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. Background According to Iraqi officials, Mr. Wyatt was the exception to the general ban on selling oil to American companies after Phase III because of his “history with Iraq” and excellent relations with SOMO. Through his Houston-based company, Coastal Petroleum, Mr. Wyatt had been a buyer of Iraqi oil since the industry was nationalized in Iraq. He was the first to bring Iraqi oil to America in approximately 1972. In 1990, Mr. Wyatt used his connections to meet with Saddam Hussein and intervene on behalf of American hostages being held in Iraq. Together with former Texas governor, John B. Connally, Mr. Wyatt was involved in arranging for 21 hostages to be flown out of Baghdad after their release. Mr. Wyatt also maintained a supportive relationship with the Iraqi missions in the United States, donating furniture to the Iraqi Mission in New York and a car to the Iraqi Embassy in Washington. He also had a close relationship with Nizar Hamdoon, Iraq’s former Permanent Representative to the United Nations. When Mr. Hamdoon developed cancer, Mr. Wyatt guaranteed and paid some of his medical bills during hospital treatments in New York. 345 2. Oil Allocations, Contracts, and Surcharges In Phase I, Mr. Wyatt was the first customer to contract for the purchase of Iraqi crude oil under the Programme. During the initial eight phases, Coastal Petroleum signed contracts to purchase almost 50 million barrels of Iraqi crude oil. According to Iraqi officials and Ministry of Oil records, the allocations were granted in the name of his company, Coastal Petroleum, and Mr. Wyatt handled the contractual arrangements in Baghdad. After the mandatory imposition of surcharges in Phase IX, Mr. Wyatt stopped using Coastal Petroleum to purchase oil under the Programme. An Iraqi official stated that, when asked directly at the end of 2000 if he would be willing to pay surcharges, Mr. Wyatt initially responded that he had to think about it. Several Iraqi officials stated that, soon after surcharges were imposed, Mr. Wyatt agreed that he would continue to purchase Iraqi crude oil and pay the surcharges. 346 345 Maurice Lorenz interview (Sept. 15, 2004); Amer Rashid interview (Oct. 29, 2004); Iraq officials interviews; The Handbook of Texas Online, “Coastal Corporation,” http://www.tsha.utexas.edu/handbook/ online/articles/CC/doc5_print.html (recounting the development of Coastal Corporation); Augusto Giangrandi interview (July 24, 2005); Oscar Wyatt letter to Thomas Fehey (Jan. 31, 2003); Memorial Sloan-Kettering Cancer Center record, credit card payment authorization form (Mar. 6, 2003) (signed by Mr. Wyatt), sales receipt and credit card slip (Mar. 13, 2003) (noting a payment of $44,705); American Express record, Oscar Wyatt account, credit card statement (Feb. 25 and Mar. 27, 2003); Memorial Sloan- Kettering Cancer Center record, Nizar Hamdoon account, receipts (Apr. 12 and May 5, 2000). Mr. Wyatt was still deemed responsible for Mr. Hamdoon’s bills by the hospital as late as April 2005. Memorial Sloan-Kettering Cancer Center record, Nizar Hamdoon account, invoice (May 4, 2005). 346 Committee oil company table, contract nos. M/01/01, M/02/01, M/03/12, M/04/28, M/05/29, M/06/27, M/07/18, M/08/72; Iraq officials interviews; Amer Rashid interview (Oct. 29, 2004); Michel Tellings interview (Oct. 14, 2004). The last contract executed on behalf of Coastal Petroleum was SOMO sales contract M/08/72 (June 26, 2000). Committee oil company table, contract no. M/08/72. REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 172 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS According to Ministry of Oil records, when Phase IX began, Mr. Wyatt received an initial allocation of 4.5 million barrels following a meeting with Oil Minister Rashid in January 2001. Subsequently, Mr. Wyatt’s allocation was increased to a total of 12 million barrels in that phase alone. During the surcharge phases, over 24 million barrels of oil allocated to Mr. Wyatt were purchased. Bayoil financed two contracts of oil allocated to Mr. Wyatt. 