Volume 1 - Iraq Watch

Iraqi importer would verify acceptance so paymentcould be released.In order to make payments to Iraq for the cash, anarrangement was negotiated annually between theCentral Banks of Iraq and Jordan. There were writteninstructions concerning the process for transferringfunds to Iraq. In order to transfer funds, the RafidianBank served as an intermediary between the CentralBank of Jordan and the CBI. Jordan was a uniquecase; trading with Iraq was ongoing since the early1980s so the trade credits Iraq earned from this Protocolwere controlled by the Central Bank. Funds weredispersed by the Central Bank of Jordan by order ofthe CBI or by specific Protocol designed for paymentfor goods and services. This Protocol included automaticpayments to Jordan for Iraqi air travel and Iraqitelephone calls as well as salaries for the employeesof the Iraqi embassy in Jordan.According to a high-ranking Jordanian banking official,the CBI had no accounts with the Central Bankof Jordan and the only relationship between the twowas through the implementation of the bilateral oilfor goods barter Protocol. The CBJ worked diligentlywith the MoT and Industry and the Customs Directorateto ensure proper valuation of Protocol shipments,because over-valuation had been a problem.Use of Banks in SyriaThe Syrian connection became much more widelyused after the February 1999 ascension of KingAbdullah Bin Hussein in Jordan and the June 2000ascension of Syrian President Bashar Assad. KingAbdullah’s government began to create more problemsfor the Iraqi Regime with regard to importingproducts from Jordan. Consequently, Iraq turned toDamascus who offered a much friendlier atmospherefor goods not sanctioned by the UN.The Commercial Bank of Syria was the repository offunds used by the Iraqi government to purchase goodsand materials both prohibited and allowed under UNsanctions. The fair market value of oil and oil productswould be deposited by Syrian buyers into anaccount in the Commercial Bank of Syria. Each ministryin the Iraqi government had use of these funds;however, there were quotas set for the amounts theywould be able to use. The top four ministries withaccess to these funds in descending order included theMoO, the MoT, the Ministry of Industry (MoI) andthe MIC. The orders to disburse funds through thisaccount would come from the Iraqi Minister of Oil. Itis estimated that there could be $500 million held in50this account.Use of Banks in TurkeySOMO and the Turkish Petroleum InternationalCompany (TIPC) had an agreement to maintain a 70percent account in the Halk Bank in Turkey and interestbearing accounts.Use of Banks in EgyptA high-ranking official in Iraqi Banking stated thatthis trade agreement began around 2001 and continuedthrough 2002. SOMO set up bank accounts atthe Al Ahli Bank in Egypt through which paymentwas made for the purchase of oil from Iraq. SOMOofficials had signatory authority over the accounts.This trade agreement was set up by the MoT and Oiland was not within the guidelines of the UN OFFprogram.Some Egyptian government officials helped thegovernment of Iraq to obtain hard currency illegallyvia the UN OFF program. It is unclear whom in theEgyptian Government was providing the assistanceand who was aware of this activity. Under this illicitsystem, the Egyptian government officials would signa contract with the Government of Iraq to purchase acertain amount of approved humanitarian goods fora set price under the UN OFF Program. The contractwould specify that the goods shipped would be firstqualitymerchandise. In actuality, the goods shippedwould be second-quality goods. When the UN paidthe Egyptian Government officials for the first-qualitygoods, the Egyptian Government officials woulddistribute the funds for the second-quality products,take a small margin of profit for them, and convert theremaining money into US dollars or gold bullion anddeposit the money into the Rafidian Bank or directlyinto the CBI. When this hard currency was received inBaghdad, the Iraqi government would pack bundles ofUS one hundred dollar bills into bags and boxes anddistribute them to the Iraqi embassies abroad. However,after the arrest of the Iraqi IIS Chief of Stationin Amman, the Iraqi government moved their primarytransit point to Damascus out of fear that the courierswould be arrested while crossing the Jordanianborder.Use of Banks in BelarusThe CBI used Infobank in Belarus to hide Regime