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
the first lift in December 2000, he was under constant pressure from the Iraqis to pay the
surcharges. Between January and April 2001, Mr. Shareef paid approximately $3.2 million in
cash into SOMO’s account at Jordan National Bank. Mr. Shareef received the money to pay
these surcharges from Mr. Sudhir, who either would deliver the money to Mr. Shareef in cash or
wire transfer it to one of Mr. Shareef’s accounts in Jordan. According to Mr. Shareef, it was his
understanding that Vitol would pay Mastek sufficiently high premiums to cover payment of the
surcharges. In a fax sent on February 26, 2001 from Iraq, Mr. Shareef wrote to Ms. Mahmood
and Mr. Sudhir that “we must clear SOMO’s A/C as soon as possible – get the money from Vitol
fast.” Mr. Shareef was referring to the practice of paying outstanding surcharges to SOMO
within 30 days of a previous lifting so that future oil liftings were not delayed. With respect to
the first surcharge payment on the Mastek contract in Phase IX, Mr. Sudhir confirmed that Vitol
paid money as a commission to Mastek, and Mastek used the money to pay the surcharge owed
on the contract. 329
According to Mr. Shareef, beginning in April 2001, the money to pay the surcharges was not
consistently forthcoming from Mr. Sudhir, and he began to worry about his safety because Iraqi
officials were harassing him to pay outstanding surcharges. Mr. Shareef wrote a letter dated
April 17, 2001 to SOMO, requesting that it prohibit oil lifts scheduled for April and May 2001
under the Mastek contract until “all payments have taken place.” Bank records show that, shortly
thereafter, surcharge payments resumed through Keppel Oil. Keppel Oil was a “shelf-company”
that Mr. Sudhir formed to avoid currency restrictions imposed in Malaysia. The company was
used to transfer €2.3 million to a SOMO account for the payment of surcharges between April
and July 2001. 330
amount of $20,000), (May 8, 2001) (cash payment by “Abu-Faras” in the amount of $40,000), (May 8,
2001) (cash payment by “Abu-Faras” in the amount of $50,000), (May 8, 2001) (cash payment by “Abu-
Faras” in the amount of $50,000), (May 14, 2001) (wire transfer by “Keppel Oil” in the amount of
€199,950.22), (May 14, 2001) (showing cash payment by “Abu-Faras” in the amount of $20,000), (May
17, 2001) (cash payment by “Abu-Faras” in the amount of $40,000), (May 17, 2001) (wire transfer by
“Keppel Oil” in the amount of €299,960.22), (July 9, 2001) (wire transfer by “Keppel Oil” in the amount of
€269,948.50), (July 9, 2001) (wire transfer by “Keppel Oil” in the amount of €299,948.50), (July 16, 2001)
(wire transfer by “Keppel Oil” in the amount of €499,946.50), (July 18, 2001) (wire transfer by “Keppel
Oil” in the amount of €279,946.50), (Aug. 2, 2001) (wire transfer by “Keppel Oil” in the amount of
€199,946.50), (Aug. 6, 2001) (wire transfer by “Keppel Oil” in the amount of €1,999,859), (Aug. 29, 2001)
(wire transfer by “Keppel Oil” in the amount of €499,946.50), (Apr. 1, 2002) (wire transfer by “Cosmos
Capital Group” in the amount of €1,708,428.25) (each translated from Arabic). “Abu-Faras” is a reference
to Mr. Shareef, and Ahmed Younis is an assistant to Mr. Shareef. Faek Ahmad Shareef interviews (Aug.
15-18, 2005). Voeharm Holding Ltd. is a company used by Mr. Sudhir. Jaya Sudhir interview (Aug. 19,
2005).
329 Faek Ahmad Shareef interviews (Aug. 15-18, 2005); Jaya Sudhir record, Faek Ahmad Shareef fax to
Noor Asiah Mahmood and Jaya Sudhir (Feb. 26, 2001); Jaya Sudhir interview (Aug. 19, 2005).
330 SOMO letter to Amer Rashid (Apr. 24, 2001) (indicating that “Faek Shareef had sent them a letter
asking them to stop the remaining lifts scheduled for April and May until all payments have taken place”)
(translated from Arabic); Jordan National Bank record, SOMO account, credit advices (Apr. 30, 2001)
(wire transfer by “Keppel Oil” in the amount of €499,960.22), (May 14, 2001) (wire transfer by “Keppel
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