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 In Phase VIII, Ministry of Oil records show that approximately $264,000 in surcharges was levied on Aredio’s contract. As with other surcharges imposed in Phase VIII, the surcharges were not immediately paid, and, a year later, the Iraqi regime demanded payment before additional oil could be lifted. Indeed, in Phase X, a new contract with Middle East Advanced Semiconductor was approved subject to payment of the $264,000 surcharges outstanding from Phase VIII. In December 2001, Taurus wire transferred $264,000 to Mr. Zureikat’s account at Jordan National Bank. Bank records show that three days later a transfer of $264,000 was made from Mr. Zureikat’s account into the SOMO account at Jordan National Bank for the payment of surcharges on the Aredio contract. Surcharges on the Phase IX contract lifted by Aredio were paid through wire transfers from a bank account associated with Taurus. The involvement of Taurus in the payment of the surcharge on this contract is discussed in Section VI.C. 151 Some of the surcharges assessed on other contracts were paid in the name of Mr. Zureikat’s company. In Phase X, Ministry of Oil records show that approximately $825,822 was paid on a Middle East Advanced Semiconductor contract relating to a United Kingdom allocation. The surcharge was paid through deposits into two SOMO accounts at Jordan National Bank under the name of Middle East Advanced Semiconductor. Additionally, surcharges totaling $502,476 were due on contracts relating to separate allocations for Mr. Zureikat (designated as “Jordan” was President of Middle East Advanced Semiconductor. Fawaz Zureikat fax to oil overseers (Dec. 20, 2001) (citing himself as President of Middle East Advanced Semiconductor); George Galloway interview (May 16, 2005). United Nations records reflect that one million barrels of oil were lifted in relation to contract M/13/48. SOMO records relating this contract to Mr. Galloway’s allocation show no oil lifted under this contract. The Committee believes that the oil shown as lifted under this contract by the United Nations records in fact may have been for the benefit of another beneficiary for whom Middle East Advanced Semiconductor acted as contract holder, Toujan Al-Faisal. SOMO records show a one million barrel lift by Middle East Advanced Semiconductor for Ms. Al-Faisal’s benefit under contract M/13/50. United Nations records do not indicate that Middle East Advanced Semiconductor lifted this oil. Committee oil beneficiary table, contract no. M/13/50; Committee oil company table, contract no. M/13/48. 151 Committee oil company table, contract nos. M/08/35, M/09/23; M/10/38, M/11/04; SOMO letters to Amer Rashid (Dec. 19, 2001) (approving contract M/11/04 for three million barrels of oil for “Mr. Galloway”); Jordan National Bank record, Ziad and Fawaz Zureikat/Middle East Advanced Semiconductor account, bank statement (Jan. 1 to Dec. 31, 2001); Jordan National Bank record, SOMO account, bank statement (Jan. 1 to Dec. 31, 2001) (translated from Arabic). The request for approval of contract M/09/118 in the name of Mr. Zureikat also contains a reference to Mr. Zureikat promising to pay the sum of $264,505 owed on “the contract of the Aredio company” (M/08/35) and thus being granted a delay in paying the surcharge due on his contract M/09/118. SOMO letter to Amer Rashid (May 8, 2001) (translated from Arabic) (approving contract M/09/118 for two million barrels of oil for “Mr. Fawaz Zureikat”); Confidential document; Jordan National Bank record, Ziad and Fawaz Zureikat/Middle East Advanced Semiconductor account, bank statement (Jan. 1 to Dec. 31, 2001) (translated from Arabic); Jordan National Bank record, SOMO account, bank statement (Jan. 1 to Dec. 31, 2001) (translated from Arabic); Committee oil company table, contract nos. M/08/35, M/09/23. The $304,321 surcharge on M/09/23 was deposited in two stages on March 18 and 19, 2001 into the SOMO account. The deposits were made in the name of Salim Ahmad. Jordan National Bank record, SOMO account, bank statement (Jan. 1 to Dec. 31, 2001) (translated from Arabic). Section VI.C of this Chapter further discusses Taurus and Salim Ahmad. REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 84 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS allocations) of which $497,353 was paid, again under the name of Middle East Advanced Semiconductor. 152 4. Donations to the Mariam Appeal From April 2001 to August 2003, Mr. Zureikat received a total of almost $1.9 million from Taurus accounts. Payments from Taurus were split roughly between deposits into an account at the Arab Bank in his name and an account at Jordan National Bank in the name of Ziad and Fawaz Zureikat/Middle East Advanced Semiconductors. 153 Mr. Zureikat initially denied having heard of either Aredio or Taurus. In a subsequent interview, however, Mr. Zureikat acknowledged that Taurus had purchased some of the oil allocations in his name, but he refused to disclose the financial arrangements. 154 A letter addressed to SOMO Executive Director Saddam Z. Hassan, dated January 13, 2001 and signed by Mr. Zureikat, authorized Aredio to execute a contract with SOMO pursuant to his allocation. He further indicated that his allocation was linked with the Mariam Appeal. 155 152 Committee oil company table, contract nos. M/10/38, M/11/04, M/09/118, M/11/10; Jordan National Bank record, SOMO account, bank statement (Jan. 1 to Dec. 31, 2001) and credit advices (Nov. 12 and Dec. 4, 2001) (translated from Arabic). 153 Jordan National Bank record, Ziad and Fawaz Zureikat/Middle East Advanced Semiconductors account, bank statements (Jan. 1 to Dec. 31, 2001; Feb. 17 to Dec. 31, 2002; Jan. 31 to Dec. 31, 2003) (translated from Arabic); Arab Bank record, Fawaz Zureikat account, credit advices (Oct. 18 and Nov. 20, 2001 (translated from Arabic); Jan. 18 and May 28, 2002); Banque Bruxelles Lambert record, Taurus account, debit advice (Apr. 18, 2001). Regarding the November 20, 2001 payment identified in the table above, a letter of credit was funded by Taurus in favor of the United Nations in the amount of €28,837,703.59. This was to fund a lift on October 16, 2001 of 1,917,528 barrels, part of contract M/10/38. On November 13, 2000, this exact amount was debited from Taurus’s Credit Suisse First Boston account in Geneva. On November 19, 2001, Taurus wire transferred $698,640.14 from Credit Suisse First Boston Geneva to an undisclosed account at Arab Bank Amman. On November 20, 2001, $698,640.14 was deposited in Mr. Zureikat’s account at Arab Bank. The reference on the Arab Bank credit advice is for “Eastern Power.” The SOMO bill of lading indicates that the name of the ship which lifted the oil on October 16, 2001 was the “Eastern Power” and lists “Credit Suisse, Geneva” as the consignee. BNP New York letter to the United Nations (Nov. 14, 2001) (informing the United Nations that its account would be credited in the amount of €28,837,703.59); Credit Suisse First Boston Geneva record, Taurus account, debit advice (Nov. 13, 2001); Arab Bank record, Fawaz Zureikat account, credit advice (Nov. 20, 2001) (translated from Arabic); SOMO bill of lading bbl/3197 (Oct. 16, 2001) (relating to contract M/10/38). BNP operated during the Programme through various affiliates, including BNP New York, the branch responsible for maintaining the escrow account. These other branches and affiliates will hereinafter be referenced by the designation “BNP”, followed by the location of the branch or affiliate (e.g. BNP Geneva, BNP Hong Kong, BNP New York). 154 Fawaz Zureikat interviews (July 28 and Oct. 10, 2005). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 85 OF 623
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