Saddam ‘Bought UN Allies’ With Oil

October 03, 2004
Saddam ‘Bought UN Allies’ With Oil
Robert Winnett

A LEAKED report has exposed the extent of alleged corruption in the United Nations’ oil-for-food scheme in Iraq, identifying up to 200 individuals and companies that made profits running into hundreds of millions of pounds from it.
The report largely implicates France and Russia, whom Saddam Hussein targeted as he sought support on the UN Security Council before the Iraq war. Both countries were influential voices against UN-backed action.

A senior UN official responsible for the scheme is identified as a major beneficiary. The report, marked “highly confidential”, also finds that the private office of Vladimir Putin, the Russian president, profited from the cheap oil. Saddam’s regime awarded this oil during the run-up to the war when military action was being discussed at the UN.

The report was drawn up on behalf of the interim Iraqi government in preparation for a possible legal action against those who may have illicitly profited under Saddam. The Iraqis hired the London-based accountants KPMG and lawyers Freshfields to advise on future action.

It details a catalogue of alleged bribery and corruption perpetrated by Saddam under the UN programme, revealing how the regime lined its pockets and those of influential politicians, journalists and UN officials.

The UN oil-for-food scheme was set up in 1995 to allow Iraq to sell controlled amounts of oil to raise money for humanitarian supplies. However, the leaked report reveals Saddam systematically abused the scheme, using it to buy “political influence” throughout the world.

The former Iraqi regime was in effect free to “allocate” oil to whom it wished. Dozens of private individuals were given oil at knockdown prices. They were able to nominate recognised traders to buy the cheap oil from the Iraqi state oil firm and sell it for a personal profit.

The report says oil was given to key countries: “The regime gave priority to Russia, China and France. This was because they were permanent members of, and hence had the ability to influence decisions made by, the UN Security Council. The regime . . . allocated ‘private oil’ to individuals or political parties that sympathised in some way with the regime.”

The report also details how the regime benefited by arranging illegal “kickbacks” from oil sales.

From September 2000, it is said Saddam made $228m (£127m) from kickbacks deposited in accounts across the Middle East. The analysis details only the export of oil — not the import of humanitarian supplies, also alleged to have been riddled with corruption.

The report is an interim analysis and therefore studies only a sample of oil contracts.

The other main allegations included in the report are that:

Benon Sevan, director of the UN oil-for-food programme, received 9.3m barrels of oil from the regime which he is estimated to have sold for a profit of £670,000. Sevan has always denied any improper conduct.

A former senior aide to Putin allegedly organised the sale of almost 4m barrels of oil at a profit of more than £330,000. At the time the oil was sold, Russia was blocking the UN from supporting America’s demands to attack Iraq. According to the report, the aide, who worked in the presidential office, received 3.9m barrels of oil between May and December 2002.

In the two months during the run-up to the war, the Iraqi regime illegally sold about £30m of oil to a Jordanian-based company with the money deposited in a Jordanian bank account established by the regime. This is suspected to have been an attempt to secure safe passage for Saddam’s family in the event of war.

A French oil company teamed up with the regime to bribe a UN-appointed inspector monitoring exports of Iraqi oil. The inspector, a Portuguese national working for Saybolt, a Dutch firm, was paid a total of £58,000 in cash to forge export documents.

The French firm is linked to a close associate of Jacques Chirac, the country’s president. A spokesman for Saybolt said it would be investigating the allegations.

Saddam imposed a surcharge of between 10 cents and 50 cents (5p to 27p) for every barrel of oil allocated by his regime between September 2000 and the end of 2002.
The money raised from this illegal surcharge was deposited in bank accounts in Jordan, Lebanon, Iraq and the United Arab Emirates. Iraqi embassies, including those in Moscow, Athens, Cairo, Rome, Vienna and Geneva, collected the money.

In total, 175 firms and individuals allegedly paid bribes to secure oil from the regime. According to the report: “The only way of enforcing the surcharge was through verbal personal guarantees and promises due to the sensitivity of the surcharge and the secrecy surrounding its imposition. However, after extensive efforts in collecting these amounts, a total of $228m (£127m) out of $263m (£146m) was eventually collected (87% of the total imposed).

“Some companies were afraid to pay the amounts through the banking system, in order not to be exposed or face possible legal sanctions overseas, and therefore preferred to pay in cash.”

The report claims that Russians had a prominent role. They received “unprecedented priority” and were allocated a third of all Iraqi oil — most of which was resold to other nations. Besides Putin’s private office, those named as having received oil include political parties, Russian oil firms and the foreign ministry.

A section of the report on Russian involvement says Saddam and his henchmen furthered “their political and propagandist cause through companies, individuals and political parties that have no relation to the oil industry. Through their activities, they have gained the indebtedness of the Russian Federation and with that, its weight and leadership on the world stage as well as its permanent membership of the UN Security Council”.

Last week Claude Hankes-Drielsma, an Iraqi government adviser who worked on the investigation, confirmed the report as genuine. “The records demonstrate that the UN oil-for-food programme provided Saddam with a vehicle to buy support internationally by bribing political parties, companies, journalists and other individuals,” he said. “This shows the need for a complete review of the UN.”