Volume 1 - Iraq Watch

International Commodity Deception:The Spherical Aluminum Powder Case StudyThe lure of high profi ts brought unscrupulous tradeintermediaries to Iraq to offer their “services.” Iraq’sAl Badr Bureau Trading and Engineering Firm soughtbids on spherical aluminum powder, a key componentfor solid rocket propellant, through a Pakistani tradeintermediary. After three attempts to purchase thepowder failed, the intermediary’s managing directorsought other means to obtain the powder for Al Badr.Throughout the trade negotiations, both Amanatullahand Dr. Farhan Ghazar, the Al Badr representative,were aware the powder was a prohibited militaryitem.• In late April 2002, the Pakistani intermediary proposedshipping the powder to Iraq through Pakistanand then Syria using “falsifi ed shipping documents”listing a different material in the shippingcontainers. He requested Dr. Ghazar’s assistance tocreate these false invoices.• By mid-May, he had identifi ed an unnamed Britishmanufacturer that was prepared to ship the powderto Karachi and passed the company’s end-user certificate to Dr. Ghazar, as a metallurgist, who shouldhave no trouble falsifying the document.• The Pakistani intermediary and Ghazar also soughtpossible nonmilitary end uses for the powder thatcould be listed on the British certifi cate.• After completing the planning for the illicit shipment,he and Dr. Ghazar sought to assure his Iraqiclients that his Pakistani company was fully preparedto handle this sensitive project and any futurerequests for other Iraqi customers.Throughout the summer and fall of 2002, the Pakistaniintermediary continued to try to close the contractfor spherical aluminum powder with Iraq. Hemade a trip to Iraq with samples in July and mailedsamples to Dr. Ghazar in October 2002. Had Iraqagreed to the shipment in November 2002, the Pakistaniintermediary’s own delivery estimates wouldhave had the powder delivered to Pakistan from aBritish fi rm no earlier than February 2003. Therefore,it is unlikely Iraq was able to obtain the aluminumpowder before OIF. Nevertheless, this case illustratesthe methods used by Iraq and its illicit trade intermediariesto evade UN sanctions and internationalmonitoring.Regime Financeand ProcurementConcealing the Identity of CommoditiesIn addition to disguising the identity of the item,trade intermediaries employed many techniques tohide the identity of the end user of the commodities.A common practice used by Middle Eastern tradeintermediaries representing Iraq’s interests wouldroutinely approach suppliers about requirements for“unidentified clients.” The international supplierswould either settle for incomplete end-user statements(part of the formal international trade documentationrequirements) or accept false end-user statementsfrom neighboring countries sympathetic to Iraq.• After 1997, many of the illicit goods imported byMIC came through Syria using false end-user certificatesprovided by high-ranking Syrian officials.The former Syrian Minister of Defense, MustafaTlas, routinely signed false end-user certificatesfor weapons dealers, generally for a fee of 12 to 15percent of the total contract amount.• Documents from the Al-Basha’ir front companyillustrate this method of deception. According to thedocuments, the Indian NEC Company complainedto Al-Basha’ir in 2000 that the majority of the itemsrequested by the MIC were seized before reachingIraq, “despite the fact that most of it had documentswith clauses mentioning the requirement of notshipping it to Iraq, Iran, North Korea, or Cuba.”135