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
After receiving the first allocation, Mr. Kaspereit and Jaber Khalef Awad, an Iraqi businessman
associated with E.O.T.C., negotiated an agreement to sell oil rights to Marc Rich + Co. Marc
Rich + Co. agreed to arrange for the financing and lifting of the oil. Marc Rich Investment Ltd., a
United Kingdom-based entity affiliated with Marc Rich + Co., managed the operations and
administration of the transactions. Most of the transactional details were handled through
facsimile or telex correspondence between Mr. Kaspereit or his assistant and employees at the
Marc Rich entities. 108
Mr. Kaspereit’s initial allocation of two million barrels in Phase IX was later increased by another
two million barrels. Marc Rich + Co. arranged to transport the oil in four lifts under two
contracts with E.O.T.C. The two contracts provided that Marc Rich + Co. would finance
E.O.T.C.’s letters of credit in favor of the United Nations. The letters of credit were financed
through a Marc Rich + Co. account at BNP Paris. Marc Rich + Co. explicitly directed BNP to
keep the company’s identity hidden. 109
(June 21, 2002) (relating to M/11/26); Committee oil surcharge table, contract no. M/11/26; SOMO letter
to Amer Rashid (June 24, 2002) (translated from Arabic) (approving contract M/12/62 for 1 million barrels
of oil for “E.O.T.C. (Mr. Claude Kaspereit/President of the Association for the Children of Iraq)”); SOMO
sales contract, no. M/12/62 (June 23, 2002); SOMO bill of lading, ck/5215 (Sept. 19, 2002) (relating to
M/12/62); Committee oil surcharge table, contract no. M/12/62. SOMO oil allocation tables for Kaspereit.
108 Confidential source; Marc Rich + Co. Investment AG fax to E.O.T.C. (Jan. 26, 2001) (marked to the
attention of “Mr. Claude Kaspereit – General Manager”) (confirming transaction dated January 25, 2001
for a purchase of 2 million barrels of oil from E.O.T.C. with lifts scheduled for February 2001); Marc Rich
+ Co. Investment AG telex to E.O.T.C. (undated) (marked to the attention of “Mr. Claude Kaspereit –
General Manager”) (refers to “new transaction with your company” for the purchase of 2 million barrels of
oil from E.O.T.C. with lifts scheduled for April and May 2001); SOMO sales contracts, nos. M/09/39 (Jan.
30, 2001), M/10/02 (July 11, 2001), M/11/26 (Dec. 19, 2001), and M/12/62 (June 23, 2002) (signed by
Claude Kaspereit, General Manager, E.O.T.C.); see, e.g., BNP record, E.O.T.C. Letter of Authorization for
Issuing a Letter of Credit in the Name of E.O.T.C. But Under the Full Responsibility of Marc Rich + Co.
Investment AG Zug (May 5, 2001) (“irrevocably” directing BNP to follow instruction from Marc Rich +
Co.); Marc Rich + Co. Undertaking Letter from to BNP (undated) (assuming all obligations of E.O.T.C. “as
if we originally were the applicant thereof”); Confidential witness interview; Vitol Record, Banque
Cantonale Vaudoise, Marc Rich Group Credit Application (undated); A former employee at a Marc Rich
entity described Marc Rich + Co. as the link “in the middle of the chain” between the “supplier” and the
“customer” in a crude oil trade transaction. Confidential witness interview.
109 SOMO letters to Amer Rashid (Feb. 1, 2001) (approving contract M/09/39 for 2 million barrels of oil for
“E.O.T.C.”), (Feb. 11, 2001) (stating that it has been agreed that “E.O.T.C.” would receive an increase of 2
million barrels of oil under contract M/09/39), (Apr. 7, 2001) (approving an increase of 2 million barrels of
oil for contract M/09/39 for “European Oil Trading Co.”) (each translated from Arabic); SOMO bills of
lading, ck/4954 (Feb. 23, 2001) (relating to M/09/39), ck/4975 (Mar. 27, 2001) (relating to M/09/39),
ck/4999 (May 2, 2001) (relating to M/09/39), ck/5014 (May 23, 2001) (relating to M/09/39); Marc Rich +
Co. Investment AG fax to E.O.T.C. (Jan. 26, 2001) (marked to the attention of “Mr. Claude Kaspereit –
General Manager”) (confirming transaction dated January 25, 2001 for a purchase of 2 million barrels of oil
from E.O.T.C. with lifts scheduled for February 2001); SOMO sales contract, no. M/09/39, Arts. 3, 10 (Jan.
30, 2001); Oil overseers fax to E.O.T.C. (Apr. 4, 2001) (approving an amendment providing E.O.T.C. with
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