347 Beginning in Phase IX, there were two major changes in the manner in which Mr. Wyatt received allocations and purchased Iraqi oil. First, Mr. Wyatt’s allocations were no longer granted in the name of Coastal Petroleum, but instead were designated as personal allocations under his own name. Also, the oil was purchased not by Coastal Petroleum, but by two new companies, Nafta Petroleum and Mednafta Trading Co. Both companies were incorporated in Cyprus shortly after the surcharges were imposed. Nafta Petroleum was incorporated in January 2001, and Mednafta Trading Co. in March 2001. 348 Neither company contracted to purchase Iraqi oil other than that allocated to Mr. Wyatt during the surcharge phases. Ministry of Oil records show that Mr. Wyatt’s name appears next to Nafta Petroleum and Mednafta Trading Co. on SOMO allocation tables. Other ministry records reflect that the oil purchased by Nafta Petroleum and Mednafta Trading Co. was “for the benefit of Mr. Oscar Wyatt” or was “Mr. Oscar Wyatt’s share.” Ministry of Oil records indicate that, when Mr. Wyatt initially changed companies from Coastal Petroleum to Nafta Petroleum, his oil allocations were designated under “Cyprus,” but subsequently were designated under “America.” 349 347 Committee oil company and beneficiary tables, contract nos. M/09/28, M/10/13, M/11/55; Committee oil financier table, contract nos. M/09/28, M/10/13; SOMO letters to Amer Rashid (Jan. 21, 2001) (approving contract no. M/09/28 for 4.5 million barrels of oil for “Nafta Petroleum” and referring to the approval being granted during “Mr. Oscar Wyatt’s visit”), (May 28, 2001) (approving contract M/09/28 for an increased quantity of 12 million barrels of oil for “Nafta Petroleum (Oscar Wyatt)”), (July 14, 2001) (approving contract M/10/15 for 10 million barrels of oil for “Nafta Petroleum (to the benefit of Mr. Oscar Wyatt)”). Approximately 1.98 million barrels from contract M/09/28 (lifted Jan. 27, 2001) and 2.08 million barrels from contract M/10/15 (lifted Oct. 2, 2001) were lifted and financed by Bayoil. Catalina Miguel letter to oil overseers (June 19, 2001); Bayoil letter to Mednafta Trading Co. (Sept. 16, 2001); David Chalmers fax to Oscar Wyatt and Catalina Miguel (Sept. 27, 2001); Bayoil record, transaction detail by account (Jan. 1995 to Dec. 2003). 348 Nafta Petroleum fax to oil overseers (July 29, 2001); Confidential document; Nafta Petroleum record, Board of Directors meeting minutes (Jan. 22, 2001); Mednafta Trading Co. record, Certificate of Incorporation (Mar. 9, 2001). 349 SOMO letters to Amer Rashid (Jan. 21, 2001) (approving contract M/09/28 for 4.5 million barrels of oil for “Nafta Petroleum” and referring to the approval being granted during “Mr. Oscar Wyatt’s visit”), (May 28, 2001) (approving contract M/09/28 for an increased quantity of 12 million barrels of oil for “Nafta Petroleum (Oscar Wyatt)”), (July 14, 2001) (approving contract M/10/15 for 10 million barrels of oil for “Nafta Petroleum (to the benefit of Mr. Oscar Wyatt)”), (Feb. 5, 2002) (approving contract M/11/55 for 4 million barrels of oil (later increased to 8.1 million) for “Mednafta (Mr. Oscar Wyatt’s share)”); SOMO categorization of companies table (Phase IX) (May 20, 2001) (indicating an allocation of 10.3 million barrels of oil (later increased to 12 million) for “Nafta Petroleum/Oscar Wyatt” under “Cyprus”); SOMO oil allocation tables for Phase X (Aug. 4, 2001) (indicating an allocation of 10 million barrels of oil for “Oscar/America”), Phase XI (Dec. 1, 2001) (indicating an allocation of 8.1 million barrels of oil for REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 173 OF 623
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