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 influence public opinion in favor of Iraq. The Government of Iraq also believed it had the discretion to cease oil sales to companies based in countries perceived as less friendly to Iraq. 11 Subsequent oil allocations fell into two categories, which appear in SOMO allocation tables beginning in Phase II. “Regular” oil allocations were given to established oil companies, many of which regularly had purchased Iraqi oil prior to the imposition of sanctions and had proved to be reliable purchasers. “Special” allocations were given to individuals, organizations, and political parties considered to be “friends” of Iraq or perceived as holding political views supportive of Iraq. Sometimes, to cover all bases, oil allocations were granted to members of the opposition parties as well as the ruling political party. 12 As its interest in directing oil allocations grew, the Government of Iraq developed an established procedure for distributing oil exports during each phase of the Programme. Beginning in Phase IV, the allocation of oil became highly politicized. A “Command Council,” headed by Vice President Taha Yassin Ramadan, and including Deputy Prime Minister Tariq Aziz, the Minister of Oil, and Minister of Finance Hikmat Al-Azzawi, was created to determine the distribution of oil contracts to companies and individuals of interest. Mr. Ramadan was in charge of allocations to individuals and companies in Arab and Islamic countries as well as in Russia and China; whereas Mr. Aziz handled the French and Italian allocations. Mr. Al-Azzawi was responsible for Belarus and Ukraine. As of Phase IV, Iraqi leaders decided to deny American, British, and Japanese companies direct oil allocations because of their opposition to the lifting of the sanctions against Iraq. On the other hand, Iraqi leaders gave preferential treatment to French, Russian and Chinese companies, because these countries were permanent members of the Security Council and strong advocates of lifting the sanctions. 13 At the beginning of each phase, SOMO officials revised the list of beneficiaries and oil allocations from the preceding phase based on instructions from Iraqi regime leaders. The proposed allocation list was submitted to the Minister of Oil, who, in turn, submitted it to the 11 SOMO oil allocation table for Phase II (June 19, 1997) (translated from Arabic); Iraq officials interviews; Tariq Aziz interview (Mar. 1, 2005). 12 Committee oil beneficiary table. The SOMO oil allocation table for Phase II comprised three categories: “friendly countries,” “special requests,” and “others.” Only five entities were included under special requests “Dutch Trafigura (France),” “Samir Vincent,” “Addax (French Deputy/Switzerland),” “Italian Costieri,” and “Turkish Delta Petroleum (or Erdem)”). Tariq Aziz interview (Mar. 1, 2005); Iraq official interview; SOMO allocation table for Phase II (June 19, 1997) (translated from Arabic). 13 SOMO oil allocation table for Phase IV (June 11, 1998) (translated from Arabic); Iraq officials interviews; Amer Rashid interview (Oct. 9, 2004); Tariq Aziz interview (Mar. 1, 2005); Taha Yassin Ramadan interview (August 17, 2005) (recalling that, as a result of the United States’ failure to change its attitude toward Iraq early in the Programme, allocations to American companies were reduced quickly and then phased out, and allocations to Russian companies correspondingly increased). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 16 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS Command Council, which made adjustments based on political criteria. Final oil allocation lists were approved by Saddam Hussein. 14 According to a former Iraqi official involved in the allocation process, a beneficiary was not required to provide a specific favor to Iraq in exchange for oil. Often, it was sufficient that the beneficiary express or support Iraq or political positions favorable to Iraq. According to Iraqi officials, beneficiaries normally took the initial step of requesting oil from an Iraqi leader. Occasionally, a senior Iraqi official granted an allocation to an individual who had not requested one. When a quantity of oil was allocated to an individual, the beneficiary was notified by the office of the Minister of Oil, Tariq Aziz, or Taha Yassin Ramadan. Sometimes, the beneficiaries contacted SOMO directly to follow up on their allocation. A beneficiary or a named representative was introduced to the Crude Oil Department and then nominated a company to contract with SOMO. The nomination could be made orally or in writing. 15 Chart C – Oil Allocations by Nationality of Beneficiaries for Phases III to VIII 16 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% PHASE III PHASE IV PHASE V PHASE VI PHASE VII PHASE VIII 0.0% Russia France China United States Turkey Phase III Group Russia France China United States Phase IV Group A Phase IV Group B Russia France China Turkey Italy Phase V Group Russia China France Turkey Italy Phase VI Group A Phase VI Group B Russia China France Turkey Spain Phase VII Group A Phase VII Group B Russia China France Vietnam Yugoslavia Phase VIII Group 14 Iraq official interview; Amer Rashid interview (Oct. 9, 2004); Tariq Aziz interview (Mar. 1, 2005). 15 Tariq Aziz interview (Mar. 1, 2005); Amer Rashid interview (Oct. 29, 2004); Iraq officials interviews; Saddam Z. Hassan interview (Mar. 9, 2005); Iraq official interview. 16 SOMO allocation tables for Phase III through Phase VIII (each translated from Arabic) (listing contractual and non-contractual beneficiaries of oil allocations by country); Committee oil beneficiary table. REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 17 OF 623
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report on programme manipulation - Independent Inquiry Committee

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