Volume 1 - Iraq Watch

cash through private sector trade outside the Protocolbetween November 1997 and March 2003. We lackinformation about earnings prior to these periods.Former Regime personnel indicate that the SOMOaccount at Halkbank was used exclusively for Iraq topay Turkish companies for the sale of goods and servicesdelivered to Iraq. The goods included oil sectorequipment, industrial equipment and raw materials,communications and transport goods, and buildingmaterials. The total amount deposited in the accountat Halkbank was $499,232,952. The total withdrawnequaled $302,305,033, leaving a balance before OIFof $196,927,919.South KoreaIllicit trade between South Korean companies andIraq was largely limited to contracts signed for hightechnologies, such as military computer equipment,sophisticated communications and radar systems.Although the South Korean Government was keen topromote South Korean companies to gain advantagein the international marketplace, there is no evidenceto suggest that the South Korean Government wascomplicit in the transfer of prohibited goods.As with other suppliers, Iraq used a network of frontcompanies and intermediaries to conceal its activitywith South Korean companies. These companiesrefused to directly supply Iraq resulting in their useof third party intermediaries from India, Jordan,and Syria to facilitate trade.• In 2000, the MIC signed a contract with a SouthKorean company for technical expertise in establishingan indigenous computer design and productionfacility in Iraq. The contract included SouthKorean technical assistance for the production ofcomputers for military purposes and the manufactureof circuit boards. The contract for SouthKorean technical expertise was signed for $14.4million.• In 2000, the IIS technology transfer division usedtwo front companies (the Iraqi company Galalaand an Indian front company, United Commodities)to procure computers, technical expertise, andtraining on computer design and production. Uponcompletion of this training, the MIC established anindigenous computer design and production line.This example illustrates the use of multiple frontcompanies to hide the IIS role in the transaction.Regime Financeand Procurement• The earliest evidence detailing a military procurementdeal with a South Korean firm was a 1998negotiation between a Korean company and theAl-Basha’ir Company, trading petroleum productsfor six patrol boats.• The evidence shows that from 2000 to 2001, SouthKorean companies provided technical components,software and expertise in the field of computerizationand communications—assisting Iraq in itsindigenous production of military computers and,thus, overall improvement of its conventional militarypower.• As early as December 2002, delegates from theIraqi Salah Al Din Public Company met with representativesof South Korean defense companies tofinalize issues surrounding several contracts whichhad already been signed by both sides.• Exploited documentation illustrated that the MICCommercial Department, through Dr. Hadi TarishZabun, Director General of Scientific Researchfacilitated “special contracts” for computers for aradar system and fiber optics for the communicationssystem in 2001.• In 2000, the Iraqi company Al-Ezz representedMIC in negotiations with a South Korean companynamed LG Innotech, which specialized in opticalfiber and digital exchanges. According to captureddocuments, LG Innotech agreed to provide the MICa total of 530 notebook-type hardened CPU systemsspecially designed for military use. The IraqiRegime planned to integrate the $11.35 million ofCPUs into its air defense systems and artillery firecontrol mechanisms. According to the same document,LG Innotech ultimately fulfilled more than80 percent of the contract. This contract also useda third party and negotiated in parallel with the LGInnotech military CPU contract.107