Volume 1 - Iraq Watch

MIC Front CompaniesThe MIC used front companies to accomplish thosebusiness transactions it could not conduct amidUN scrutiny. Front companies handled the tasksof smuggling oil, funneling UN OFF revenues,and importing weapons and dual-use materialssanctioned by the UN. The MIC formed many ofthese companies in 1991 to bypass UN sanctions andspread the transfer of funds through a wider variety ofcompanies to avoid international attention (for a fulllist see Annex K: Suspected Front Companies AssociatedWith Iraq).• The MIC operated three primary procurement frontcompanies that were critical to Iraq’s clandestineimport activities: Al-Basha’ir, Al-Mafakher, andARMOS.• These companies also had a close association withthe IIS and used connections that the IIS had inforeign countries to procure goods.• The IIS was also heavily involved in the operationof these companies by having IIS personnelin middle and upper management and in securityoperations.The most important of these companies was Al-Basha’ir, which was formed by Husayn Kamil andmanaged by Munir Mamduh Awad al-Qubaysi. Thecompanies ARMOS and Al-Mafakher were createdlater by the head of MIC, Abd al-Tawab MullahHuwaysh, to help facilitate competition among MICfront companies in importing banned goods and toimprove productivity. Apparently, Huwaysh deemedthese companies to be so important to MIC thataround 1998 he moved responsibilities for the companiesfrom one of his deputies to the CommercialDirectorate. This allowed him to exert greater controlover the operation of the companies, according to aformer Regime official.• There was a large network of international companiesand banks with which these front companiestraded. Some were merely banks or holding companies,primarily in Syria and Jordan that purchaseditems from the manufacturer and acted as cutoutsbefore sending the items to Iraq under false documents.The networks of these companies still exist throughtheir former employees, even as the old offices nowstand empty. The owners and employees of formerfront companies may be seeking to become a part ofthe post-Saddam Iraqi business community.Bidding Process With MIC Committees. Accordingto a former civil engineer, the MIC bidding processbegan when a MIC facility generated a requirement,called a tender. There were two kinds of tenders,regular or invitation.• Regular tenders were open and could be bid uponby any contractor or private company approved byMIC security, including foreign contractors.• Invitation tenders were issued when specialtyitems were required that could only be suppliedby specific companies. In addition to MIC securityapproval, it is most likely the IIS and/or MFAalso vetted these companies. The invitation tenderswere issued directly to company agents in Iraq andJordan, not to the foreign companies directly.• This approval process was a result of Iraqi officials’concerns over foreign companies with hidden connectionsto Israel. According to captured documents,the MIC blacklisted a Bulgarian companybecause a Russian-Israeli businessman owned it.Interested foreign and domestic supply companiesthen offered bids for the tenders through the MIClegal department. The MIC Procurement Committee,an informal seven-member panel, selected thebest bid based on the offered price and the preferencerating of the particular supply company. After a tenderwas awarded to a specific supplier, the MIC facilitythat originated the tender passed the contract to aMIC trading company such as Al-Basha’ir, ARMOS,or Al-Mafakher. These companies worked through theapproved supplier to conduct the actual procurement.The Al-Basha’ir Trading Company. The MIC establishedthe Al-Basha’ir front company in 1991. Thecompany’s names has been discovered on hundredsof contracts for weapons and dual-use materials, aswell as legitimate day-to-day goods and supplies.The company traded in items such as constructionmaterials, foodstuffs, and power generators to cover72