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
2. The Transportation of the Embassy Payments to Iraq
Cash payments were stored by the commercial counselor in the safe in his office at the Embassy.
The cash, along with copies of relevant receipts, was transported periodically in red canvas
diplomatic bags from Moscow to Baghdad by the diplomatic staff of the Iraqi Embassy. The time
and amount of transported cash was decided by the ambassador. Diplomatic bags, which could
hold up to $1.5 million in $100 bills, were used to transport the money when a sufficient amount
accumulated at the Embassy. All diplomatic bags were numbered and sealed with wax.
Nevertheless, Embassy staff transporting the cash were often aware of the contents of the bag,
since the Embassy was rather small and the employees exchanged information. Because the cash
was transported in diplomatic pouches and Embassy staff exercised diplomatic immunity, the
pouches were not searched at the Moscow airport by Russian customs authorities. 57
The cash was transported on airplanes chartered by A.V.M. Air (“AVM”), a company that had
regular flights between Moscow and Baghdad. Adel Al-Dzhilaui, the President of AVM,
confirmed that Iraqi officials and diplomats flew to and from Baghdad on AVM’s flights. Mr.
Al-Dzhilaui, as well as Vladimir Malyugin, an AVM pilot who flew regularly to and from
Baghdad, denied any knowledge of cash being transported by Iraqi diplomats. Mr. Al-Dzhilaui
and Mr. Malyugin also denied seeing any diplomatic bags on the flights. 58
According to Iraqi officials and Ministry of Oil records, Mr. Al-Dzhilaui solicited and received
oil allocations during the Programme. Five million barrels of oil were allocated in Mr. Al-
Dzhilaui’s name. Of this allocation, two million barrels were lifted through Pitkin Limited, a
Cyprus-based company. The Committee has obtained a copy of a letter from Mr. Al-Dzhilaui to
the Iraqi Minister of Oil, in which Mr. Al-Dzhilaui requested an oil allocation, expressing
“sincere thankfulness for Your [Amer Rashid’s] kind attention and cooperation in the issue
connected with crude oil allocation to our Company by the Iraqi Government.” When
interviewed by the Committee, Mr. Al-Dzhilaui denied soliciting or receiving oil allocations from
the Government of Iraq. When presented with a copy of his letter to the Iraqi Minister of Oil, Mr.
Al-Dzhilaui denied the authenticity of his signature. 59
a result, no relevant records regarding Zangas’s participation in the Programme could be located.
According to a Zangas representative, the company’s activities in the Programme were kept strictly under
the control of former top management of the company. Zangas representative interview (Aug. 24, 2005).
57 Iraq officials interviews. One of the officials of the Government of Iraq informed the Committee that he
once personally transported $2 million in cash to Baghdad, pursuant to instructions of Ambassador Abbas
Qunfuz. Iraq official interview.
58 Iraq officials interviews; Adel Al-Dzhilaui and Vladimir Malygin interviews (Nov. 22, 2004 and Mar. 5,
2005).
59 Iraq officials interviews; Committee oil beneficiary table, contract no. M/11/121; Adel Al-Dzhilaui and
Vladimir Malygin interviews (Nov. 22, 2004 and Mar. 5, 2005); Ministry of Oil record, Amer Rashid letter
to Taha Yassin Ramadan (Apr. 12, 2002) (translated from Arabic) (discussing Mr. Al-Dzhilaui’s oil
allocation); Ministry of Oil record, Adel Al-Dzhilaui letter to Amer Rashid (Apr. 29, 2002) (translated from
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