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 The oil allocated to Mr. Shareef in Phases V and VI was lifted by Tradeyear Sdn Bhd (“Tradeyear”), a Malaysian company. Mr. Shareef was unhappy with the commissions he was receiving from Tradeyear, and he decided along with his business partner and former sister-inlaw, Noorasiah Mahmood, to revive Mastek, a long-dormant Malaysian company, for the purpose of obtaining Iraqi oil contracts. Mr. Shareef and Ms. Mahmood were joined at Mastek by Mr. Sudhir, a Malaysian businessman who had dealt previously with Vitol. 325 Mastek received oil contracts from SOMO in Phases VII through IX, and Vitol financed and lifted the oil received under these contracts. Within Mastek, Mr. Shareef handled the company’s relations with SOMO and Iraq, and he often stayed in Amman or Baghdad. Mr. Sudhir managed Mastek’s business arrangements with Vitol. After receiving 2.5 million barrels in Phase VII and five million barrels in Phase VIII, Mastek’s oil allocation increased dramatically in Phase IX as it received over 39.5 million barrels of oil—the single largest allocation of oil during the Programme. Vitol and bank records indicate that Vitol financed and lifted at least 33 million barrels of oil obtained by Mastek during Phase IX, making Vitol one of the major purchasers of Iraqi crude oil during the Phase IX exporting crisis. 326 interview (Aug. 17, 2005); Amer Rashid interview (Aug. 21, 2005) (indicating that Mr. Shareef was said to have some connection to Mr. Badawi); Iraq officials interviews; Faek Ahmad Shareef interviews (Aug. 15- 18, 2005) (indicating that he brought delegations to Iraq from various countries and that Iraqis knew that he was married to the sister-in-law of Mr. Badawi); Jaya Sudhir interview (Aug. 19, 2005) (indicating that Mr. Shareef had leveraged his connection to Mr. Badawi). Mr. Shareef was married to the sister-in-law of Mr. Badawi. Faek Ahmad Shareef record, Faek Ahmad Shareef biographical data (undated). A review of Iraqi documents confirms that Iraqi officials associated Mr. Shareef with Mr. Badawi as references to Mr. Shareef’s oil allocations in SOMO documents appear in some instances as “Mr. Faek Ahmad Shareef / for the benefit of Abdullah.” SOMO oil allocation table for Phase VII (Dec. 17, 1999) (special requests) (translated from Arabic); SOMO letter to Amer Rashid (Dec. 23, 1999) (approving contract M/07/59 for Mastek) (translated from Arabic); SOMO oil allocation table for Phase VIII (June 14, 2000) (translated from Arabic); see also Abdullah Haji Ahmad Badawi letter to Taha Yassin Ramadan (Nov. 13, 2001) (recommending a delegation headed by Mr. Shareef and Noor Asiah Mahmood). The Committee has not found any evidence that Mr. Badawi has received any benefit from the oil allocations traded by Mastek, and Mr. Shareef and the other Mastek shareholders have denied that Mr. Badawi received any benefit from the oil traded. Jaya Sudhir interview (Aug. 19, 2005); Faek Ahmad Shareef interviews (Aug. 15-18, 2005). When asked about the letter sent by Mr. Badawi to Mr. Ramadan recommending the delegation headed by Mr. Shareef, Mr. Shareef indicated that Mr. Badawi had issued the letter as a way to support the Malaysian private sector and had done so for other Malaysian companies as well. Faek Ahmad Shareef interviews (Aug. 15-18, 2005). 325 Faek Ahmad Shareef interviews (Aug. 15-18, 2005); Jaya Sudhir interview (Aug. 19, 2005); Kho Hui Meng interview (Aug. 19, 2005); Farah Jaafar, “Bright Outlook for Mastek,” The New Straits Times, Jan. 24, 2000 (indicating that Mr. Shareef revived Mastek with the hope that it eventually would become an established oil trading company). 326 Committee oil company table, contract nos. M/07/59, M/08/60, M/09/18; Committee oil financier table, contract nos. M/08/60, M/09/18; Vitol and Mastek Phase VII agreement; Faek Ahmad Shareef interviews (Aug. 15-18, 2005) (indicating that it was “Vitol, all Vitol” when it came to lifting the oil for Mastek); Jaya Sudhir interview (Aug. 19, 2005); SOMO letters to Amer Rashid (Jan. 11, 2001) (approving contract REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 162 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS Mastek obtained a high volume of oil in Phase IX because it agreed to pay the surcharges imposed by Iraq. According to Mr. Shareef, the Iraqi Minister of Oil, Amer Rashid, called him to a meeting in December 2000, at the beginning of Phase IX. During the meeting, Mr. Rashid told Mr. Shareef about the difficulty Iraq was experiencing with its oil exports, and he asked Mr. Shareef to perform his “national duty for Iraq” and help keep Iraqi crude oil flowing. Mr. Shareef admitted that Mr. Rashid also told him that Mastek would need to make some payments directly to Iraq to obtain the oil. Mr. Shareef recalled that, after his meeting with Mr. Rashid, Ali Hassan Rajab, a senior SOMO official, had a phone conversation with Mastek’s other shareholders, Mr. Sudhir and Ms. Mahmood, in which SOMO raised the issue of surcharges. After these conversations, Mr. Shareef wrote a note on December 24, 2000 to his partners, Mr. Sudhir and Ms. Mahmood (usually referred to as “Nonni”), reiterating that Mastek had to pay the surcharges in order to have the crude oil lifted. He also informed them that he had guaranteed payment of the surcharges on the oil loaded on the vessel Moscliff. The vessel was scheduled to load oil under Mastek contract M/08/60. On the same day that Mr. Shareef gave his guarantee, SOMO allowed the vessel Moscliff to lift the oil. The Committee has obtained a copy of the note that Mr. Shareef sent to his partners. 327 M/09/18 for six million barrels of oil for Mastek), (Jan. 31, 2001) (increasing contract M/09/18 by seven million barrels of oil), (Mar. 25, 2001) (stating that Mastek’s new amount of oil under contract M/09/18 is 37 million barrels), (May 5, 2001) (increasing contract M/09/18 by 2.5 million barrels) (each translated from Arabic). Vitol also purchased Iraqi oil in Phase IX through other companies. Committee oil financier table, contract nos. M/09/54 (Masefield AG), M/09/66 (Seta Insaat Petrol ve Petrol Urunleri), M/09/70 (Al- Rasheed International Cooperation), M/09/78 (Oil & Gas Services Group Ltd.), M/09/80 (Kampac Oil Ltd.), M/09/89 (Oil & Gas Services Group Ltd.), M/09/106 (Unifuel LLC), M/09/116 (International Petroleum and Industrial Services), M/09/119 (Machinoimport). 327 Faek Ahmad Shareef interviews (Aug. 15-18, 2005) (recalling that his meeting with Mr. Rashid occurred during the month of Ramadan in 2000); Jaya Sudhir interview (Aug. 19, 2005) (confirming that Iraqi officials were putting pressure on Mr. Shareef to arrange for the oil lift as soon as possible); SOMO bill of lading, bbl/3029 (Dec. 24, 2000) (relating to the Moscliff vessel). In 2000, the month of Ramadan began on November 27. Encyclopedia of the Orient, “Ramadan,” http://i-cias.com/e.o/ramadan.htm. REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 163 OF 623
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report on programme manipulation - Independent Inquiry Committee

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