Volume 1 - Iraq Watch

Chapter SummaryThe Illicit Finance and Procurement chapter focuses on the economic means, key actors and organizations,foreign suppliers, and procurement mechanisms used by Saddam to pursue his set of objectives: survival ofhimself, his Regime, and his legacy. The first section of the chapter provides an historic background dividedinto key economic phases. The chapter then examines Saddam’s major revenue streams outside the UN sanctionsregime: bilateral trade Protocols, UN OFF oil surcharges, commodity kickbacks, and “cash sales” or oilsmuggling activities. ISG estimates the total amount of revenue earned between 1991 and 2003, while payingspecial attention to money earned after the introduction of the OFF program. ISG also addresses how theRegime used its oil assets to influence non-Iraqi individuals by means of an institutionalized, secret oil voucherprogram.Following the illicit revenue section, the chapter identifies the Iraqi Regime’s key individuals, ministries,organizations, and private entities within the Regime that were involved in Saddam’s procurement and revenueactivities. Next, the section identifies foreign suppliers—governments, state-owned and private firms, and/orindividual agents that engaged in the export of goods in contravention of UN resolutions. In some cases, ISGhas uncovered foreign government activity and knowledge that ranged from tacit approval to active complicity.In other cases, firms engaged in the illegal activities without their government’s consent or knowledge.Moreover, ISG’s investigation exposed Iraqi and foreign trade intermediaries’ deceptive methods used to purchase,acquire, and import UN-banned items.Finally, this chapter provides several annexes that give more detail on the spectrum of issues examined in theprocurement chapter of ISG’s report. Annex A consists of translations of Iraq’s major trade Protocols; Annex Bis an oil voucher recipient list that ISG obtained from Iraq’s State Oil Marketing Organization (SOMO). AnnexC relates Iraq’s normal governmental budgetary process, while Annex D provides general Iraqi economic data.Annex E outlines ISG’s illicit earnings sources and estimation methodology, and Annex F provides an illustrativeoil smuggling case study. Annex G explains Iraq’s banking system, and Annex H lists Iraqi-related UNSecurity Council Resolutions. Annexes I and J reveal suspected Iraqi dual-use and conventional weapons procurementtransactions, while Annex K lists suspected companies engaged in military-related trade with Iraq.Finally, Annex L provides a list of procurement acronyms found throughout this section.Regime Financeand Procurement7