Saddam Bribed China With Oil Deals, CIA Finds

Saddam Bribed China With Oil Deals, CIA Finds
By Bill Gertz
11 October 2004
THE WASHINGTON TIMES

China illegally supplied Saddam Hussein's regime with missile technology and other weaponry and was a major beneficiary of the U.N. oil-for-food program, according to a CIA report.

The report by the Iraq Survey Group also stated that China, along with France and Russia, was bribed by Saddam with oil sales and weapons deals into working to end U.N. sanctions.

One sale took place in 2001 and involved an intelligence officer in Beijing, Abd al-Wahab, who bought 10 to 20 gyroscopes and 20 accelerometers from a Chinese firm that was not identified by name. The equipment was to be used in Iraq's Al-Samud missile program, said a former high-ranking official of Iraq's Military Industrialization Commission, which was in charge of arms procurement.

China was the third-largest recipient of oil vouchers from Saddam's regime, the report said. Russia and France were the two largest.

The Iraqi government used the voucher system to siphon off $11 billion through contracting kickbacks and other corruption in the $64 billion humanitarian program, which operated from 1996 to 2003. The program was designed to get food and medicine to the Iraqi people, despite international sanctions.

China also supplied rocket guidance software to the Iraqi Atomic Energy Commission in 2002 that was labeled "children's software" to mask its military nature, the report said.

The report sought to clear the Chinese government of a direct role in the illicit trade by stating the CIA had "no evidence" suggesting Beijing approved the exports.

However, the report noted that the companies involved were "state-owned" firms that were newly privatized and were willing to circumvent U.N. monitoring in supplying goods illegally.

Chinese Embassy spokesman Sun Weide said China's actions under the oil-for-food program were "totally legal." He also said Beijing complied strictly with U.N. resolutions regarding arms technology transfers to Saddam.

Chinese assistance helped boost Iraq's missile programs, especially in the area of guidance and control systems, the report said, noting that "Chinese companies willingly supplied these types of items to the Iraqi regime."

"In supplying prohibited goods, Chinese companies would frequently employ third countries and intermediaries to transship commodities into Iraq," the report said. "The Chinese-Iraqi procurement relationship was both politically problematic and economically pragmatic in nature, but it ultimately provided Iraq with prohibited items, mainly telecommunication equipment and items with ballistic missile applications."

One of the Chinese front companies named in the report was Siam Premium Products. Other Iraqi intermediaries for the China military sales were identified in India, Turkey, Syria and Jordan.

The CIA identified a major supplier of weapons goods to Iraq as the China North Industries Corp., or Norinco, which has been sanctioned by the U.S. government several times.

Norinco agreed in 2000 to supply 200 gyroscopes for use in Russian and Chinese cruise missiles. It also sold machine tools with missile applications.

The report, quoting documents obtained in Iraq, stated that Norinco agreed to continue selling military goods to Iraq despite Baghdad's debt of more than $3 billion to the company from earlier sales.

The company said it would keep the arms trade secret from the Beijing government, and Iraq agreed to repay Norinco with crude oil and petroleum products, the report said.

Iraq also was in the process of buying chemicals and materials for liquid-fuel missiles from Chinese and Indian companies. The sale may have been stopped by the U.S. military action that began in March 2003, the report said.

The report also provided new details on Chinese assistance to Iraq's fiber-optic communications networks, which were used to "connect static command, control and communications bases."

The report stated that the Chinese company Huawei and two other Chinese firms "illicitly provided transmission switches" for fiber-optic communications from 1999 to 2002.

The equipment was banned under the oil-for-food program, and included more than 100,000 lines and fiber-optic cable, the report said.

Chinese firms also supplied Iraq with graphite, a key component for missile nose cones, directional vanes and engine nozzle throats.

"Recovered documents from 2001 indicated a drive to acquire Chinese graphite-related products such as electrodes, powder and missile-related fuel," the report said.