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 The surcharges paid on contracts executed by ACTEC totaled $6,194,000. Most of the surcharges imposed on ACTEC’s contracts —$5,794,000—were paid through the Iraqi Embassy in Moscow. The remaining surcharges were paid through bank transfers by Scandinavian T. Limited (“Scandinavian”). Scandinavian was created in 1999 in the Republic of Seychelles by two oil traders, Viacheslav Vodennikov and Roman Kononchuk. As of January 18, 2000, the list of its beneficial owners included Mr. Zair-Bek, Mr. Vodennikov, and Mr. Kononchuk. According to Iraqi Ministry of Oil records, in October and November 2000, Scandinavian made four surcharge payments of $100,000 in relation to ACTEC’s contract M/08/05. At least one of the payment orders, dated November 6, 2000, was signed by Mr. Zair-Bek. The money was transferred from United European Bank (“UEB”) to a SOMO account in Fransabank. According to Ministry of Oil records, this payment covered part of the surcharge on contract M/08/05. The Committee was unable to locate Mr. Zair-Bek to discuss ACTEC’s participation in the Programme and surcharge payments on its oil contracts. 65 c. Alfa Eco About 2.8 percent of the Iraqi oil exported under the Programme was sold through Alfa Eco. Alfa Eco was the fourth largest purchaser of Iraqi oil under the Programme, executing 15 oil contracts for more than 106 million barrels of oil. Established in 1989, Alfa Eco was one of the original companies in the Alfa Group Consortium, which consists of dozens of companies registered in various countries, including a number of telecommunication companies, TNK-BP, and Alfa Bank. A total of $2,351,880 in surcharges was paid on four of Alfa Eco’s 15 oil contracts, the only such contracts executed by Alfa Eco in the surcharge phases. Most of the payments—$2,039,161—were made in cash through the Iraqi Embassy in Moscow, and the specifically for the Programme); Alexandre Kramar interview (Mar. 5, 2005). One Russian official, when asked about ACTEC, stated that two sets of companies operated in the Programme: established large companies and companies created specifically to pursue opportunities under the Programme. Russia officials #3, 6-7 interview (Mar. 1, 2005). 65 Committee oil surcharge table, contract nos. M/08/05, M/10/83, M/11/39; Fransabank record, SOMO account, credit advice (Oct. 23, 2000); Fransabank record, SOMO account, credit advice (Oct. 26, 2000); Fransabank record, SOMO account, credit advice (Nov. 7, 2000); SOMO record, Iraq Embassy in Moscow payment receipts, nos. 62 (Dec. 20, 2001), 66 (Dec. 25, 2001) (stating that the money was brought by Mr. Zair-Bek), 71 (Jan. 18, 2002), 72 (Jan. 21, 2002), 77 (Feb. 1, 2002) (stating that the money was brought by Mr. Zair-Bek), 88 (Mar. 5, 2002), 112 (May 24, 2002), 119 (June 24, 2002), 120 (June 26, 2002) (each translated from Arabic); UEB record, Scandinavian account, incorporation documents (1999-2002) (stating that Mr. Vodennikov and Mr. Kononchuk were introduced to UEB by Taurus Petroleum and specifically by Martin Schenker, Financial Director of Taurus Petroleum); UEB record, Scandinavian account, verification of beneficial owner’s identity (Jan. 18, 2000); Confidential source <strong>report</strong>s (stating that, between 1999 and 2002, Mr. Vodennikov also appeared in ACTEC’s records as one of its employees); UEB record, Scandinavian account, payment order (Nov. 6, 2000); Bank of Jordan record, SOMO account, SWIFT message (Nov. 6, 2000); Committee oil surcharge table, contract no. M/08/05; ACTEC site visit <strong>report</strong> (Feb. 28, 2005) (discussing a visit to ACTEC’s office by Committee investigators). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 44 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS remaining amount of $312,719 was transferred using two companies, Star Port LLC (“Star Port”) and Watford Limited (“Watford”). 