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 Figure: Claude Kaspereit letter to Saddam Z. Hassan (Jan. 30, 2001). E.O.T.C. paid the full amount of surcharges owed on contract M/09/39 in five installments. The payments were deposited in a SOMO account at Jordan National Bank. Each of E.O.T.C.’s surcharge payments were made contemporaneous with each of the oil lifts under M/09/39. 114 Mr. Kaspereit was aware that E.O.T.C. arranged for the payment of surcharges on these oil contracts. He knew that the surcharges were illicit. He had indicated to other individuals that he knew the overwhelming majority of the companies were paying surcharges at the time, and that a refusal to pay the surcharges would have resulted in Iraq’s refusal to grant him oil allocations. 115 114 Jordan National Bank record, SOMO account, credit advices (Mar. 21, Apr. 29, May 2, June 7, and Nov. 11, 2001) (showing three payments by E.O.T.C. to SOMO’s account by cash deposits and two of the payments by wire transfer) (translated from Arabic); Committee oil surcharge table, contract nos. M/09/39, M/10/02; 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). The final surcharge payment under M/09/39 was made at the same time that the surcharges were paid under M/10/02. 115 Confidential source. REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 66 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS Mr. Kaspereit was also aware that the premium paid by Marc Rich + Co. covered a commission to E.O.T.C. and the surcharge levied on the contract. According to an individual familiar with the relationship between E.O.T.C. and Marc Rich + Co., Mr. Kaspereit’s associate at E.O.T.C., Mr. Khalef Awad, informed his contacts at Marc Rich + Co. about the imposition of surcharges. E.O.T.C. and Marc Rich + Co. representatives discussed the surcharges. They agreed that the premium paid by Marc Rich + Co. would incorporate the additional cost of the surcharges. 116 In Phase IX, Marc Rich + Co. agreed to pay a $0.30 to $0.40 per barrel premium on the oil purchased from E.O.T.C. Marc Rich + Co. wire transferred the payment to E.O.T.C.’s account at Kredietbank. To avoid paying the surcharges directly, Mr. Kaspereit transferred a portion of the premium to an account operated by Khalef Awad. Using funds from Marc Rich + Co., Mr. Awad paid the surcharges on behalf of E.O.T.C. by wiring money to a SOMO account at Jordan National Bank. 117 In Phase X, Ministry of Oil records show that a total of $501,393.75 was levied on E.O.T.C.’s contract. E.O.T.C. paid close to the full amount of the surcharges on that contract. According to bank records, E.O.T.C. made a single cash deposit of $497,370 to a SOMO account to cover the surcharges on M/10/02. E.O.T.C. did not pay surcharges on other oil contracts in later phases. 118 Marc Rich + Co. has denied any involvement in the payment of surcharges. 119 E. SERGE BOIDEVAIX Serge Boidevaix, a French consultant and former diplomat, was hired to obtain Iraqi crude oil contracts for Vitol S.A. (“Vitol”), a Swiss company based in Geneva. He received allocations of over 32 million barrels of oil from the Government of Iraq over ten phases. Almost 30 million 116 Confidential source. According to one senior French official, it was well known that surcharges ranged from somewhere between $0.10 and $0.25 per barrel depending on where the oil was to be sold. France official #6 interview (Mar. 22, 2005); see also Iraq official interview (stating that the surcharges ranged from $0.30 to $0.25 per barrel depending on the destination of oil). 117 Marc Rich + Co. Investment AG fax to E.O.T.C. (Jan. 26, 2001) (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) (indicating that Marc Rich + Co. would pay E.O.T.C. a commission of $0.30 per barrel of oil); Marc Rich + Co. Investment AG telex to E.O.T.C. (undated) (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) (indicating that Marc Rich + Co. would pay E.O.T.C. a commission of $0.40 on the first lift of 1 million barrels of oil and a $0.35 commission on the second lift of 1 million barrels of oil); Committee oil company table, contract no. M/09/39; Confidential source; Jordan National Bank record, SOMO account, credit advices (Mar. 21, Apr. 29, May 2, June 6, and Nov. 11, 2001) (translated from Arabic). 118 Committee oil surcharge table, contract nos. M/10/02, M/11/26 and M/12/62; Jordan National Bank record, SOMO account, credit advice (Nov. 1, 2001) (translated from Arabic). 119 Marc Rich Group letter to the Committee (Oct. 24, 2005). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 67 OF 623
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report on programme manipulation - Independent Inquiry Committee

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