Volume 1 - Iraq Watch

Bank of Jordan. SOMO created separate accountsboth for surcharge payments and for Protocol-generatedrevenue. Three surcharge accounts were created,one each for the deposits of US dollars, Francs, andeventually Euros. The two required signatories onthese accounts were SOMO employees.Funds from SOMO accounts had to be released bya SOMO order. Payments from accounts holdingthe credit portion of earnings from the Protocol withSyria (at Syrian Commercial Bank) and the creditportion of earnings from the Protocol with Turkey(the TPIC account on behalf of SOMO at the HalkBank) required authorizations from various ministriesand the Presidential Office (Diwan). When SOMOreceived the appropriate approvals, it generated aletter directing the banks to make payments.• SOMO had at least thirteen accounts that were usedto receive and/or hold the 10 percent fee amountsreceived from the various ministries.• The MoO had no authority over these accounts andthey were located in Jordan, Syria, Lebanon, andthe UAE.SOMO’s Relationship to the MoOWhile SOMO’s role was to sell Iraq’s oil and handlesome of the funds derived from those sales, theMoO’s role was primarily to procure goods andservices needed by the oil sector. As part of this effortthe MoO would collect the 10 percent fee on importcontracts.• A former Oil Ministry official in charge of contractingfor maintenance equipment and spare partsstated they would accept a low bid and requireanother 10 percent be added to the contract. Iraqiofficials believed 10 percent could be easily hiddenfrom the UN. For example, if the bid were for $1million, the supplier would be told to make it $1.1million. This scheme was quite effective for generatingillicit revenue.• The MoO has bank accounts at several differentlocations and in several different countries.SOMO’s 13 accounts were separate from the MoO.According to a high-level source at the MoO, theMinistry had only basic information relative to theSOMO accounts, such as the name of the financialinstitution, the account holder’s name, and the nameof the person who had signatory authority on theaccount.• The source stated that the MoO had this informationso that they could transfer funds to the accountswhen oil was sold. According to a source at theMinistry, the MoO is currently trying to recoverfunds from some of these accounts, particularly inJordan, and return the money to Baghdad.Iraq’s MoO currently has two active bank accountsat the Jordan National Bank, Queen Nor Branch,Amman, Jordan. These are the same accounts thatthe MoO has used for the last several years. The firstaccount is a joint account held in the name of theMoO and Jordan Petroleum Refinery Co., Ltd. Its balanceon 30 November 2003 was approximately $78.4million. The second account is called the Ministrypersonal current account. Its balance on the same datewas $3.9 million.• The source of these funds was from the sale ofcrude oil and oil products to Jordan under the TradeProtocols.• The Oil Ministry claims that the funds in theseaccounts were to be used to purchase engineeringand chemical materials necessary to keep Iraq’s oilindustry operating at a minimum production level.Official Oil AccountsSOMO held a variety of bank accounts to manageand control Iraq’s legal and illegal oil revenues. Theseaccounts have been categorized as non-surchargeaccounts (including Protocol revenues), oil surchargeaccounts, and cash sales accounts. Figure 25 showsthe bank accounts that SOMO opened for non-surchargepurposes.• The first five SOMO accounts are individuallynamed accounts at the Ahli Bank in Jordan. Formore detail on those names, see Figure 26.• The fifth account listed at the Ahli Bank in thename of Ali Rijab & Yakdhan was a Protocol tradeaccount set up to receive payments related to theIraq-Jordanian Protocol and was opened just a fewmonths before the start of OIF. This trade accountallowed 60 percent of oil proceeds to remain in thetrade account and 40 percent of the proceeds to be40