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
VII. TRAFIGURA, IBEX AND THE ESSEX TOP-OFFS
In September 2001, a sea captain of an oil tanker wrote to a United Nations oil overseer to warn
of a smuggling scheme involving his ship. The captain alleged that his tanker—the Essex—had
been “topped off” on two separate occasions with more oil than authorized under the Programme
while loading at Mina al-Bakr in May and August 2001. To support his claim, the captain
furnished copies of duplicate bills of lading substantiating the fact that excess oil had been loaded
beyond what was authorized under the Programme. 355
In both instances, 1.8 million barrels of Basrah light crude oil were officially contracted and
approved for loading under the Programme. But each time these UN-approved quantities were
loaded, more than 200,000 barrels were added. The addition of oil cargo beyond the UNapproved
oil contract was forbidden without the prior notice and approval of the United Nations
oil overseers. 356
As set forth below, the parties complicit in this top-off scheme were: (1) Ibex Energy/Multi-
Prestation S.A.R.L. (“Ibex”)—a French oil services company that contracted for the purchase of
oil from Iraq; (2) Trafigura Beheer B.V. and its London branch, Trafigura Limited (collectively
“Trafigura”)—a large oil and commodities trader that agreed to purchase the oil to be loaded onto
the Essex; (3) the Government of Iraq; and (4) Armando Carlos Oliveira—Saybolt’s lead
inspector at the Mina al-Bakr offshore oil platform.
The smuggled oil was bought through a complex financial scheme involving Ibex Energy and
Trafigura. Both companies used off-shore companies in an effort to disguise the payments
between them. The Government of Iraq earned nearly €9.4 million on the two smuggled loads of
oil. 357
A. TRAFIGURA AND IBEX ENERGY–THE OIL TOP-OFF SCHEME
Trafigura was among the first contractors under the Programme and directly purchased over 31
million barrels of oil from Iraq. This trade was facilitated in large part by Rui Cabeçadas de
Sousa, an independent businessman in the oil industry, who arranged for meetings between the
355 Theofanis Chiladakis letter to Morten Buur-Jensen (Sept. 21, 2001). Annexed to this written statement,
Captain Chiladakis provided copies of four bills of lading—two for a lifting on May 16, 2001, and two for
a lifting on August 27, 2001; see also Shamkhi H. Faraj <strong>report</strong> to Minister of Oil, “Allocations and Sales of
Crude Oil in the phases of the Memorandum of Understanding 1996-2003,” app. 7 (Feb. 19, 2004)
(translated from Arabic) (summary by SOMO officials of Iraq’s oil allocation and sales practices during the
Programme and describing the Essex “top off” scheme) (hereinafter “SOMO Summary Report”).
356 Theofanis Chiladakis letter to Morten Buur-Jensen (Sept. 21, 2001).
357 Banque Audi record, Windmill Trade Ltd (hereinafter “Windmill”) account, statement (June 30 to Oct.
31, 2001) (June 30 to Oct. 31, 2001); Banque Saradar record, Windmill account, statement (June 30 to Oct.
31, 2001) (June 30 to Oct. 31, 2001); SOMO Summary Report.
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