrels. 314 Surcharges were levied on the oil contracts executed by Vitol and Mr. Boidevaix in Phases IX and X. Vitol was aware that SOMO had imposed surcharges by Phase IX. At an OPEC conference in 2001, a SOMO official advised Mr. Boidevaix that Vitol had to pay surcharges if the company wanted any further oil contracts. Mr. Boidevaix discussed the matter with Robin D’Alessandro, the main Vitol trader for Iraqi crude oil, who in turn raised the issue with the management team in charge of crude oil at Vitol. Both Mr. Boidevaix and Ms. D’Alessandro stated that they agreed that no surcharges would be paid. However, after the OPEC conference, SOMO wrote a letter to the Minister of Oil seeking approval for Vitol’s contract in Phase IX, and explicitly referenced that, under the contract, surcharges were due within 30 days of the lift. In the letter, the SOMO official wrote that the Minister of Oil— based on his meeting with Mr. Boidevaix during the OPEC conference—previously had approved giving this contract to Vitol. As demanded by SOMO, a surcharge payment on contract M/09/97 was made 23 days after Vitol lifted the oil. 315 314 Robin D’Alessandro interview (Oct. 10, 2005) (indicating that, from Phases I through III, Vitol purchased from a number of companies including Total and Bayoil); Robin D’Alessandro fax to Oil overseers (Jan. 26, 1998) (indicating that Vitol was working with Sidanco regarding the purchase of 7.2 million barrels of oil); SOMO sales contract, no. M/04/08 (June 4, 1998); Vitol S.A. record, Vitol S.A. and S.B. Consultant consultancy agreement (Apr. 27, 1998); Committee oil company table, contract nos. M/04/08 (6,068,630 barrels lifted), M/05/36 (3,521,487 barrels lifted), M/06/40 (4,967,270 barrels lifted), M/07/30 (1,555,894 barrels lifted), M/08/34 (1,521,065 barrels lifted), M/09/97 (1,986,148 barrels lifted), M/10/78 (966,440 barrels lifted), M/13/74 (8,939,152 barrels lifted). A SOMO official has confirmed that SOMO would not have sold oil to Vitol as a Swiss company. Saddam Z. Hassan interview (Mar. 9, 2005). 315 Committee oil company table, contract nos. M/09/97 (showing that surcharges in the amount of $545,801 were levied and paid), M/10/78 (showing that surcharges in the amount of $241,610 were levied and paid); Serge Boidevaix interview (Oct. 4, 2005); Robin D’Alessandro interview (Oct. 10, 2005); SOMO letter to Amer Rashid (Apr. 5, 2001)(approving contract M/09/97 for two million barrels of oil for Vitol) (translated from Arabic); SOMO bill of lading, bbl/3123 (May 31, 2001) (relating to contract M/09/97 and indicating that Vitol’s first lift under contract M/09/97 occurred on May 31, 2001); Fransabank record, SOMO account, credit advice (June 23, 2001) (showing the transfer of $250,217.00 from Peakville Limited’s account at HSBC Hong Kong on June 23, 2001). SOMO records refer to a minimal shortfall of $622 in the surcharge paid on contract M/10/78. These surcharge payments amounted to a $0.27 per barrel surcharge on Vitol’s Phase IX contract and a $0.25 per barrel surcharge on Vitol’s Phase X contract. Committee oil company table, contract nos. M/09/97, M/10/78. REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 158 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS An entity named Peakville Limited was used to pay a total of $545,801 in surcharges on Vitol contract M/09/97. Ministry of Oil and bank records show that this amount was transferred through three wires from the account of Peakville Limited at HSBC Bank Hong Kong to a SOMO bank account at Fransabank. 316 Table 5 - Surcharges Paid by Peakville Limited on Vitol’s Phase IX Contract Source of Payment Contract Payment Date Wire Amount Recipient of Payment Peakville Limited Account at HSBC Hong Kong Peakville Limited Account at HSBC Hong Kong M/09/97 June 23, 2001 $250,217.25 SOMO Account at Fransabank Lebanon M/09/97 Aug. 31, 2001 $108,000.00 SOMO Account at Fransabank Lebanon Peakville Limited Account at HSBC Hong Kong M/09/97 Aug. 31, 2001 $187,583.70 SOMO Account at Fransabank Lebanon Total $545,800.95 The wire transfer documents do not identify Peakville Limited as being affiliated with Vitol. However, the Committee has obtained records for a number of other wire transfers that are not related to the Programme, but that originate from Peakville Limited. Some of these wire transfer records show the following information for Peakville Limited: “Peakville Limited c/o Mr. R. Favre – Vitol SA, Rue des Bains 33, PO Box 162.” 317 Roland Favre is one of Vitol’s financial directors with signatory authority on a number of Vitol commercial bank accounts around the world; indeed, Mr. Favre signed Vitol’s consultancy agreement with Mr. Boidevaix. The address referenced in the wires was Vitol’s address in Geneva at the time. When asked about these wire transfers, Ms. D’Alessandro stated that she had no knowledge of Peakville Limited or of its association with Vitol. 318 316 Committee oil company table, contract no. M/09/97 (showing that surcharges in the amount of $545,801 were paid); Fransabank record, SOMO account, credit advices (June 23, 2001) (showing transfer of $250,217.25 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). 317 Peakville Limited wire transfers through HSBC Hong Kong correspondent account at HSBC New York (Aug. 27, 2002; July 23 and Aug. 25, 2003); Crédit Lyonnais (Suisse) S.A. record, Vitol S.A. account, opening documentation (Sept. 28, 2000) (showing Mr. Favre as having individual signing authority over the account and Vitol S.A.’s address as “Rue des Bains 33, P.O. Box 162, 1211, Geneva”). 318 UEB record, Vitol Bahrain E.C. account, opening documentation (Aug. 17, 2004) (showing Mr. Favre as a director of Vitol with individual signing authority over the account); Crédit Lyonnais (Suisse) S.A. record, Vitol Bahrain E.C. account opening documentation (Jan. 12, 1994) (showing Mr. Favre as having individual signing authority over the account); Crédit Lyonnais (Suisse) S.A. record, Vitol S.A. account, REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 159 OF 623
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