66 One of those two companies—Watford—has employees in common with other companies in the Alfa Group. According to bank and company registration records obtained by the Committee, a number of Watford’s managers—including Dmitry Plouzhnikov, James Grassick, Susan Cubbon, Simon Elmont, and Gillian Caine—also appear in registration documents of numerous other companies controlled by Alfa Group. Among them are Crown Commodities Limited and Crown Trade and Finance, trading arms of Alfa Group, which, along with Crown Resources AG, participated in trading operations related to Iraqi oil purchased by Alfa Eco and Tyumen Oil Company. 67 The Committee has contacted Alfa Eco on several occasions requesting a meeting to discuss the surcharge payments made on Alfa Eco’s and TNK’s contracts. Initially, the company stated that it was ready to provide “possible assistance on the matter.” However, in January 2005, Alfa Eco stated that it would communicate with the Committee through the Russian Ministry of Foreign 66 Committee oil company table, contract nos. M/01/21, M/01/24, M/02/06, M/03/02, M/03/37, M/03/53, M/04/15, M/05/07, M/06/17, M/07/23, M/08/24, M/09/101, M/10/63, M/11/31, M/12/119; Alfa Eco, “About Alfa Eco,” http://www.alfaeco.ru/en/about; Alfa Eco, “Alfa Eco’s history,” http://www.alfaeco.ru/en/about/history; Tatiana Egorova, “Fridman is worth $8 bln,” Vedomosti, Oct. 7, 2005 (translated from Russian); Committee oil surcharge table, contract nos. M/08/24, M/09/101, M/10/63, M/11/31; SOMO record, Iraq Embassy in Moscow payment receipts, nos. 48 (Nov. 9, 2001), 60 (Dec. 19, 2001), 85 (Feb. 19, 2002) (each translated from Arabic); Jordan National Bank record, SOMO account, credit advice (May 28, 2001) (containing surcharge payments of $104,730 and $70,000 on Alfa Eco’s contract M/08/24 and payment of $101,000 on TNK’s contract M/08/25); Fransabank record, SOMO account, SWIFT message (Nov. 3, 2000) (containing surcharge payments of $40,000 and $98,004 on Alfa Eco’s contract M/08/24 and payment of $99,774 on TNK’s contract M/08/25). According to the data of the Iraqi Ministry of Oil, a total of $1,541,881 was paid in surcharges on TNK’s contracts. Committee oil surcharge table, contract nos. M/08/25, M/08/40, M/09/102. The Committee contacted TNK-BP seeking its comments on information on surcharges paid on its contracts. As of October 25, 2005, TNK-BP has neither denied nor confirmed the accuracy of information on its surcharge payments. TNK-BP representatives interview (Mar. 3, 2005). 67 Watford incorporation records (1993-2000) (identifying Mr. Plouzhnikov, Mr. Grassick, Ms. Cubbon, Mr. Elmont, and Mr. Caine among Watford’s managers); United Overseers Bank record, Crown Trade and Finance account, account opening documents (1996-2000) (identifying Dmitry Plouzhnikov as one of the managers of the company); Crown Trade Limited incorporation documents (1998-1999) (identifying Mr. Caine, Mr. Elmont, Mr. Grassick, and Ms. Cubbon among the managers of the company); Crown Commodities Limited incorporation documents (1997-2000) (identifying Dmitry Plouzhnikov as one of the managers of the company); David Chalmers letter to Crown Resources AG c/o Alfa Eco (Oct. 12, 2000); Crown Resources AG letter to Saybolt (Oct. 26, 2000); David Chalmers letter to Crown Commodities (June 8, 1999); Crown Commodities letter to David Chalmers (Jan. 17, 1998); Alexandre Kramar interview (Mar. 5, 2005) (discussing Crown’s affiliation with Alfa Eco and involvement in the Programme); Michael Teagarden, “Crude Trader Crown Resources Begins ’03 With New Names, Owners,” The Oil Daily, Jan. 3, 2003 (describing affiliation of Crown Resources AG with Alfa Group and discussing the sale of the company in the end of 2002). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 45 OF 623
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