Volume 1 - Iraq Watch

The IIS used the Al-Basha’ir front company tofacilitate a deal with the Bulgarian JEFF Company toobtain T-72 tank parts and Igla MANPADS, accordingto a former MIC senior executive. The goodswere either flown to Baghdad under the guise of ahumanitarian mission or they were delivered viaSyria. If coming via Syria, illicit military goods typicallyarrived via the Latakia Port and then were thentrucked to Iraq in SES company vehicles.Information from contracts found and data derivedfrom the records of the SOMO indicates that the Al-Basha’ir Company was also a major broker in Iraqioil smuggling (see Figure 43).• The Jordanian branch of Al-Basha’ir signed contractsfor the export of oil and oil products fromIraq, according to SOMO records.• SOMO records indicate Al-Basha’ir signed 198oil contracts from November 1999 through March2003. The contracts were for fuel oil, usually at $30per ton, and gas oil, usually at $80 per ton. Almostall were for export by ship through the ArabianGulf, although the destination of two contracts waslisted as “North,” which usually meant Turkey.• The value of the contracts totaled $15.4 million.This is the amount to be paid to SOMO. We do nothave information about the amount of money Al-Basha’ir earned from the trade.ARMOS Trading Company. ARMOS, a joint IraqiMIC—Russian venture, was initially proposed by aRussian general named Anatoliy Ivanovich Makros.Makros, a former Soviet delegation leader in the1980s, MIC, and IIS founded ARMOS in 1998.Makros’ original scheme was to bring Russian technicalexperts into Iraq with cooperation from MICand IIS through ARMOS. Despite the Russian ties,however, MIC officials dominated the company (seeFigures 44 and 45).• Dr. Hadi Tarish Zabun, head of the MIC SpecialOffice, was chairman of the ARMOS Board ofDirectors.• Siham Khayri al-Din Hassan, a Romanian-educatedeconomist who had worked in the MIC CommercialDirectorate, was the manager of ARMOS.• Munir Mamduh Awad al-Qubaysi, manager of Al-Basha’ir, was also on the board of directors, alongwith a representative of the IIS M23 Directorate(MIC Security). (see the IIS procurement section ofthis chapter and the RSI IIS annex.)ARMOS had a much smaller staff than Al-Basha’ir.But despite its size, the company achieved goodresults, according to an Iraqi official with directaccess to the information. ARMOS conductedapproximately 5 percent of the amount of business ofAl-Basha’ir, but five times more than Al-Mafakher. Incomparison to al-Qubaysi, however, Hassan wieldedrelatively little power.• ARMOS served as the conduit for many Russiancontracts, including contracts for aircraft enginesfor the Iraqi Air Force, according to another official.• Captured documents show that ARMOS wasinvolved in a deal to import MI-8 helicopter enginesfrom Russia through Syria in 2001.Captured documents detail an agreement in 2002between Iraq and Russian experts, Mr. Shakhlov andMr. Yusubov for the procurement of Russian missiletechnology and equipment in which ARMOS acted asa liaison between them. The documents also mentionhow the Iraqis used the Russian organization for victimsof nuclear disasters as a cover for the operation.The use of a charitable organization in this transactionhighlights the variety of methods used by theIraqi front companies to conceal their activities. Thecontract reads, “as for the second party (the RussianNuclear Disaster Victims Fund Institution) blockadeimposed on Iraq will not be considered a forcefulcircumstance.”• The value of the contracts was for a total of$600,000.• Some $100,000 for the Russian Standard MilitarySpecifications system.• Another $500,000 for the Schematic DiagramSystem.According to Huwaysh, although the company wasorganized primarily to do business with Russia,in 2002 the MIC granted ARMOS access to otherpotential markets, including Bulgaria and Ukraine.This new access was similar to that of Al-Basha’ir.74