Volume 1 - Iraq Watch

The information provided by these two sources contradictsHuwaysh’s statement that in early April 2003,he traveled to Syria to determine why Hasan andal-Qubaysi had not returned to Baghdad. According toHuwaysh, he had not been able to determine what hadhappened to the two gentlemen or the funds.• The MIC issued a contract when the import committeeaccepted a bid on the goods. We speculatethat the contracted companies were then responsiblefor obtaining the goods—importing them fromJordan, Syria, Turkey, or elsewhere as necessary—and delivering them to the MIC customer.Items Procured by the MIC via Front CompaniesIraq’s MIC had two primary avenues for procuringmaterials and manufacturing equipment outside ofUN OFF channels. One avenue involved the use ofimport committees and the other a straightforwardcontracting process to purchase items from foreignsuppliers. The MIC obtained large amounts ofimported materials and production equipment througha process described by a senior Iraqi:• During the annual budget formulation process,managers of MIC facilities identified importedproducts that their enterprises needed to supporttheir production plans for the following year. Afterthe MIC approved the annual budget at the beginningof each calendar year, the managers preparedtenders for the required imports. The MIC thendistributed the tenders at the annual Baghdad TradeFair and advertised them in Iraqi trade papers.• The MIC received bids on the tenders from potentialsuppliers indicating price, terms; for example,‘X’ offered to provide some equipment for $1 million.Bids on the tenders from potential supplierswere submitted to a MIC import committee. Originallythere was just one import committee, but thevolume of imports grew in later years to the pointwhere a second import committee was establishedto handle the volume. The import committees metevery night at the Baghdad International Trade Fairsite.• The import committees would then take the originaltenders and subject them to a rebidding process.For example, company ‘Y’ could offer to supply thesame equipment as company ‘X,’ but for $500,000less than its competitor’s bid, a large saving comparedto the original price. Through this process,the import committees saved the MIC millions ofdollars. The committees issued quarterly reports onthe amounts of money saved. Huwaysh was veryproud of this bidding process and often gave thecommittee members bonuses based on the amountof money saved.• Engineers from the MIC Technical Directoratealways headed the import committees. Other membersof the committees included representativesfrom the MIC Commercial, Administration andFinance, and Legal Directorates, along with an IISrepresentative from MIC security.Items Procured via the MIC’s Link to IraqiIntelligenceThe other procurement avenue operated throughthe MIC “Special Office” and enlisted the IIS tolocate suppliers of particularly sensitive or obviouslymilitary items, such as weapons and ammunition(for more details see the IIS procurement section ofthis chapter and the RSI IIS annex). Items purchasedthrough the Special Office were then shipped to Iraqvia third countries using front companies as buyers.MIC procurement companies played a key role inthese import activities, as did several front companieswith ties to top Syrian leaders. During the annualbudget formulation process, managers of MIC facilitiesidentified imported products that their enterprisesneeded to support their production plans for the followingyear.The MIC and the IIS formed a special channel forimporting sensitive goods and services—dual-useor related to weapons and munitions manufacturing—particularlythose that required the assistanceof foreign government officials. A source within theMIC Commercial Directorate of stated that the IISwas “involved in everything.” The IIS was the finalauthority on MIC contracts due to its direct relationshipwith Saddam.In November 1997, Saddam approved a MIC proposalto enlist the IIS to develop new procurement, technologytransfer, and technical assistance channels tosupplement the existing MIC Commercial Directoratechannels, according to a source with direct access.• Huwaysh formed the MIC-IIS relationship to supportIraq’s missile program after Saddam instructedhim to improve Iraq’s missile capabilities.Regime Financeand Procurement69