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 D. UNITED NATIONS RESPONSE TO THE ESSEX TOP-OFF ALLEGATIONS As discussed above, on October 9, 2001, United Nations oil overseer Morten Buur-Jensen received a written statement with attached documents from Captain Chiladakis. In his statement, Captain Chiladakis alleged that the Essex twice loaded crude oil at Mina al-Bakr outside of the Programme–once in May and a second time in August 2001. Captain Chiladakis also annexed numerous documents to his statement, including two sets of bills of lading for the Essex loadings. In addition, Captain Chiladakis provided two TQOB forms, which contained handwritten data identifying the sum of both the UN-approved and illegal top-off parcels of oil. Both the May 16, 2001 and the August 27, 2001 TQOB forms were signed by Mr. Manoussakis, and the loading master for the Iraqi South Oil Company at Mina al-Bakr. 379 Mr. Buur-Jensen quickly shared this information with the other oil overseers, Benon Sevan and Stephani Scheer of OIP, and Peter Boks at Saybolt. Mr. Boks responded within hours and assured OIP that the matter would be investigated thoroughly. The following day, the oil overseers provided Captain Chiladakis’s letter and attachments to Mr. Boks, and Saybolt initiated its own investigation of the matter. 380 Although the Essex allegations were immediately shared with the oil overseers, OIP, and Saybolt, nearly two weeks passed before the 661 Committee was notified. Mr. Sevan delayed informing the 661 Committee until the Government of Iraq had been given an opportunity to respond to the allegations. On October 19, 2001, Mr. Sevan presented Captain Chiladakis’s allegations to the Iraqi Ambassador to the United Nations, Mohammed Al-Douri, and requested an urgent response. In his October 22, 2001 response, Ambassador Al-Douri stated that SOMO had looked into the matter and found no information that corroborated Captain Chiladakis’s allegations. The next day, with news of the matter beginning to circulate, the Permanent Mission of the Kingdom of the Netherlands to the United Nations requested OIP to provide information regarding the Essex. 379 Theofanis Chiladakis died in 2002, therefore the Committee was not able to interview him. Manolis Manoussakis interview (May 12, 2005); Theofanis Chiladakis letter to Morten Buur-Jensen (Sept. 21, 2001). The Financial Times <strong>report</strong>ed that Captain Chiladakis walked into the United States Embassy in Athens on September 21, 2001, completed his letter there and provided it to United States Embassy officials. Carola Hoyos, “Oil smugglers keep cash flowing back to Saddam,” Financial Times, Jan. 17, 2002, p. 9. 380 Morten Buur-Jensen e-mail to Benon Sevan (Oct. 9, 2001); Peter Boks email to Benon Sevan (Oct. 9, 2001); Oil overseers letter to Peter Boks (Oct. 10, 2001). On October 17, 2001, Saybolt completed its investigative <strong>report</strong> on the Essex top-off loadings. Saybolt’s investigative findings on the matter relied in large measure upon the statements and denials of Armando Carlos Costa Oliveira. “Report on alleged loadings of Crude Oil from Mina al-Bakr outside the United Nations Oil for Food Program,” (Oct. 17, 2001) (hereinafter “Saybolt Essex Report”); Peter Boks interview (Oct. 6, 2004); Armando Carlos Oliveira interview (May 14, 2005). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 186 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS Rather than conducting an independent investigation of the matter, OIP simply adopted Saybolt’s investigative findings which found no improper conduct by Mr. Oliveira. 381 In a letter dated October 24, 2001, Mr. Sevan formally referred Captain Chiladakis’s allegations regarding the Essex to the 661 Committee Chairman. Distribution to the members of the Security Council occurred that same day. This matter was discussed at the next three 661 Committee meetings. At the November 6, 2001 meeting, Mr. Sevan invited Mr. Boks to present Saybolt’s investigative findings to the 661 Committee. He also updated the 661 Committee on Trafigura’s efforts to resolve this matter and acquire authorization from the Dutch authorities to sell the nowtainted oil. 382 During a 661 Committee meeting two days later, Mr. Sevan noted that he would be working constantly with Saybolt during the coming weeks and would <strong>report</strong> back to the Committee. Further discussion focused on Trafigura’s payment to the escrow account for the top-offs and referring the matter for investigation to each of the member states affected by the situation: the Netherlands, France, the United States, the United Kingdom, the Bahamas, and Venezuela. Although significant investigations were initiated in the Netherlands, the United Kingdom, the United States, and France by Customs and financial prosecutorial authorities, no charges were ever brought against any of the companies or individuals involved in the Essex top-offs. Investigations in the Netherlands and the United States remain active while the United Kingdom and France investigations have since been closed. 383 381 Morten Buur-Jensen e-mail to Benon Sevan (Oct. 9, 2001); Benon Sevan letter to 661 Committee Chairman, S/AC.25/2001/COMM.474 (Oct. 24, 2001); Benon Sevan e-mail to Oil overseers (Oct. 24, 2001) (copied to Stephani Scheer); Benon Sevan letter to Mohammed Al-Douri (Oct. 19, 2001); Mohammed Al-Douri letter to Benon Sevan (Oct. 22, 2001); Netherlands Mission letter to OIP (Oct. 23, 2001). By the time the 661 Committee was notified, Saybolt had investigated the matter and already provided its results to OIP. Saybolt and Mr. Oliveira denied any knowledge of the top-offs. Saybolt Essex Report. On October 30, 2001, Mr. Sevan informed Bruce Rashkow, Director of the General Legal Division of the Office of Legal Affairs that he had requested that Saybolt investigate the matter, and to appear before the 661 Committee on November 6, 2001. The following day, Mr. Rashkow warned Mr. Sevan: “[A]s we previously indicated, it is incumbent on the Organization to investigate this matter, including the actions of Saybolt.” Benon Sevan e-mail to Bruce Rashkow (Oct. 30, 2001); Bruce Rashkow note to Benon Sevan (Oct. 31, 2001). 382 Benon Sevan letter to Mohammed Al-Douri (Oct. 19, 2001); Mohammed Al-Douri letter to Benon Sevan (Oct. 22, 2001); Benon Sevan letter to 661 Committee Chairman, S/AC.25/2001/COMM.474 (Oct. 24, 2001); Benon Sevan note to Joseph Stephanides (Oct. 24, 2001); Provisional record of 661 Committee meeting, S/AC.25/SR.225 (Nov. 6, 2001); Provisional record of 661 Committee meeting, S/AC.25/SR.226 (Nov. 8, 2001); Provisional record of 661 Committee meeting, S/AC.25/SR.227 (Dec. 3, 2001). 383 Provisional record of 661 Committee meeting, S/AC.25/SR.226 (Nov. 8, 2001); 661 Committee Chairman letters to the permanent representatives of the Netherlands, France, the United States, the United Kingdom, the Bahamas, and Venezuela (Nov. 20 and 23, 2001) (requesting official investigations into the actions of those companies from their respective states who were involved in the oil lifted by the Essex). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 187 OF 623
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