Volume 1 - Iraq Watch

• Yugoslav Federal also supplied materials and expertisedirectly to Iraq from the Yugoslav production agreement for overhaul of the engines in the former• The agenda also included a realization of an oldcompanies.Federal Republic of Yugoslavia. The time limit forthe delivery and assembly of equipment was to beA senior executive at the MIC stated that the financial up to nine months.transfers between Yugoslavia and Iraq were under thesupervision of the Belarusian Infobank. Infobank also • Other documents captured indicated that the MICissued security bonds for the advance payment portionsof the contracts.deal, as well as Yugoimport. According to a contractfront company Al-Basha’ir was also involved in thebetween the two companies, the total amount of the• The contracts were signed pursuant to the Iraqi- deal was worth $8.5 million.Syrian Protocol where the payments were madethrough a third party, usually a Syrian-based company.equipment from Syria to Baghdad for a total price ofAl-Basha’ir was to be responsible for transporting the$300,000.• This Syrian company would pay the contractamount to the Belarusian bank in exchange for a As of May 2000, 45 overhauled engines had been10- to 12-percent cut of the value of the contract. delivered; however, captured documents detail a disputebetween ORAO and Iraq’s Ministry of DefenseAccording to the senior executive of the MIC mentionedabove, the former Yugoslavian Governmentover the price and delivery of 19 remaining engines.was represented commercially through the use of Al-Salafa is an Iraqi company that is a part of the Alexpertsand ex-military personnel to assist in the Eman network of front companies.transfer of technology and technical expertise for newmilitary projects. The coordination was under thedirect supervision of the MIC Director, Abd al-Tawab BulgariaMullah Huwaysh, Dr. Hadi Tarish Zabun, head of Although the procurement relationship began inspecial procurement at the MIC, and the Iraqi Deputy 1998, from 2000 until the start of OIF, the MIC conductedbusiness with the Bulgarian JEFF Company,Minister of Defense. This source also stated that thePresident of Yugoslavia opened accounts in Amman, a company that the IIS recommended the MIC use.Jordan. under the Lebanese cover company MEGA. The JEFF Company’s headquarters was located inSofia, Bulgaria. According to a senior executive inIn October 2002, Stabilization Forces (SFOR), Bosnia the MIC, the Bulgarian government was aware of theand Herzegovina, conducted an inspection of the dealings between the JEFF Company and Iraq. ISGORAO Aviation Company, in Bijeljin, Bosnia and cannot confirm this claim. The MIC used the Al-Herzegovina. Over 60 computer hard drives and a Basha’ir Company to coordinate contracts with JEFF.large number of documents were seized. Among the To establish a contract, JEFF personnel would travelcaptured documents was a five-page memorandum to Iraq to meet with the Al-Basha’ir Company or vicethat documents the discussions and agreements versa. Al-Basha’ir would then deliver the contract tobetween ORAO, Al-Salafa, and the Iraqi Ministry of the Commercial Department of the MIC where anDefense concerning the illegal shipment of R13-300 arrangement for the contractual payment would beand R25-300 jet engines for the MiG-21.made.• Included in the memorandum is an agenda for the Reportedly, Bulgarian companies exported numerousmilitary items to Iraq after 2000 in violation ofenlargement of existing capacities for overhaul ofR13-300 and R25-300 jet engines. UN sanctions (see figure 59).Regime Financeand Procurement113