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
a. Zarubezhneft
Zarubezhneft, a state-owned Russian oil company established in 1967, was the single most active
oil contractor in the Programme. Between Phases I and XI, Zarubezhneft executed over 18 oil
contracts, purchasing about 168.4 million barrels of oil, which amounted to approximately 4.6
percent of total sales of Iraqi oil under the Programme. According to SOMO records, a total of
$8,701,631 was paid in surcharges on five contracts executed by Zarubezhneft. Most of the
surcharges—approximately $7,904,016—were paid through cash deliveries to the Iraqi Embassy
in Moscow. 62
The Committee has furnished Zarubezhneft with data on surcharges paid on its oil contracts. In
response, Zarubezhneft stated that this data had “no relation to the activities of the Company
during the Programme” and that its activities throughout the Programme were carried out in
“strict compliance with recommendations of the Ministry of Foreign Affairs of Russia and with
complete adherence to the requirements of the international sanctions regime.” 63
b. ACTEC
The eighth largest oil purchaser in the Programme was ACTEC, a Russian-based company
created around 1995. The exact scope of ACTEC’s business activity in Russia is unclear, but it
appears to have been established specifically for Programme-related business projects.
According to Iraqi Ministry of Oil records, from Phases V until XI, ACTEC executed contracts to
purchase about 71.9 million barrels of oil, which amounted to approximately 2.3 percent of total
sales of Iraqi oil under the Programme. ACTEC purchased the oil under allocations granted in
the names of the Communist Party of the Russian Federation and the Communist Party of
Slovakia. All but one of ACTEC’s oil contracts were signed by Vladimir Zair-Bek, the President
of the company. 64
Committee (Oct. 18, 2005); Alexandre Kramar interview (Mar. 5, 2005) (commenting in his capacity as a
representative of Zarubezhneft).
62 Zarubezhneft, “History,” http://www.nestro.ru/www/nestroweb.nsf/index/enpr_history_eng; Committee
oil company table, contract nos. M/01/15, M/02/05, M/02/34, M/03/14, M/03/50, M/04/01, M/05/12,
M/06/18, M/07/07, M/07/81, M/07/93, M/08/02, M/08/82, M/08/86, M/09/19, M/09/82, M/10/01,
M/11/115; Committee oil surcharge table, contract nos. M/08/02, M/08/82, M/09/82, M/10/01, M/11/115;
SOMO record, Iraq Embassy in Moscow payment receipts, nos. 6 (Apr. 27, 2001), 9 (May 18, 2001), 11
(May 29, 2001), 18 (June 28, 2001), 24 (Aug. 16, 2001), 35 (Sept. 17, 2001), 39 (Oct. 2, 2001), 86 (Feb.
26, 2002), 100 (Apr. 4, 2002), 107 (Apr. 24, 2002) (each translated from Arabic).
63 Committee letter to Russia Ministry of Foreign Affairs (Feb. 18, 2005); Zarubezhneft letter to Russia
Ministry of Foreign Affairs (Feb. 11, 2005) (translated from Russian) (provided to the Committee by the
Russian Ministry of Foreign Affairs); Alexandre Kramar interview (Mar. 5, 2005).
64 Committee oil company table, contract nos. M/05/63 (Feb. 11, 1999) (signed by Mr. Zair-Bek), M/06/55
(June 6, 1999) (signed by Mr. Zair-Bek), M/07/48 (Dec. 18, 1999) (signed by Mr. Zair-Bek), M/08/05
(June 21, 2000) (signed by ACTEC’s regional representative in Iraq), M/10/83 (Oct. 14, 2001) (signed by
Mr. Zair-Bek), M/11/39 (Dec. 22, 2001) (signed by Mr. Zair-Bek), M/11/45 (Dec. 23, 2001) (signed by Mr.
Zair-Bek); Confidential source <strong>report</strong>s (stating that ACTEC was established by the leadership of KPRF
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