Volume 1 - Iraq Watch

conflict, President Lukashenko instructed the BelarusianMinistry of Defense to allow Iraq to purchaseany goods from Belarusian military supplies.Payments From Iraq to BelarusThe main revenue stream for funding illicit trade withIraq came from the Iraq-Syria Trade Protocol. Theamount of illicit military trade between Belarus andIraq was significant according to captured documents,with Belarusian Governments receiving nearly $114million in payments from Iraq.According to a detainee, the critical financial elementin the illicit trade process between Belarus andIraq was Infobank. Belarus demanded to be paid 75percent of the contract price in hard currency beforedelivery of any goods. Iraq did not agree to this.Therefore, Infobank agreed to provide bridging funds,including the 75 percent up-front fee, to financeillicit deals between Belarus and Iraq for a fee of 15percent of any contract. According to a high-levelRegime source with direct access, kickbacks paidto Iraq by Belarusian companies for exports to Iraqunder the UN OFF Program were kept at the Infobankto fund future illicit Iraqi imports from Belarus. Asenior former executive in the Iraqi MIC believes thatInfobank had a total of $7 million of Iraqi money inits accounts before OIF. Infobank also financed illicitmilitary trade between Iraq and Yugoimport-FDSP ofSerbia, paying equivalent up-front fees, according to aformer senior executive in the MIC.TaiwanAlthough a limited supplier of prohibited goods toIraq, companies from Taiwan negotiated for conventionallymilitary goods and provided critical CNCmachines to the Regime from 2001 to 2003. Thesemachines provided Iraq with a means to improve itsmilitary-related production.The earliest evidence of Iraq’s procurement relationshipwith Taiwan dates back to January 2001, whenIraq sought military equipment and dual-use goodsfrom companies in Taiwan. In an apparent attemptto circumvent UN sanctions, Dr. Kahalid Sulaimanof the Iraq-based company ETIK for General TradingLimited approached the Taiwanese arms brokeragefirm, Epnon International Limited, seeking 150engines for T-72 and T-55 tanks, 200 engines forthe T-62 tank, and 100 engines for the BMP-1 andBMP-2 armored personnel carriers. The engines wereto be in complete and new condition.Although Epnon’s prices were higher than othersources, ETIK learned that it did business without theneed for official papers. The deal was originally structuredas cash only; however, under-the-table transactionwith the payments made in advance occurred,and an agreement was eventually reached for half thepayment for the engines to be in cash, and the otherhalf in oil.• ISG has found no evidence that these engines weredelivered to Iraq.There is limited information on the supply of CNCmachines to Iraq, but during UNSCOM’s tenure,UN inspectors confirmed Iraq had obtained CNCmachines manufactured by companies in Taiwan.• During an inspection in 1998 of the Al RasheedGeneral Company’s Tho Al-Fekar Plant at the TajiMetals Complex, UNSCOM inspectors found fournew Hartford vertical machining centers, with onemachine installed and being used on Ababil-50motor bulkheads. The four machines, made bythe She Hong Machinery Company Limited, werethree-axis vertical machining center with an indexingfourth axis and a 20-tool carousel.• The inspectors considered these modern, standardquality CNC machines suitable for good qualityaerospace and missile-related applications. Laterin 1998, another inspection at the Tho Al FekarMechanical Plant reported another four HartfordCNC machines milling Ababil-50 rocket nozzles.The team identified that three of these machinespossessed a computer-controlled turntable.• ISG cannot confirm that these CNC machines werepurchased directly from sources in Taiwan. It isequally likely that these machines were obtainedfrom unknown third parties.Regime Financeand Procurement129