Saddam's Oil Vouchers Revisited

Introduction

The Iraqi daily Al-Mada ("Horizon") was the first newspaper to publish a list of 270 individuals and organizations that benefited from oil vouchers granted to them by the regime of Saddam Hussein. [1] The intention of the grant was either to allow the recipients to sell the vouchers to intermediaries for a quick profit or to buy the oil themselves at discounted prices. It was assumed that the vouchers would permit their ultimate bearer to purchase Iraqi oil at a sufficiently discounted price as to leave a margin of profit to the voucher beneficiary, the intermediary, the oil company which ultimately lifted the oil and, in some instance, to the regime itself in the form of surcharges or kickbacks that it levied on Iraqi oil exports. Al-Mada differentiates between "end-users" and "not-end users," the latter term referring to voucher recipients who had no refineries and, in many instances, were not in the oil business to start with. According to Al-Mada, its list is limited "to non-end users and to intermediary companies." It is this list in Al-Mada that has triggered multiple investigations.

The Duelfer Report and the Vouchers

Based on a thorough examination of the data at Iraq'sMinistry of Oil and its marketing arm, the State Oil Marketing Organization (SOMO), the Duelfer Report, released in September 2004, has pieced together a complete list of oil vouchers granted by the Saddam regime during the entire life of the Oil for Food Program beginning with the first phase of the program in 1996-7 and ending with the thirteenth and last phase, which ended with the fall of the regime. [2]

With minor exceptions, everyone who appeared on the Al-Mada list appears also on the Duelfer list. This is the first confirmation that the Al-Mada list is authentic. While the Duelfer report authenticates the Al-Mada list, the two lists of oil voucher recipients differ in terms of detail and specificity. While the Al-Mada list includes gross allocation of barrels of crude oil in each voucher, the Duelfer reports lists the vouchers with three different designations:

1. The number of barrels allocated vs. the number of barrels lifted. According to Duelfer, by the end of the final phase of the Oil for Food Program, Iraq had allocated 4.4. billion barrels of oil to approved recipients. However, only 3.4 billion barrels were actually lifted (loaded and exported). [3]

2. Contracts that had been signed but listed as "not performed," meaning that the transaction was formally concluded but no oil was lifted, for reasons that were not given.

3. There was also a "nil" designation, meaning that a voucher was granted but no action was taken by the beneficiary or by SOMO. Some of these beneficiaries refused to pay the surcharge on previous shipments and were therefore denied new shipments by SOMO. But there could be other reasons why a beneficiary had not taken advantage of the inherent value of the voucher.

Intriguing Figures among Voucher Recipients

The names of some oil voucher recipients stand out. One such person is Mawlana Abd Al-Manan who was allocated a total of 43.2 million barrels, most of it lifted by the Swiss branch of the Russian company Lukoil. One shipment was lifted by "Jordan Grain," whose name is unusual.

The intriguing part about Al-Manan is a reference made about him by the Iraqi intelligence service in a letter dated September 15, 1999. The letter referred to an instruction, delivered by phone, by "His Excellency the Director of Intelligence" to M5/15/2 instructing him to host "the Bangladeshi Mulana Muhammad Abd Al-Manan and his son Muhammad Mu'een at the Rashid Hotel in Baghdad at the expense of the Mukhabarat." [4]

Another person who was directly involved in terrorism is Abu Al-Abbas, who was allocated a total of 11.5 million barrels, some of which was lifted by Vilma Oil Consultant, a Spanish company. Abu Al-Abbas has also sold 1.5 million barrels through Ayad Ammora and Partnership (Syria), which is also listed as a recipient of vouchers for 18 million barrels.

Abu Al-Abbas was first mentioned in a "top secret and personal" letter (No.110/2/43 of 25 January 1993) from the Iraqi intelligence service to the secretary of the president of the republic. The letter listed the terrorist organizations that could be employed by Iraq to carry out sabotage and terrorism activities against American interests in the Arab world.

There is also the case the of the Syrian author Hamida Na'na', who wrote a biography of Iraq's former deputy prime minister Tariq Aziz, and was reportedly engaged in writing a biography of Ali Hassan Al-Majid, known as Chemical Ali. Ms. Na'na had done her oil business though Gemmar (a Swiss company), Devon Petroleum (a Panamanian company), and was also listed with African Petroleum Ltd (Namibia). Her last contract has "not performed."

Gemmar was also the trading company used by the Iraqi-French Friendship Society (15.1 million barrels), the former French Interior Minister Charles Pasqua (12 million barrels), and the Lebanese Alias Al-Farzali (multiple vouchers), who was listed under France.

Khalid Gamal Abdul Nasser (the son of former Egyptian leader Gamal Abdul Nasser), a recipient of vouchers for 16 million barrels, had operated through the Swiss company Lex Oil, as well as through Iraqi-Egyptian Company and another company under the unusual name of Income Company, which is also listed as recipient of vouchers. This may be a case of double counting, but it has to be examined further.

The Romania Labor Party (5.5 million barrels) had opted to do its oil business through National Oil Wells of Qatar.

Mention should also be made of the case of Bassim Qaqish, with multiple vouchers listed under Spain. The Spanish papers dealt mainly with Javier Ruperez of the Spanish Popular Party, another voucherrecipient, but not much with Qaqish.

The most intriguing of all is the case of Benon Sevan, the UN director of the Oil for Food Program. Mr. Sevan, who was identified in the lists with the United Nations but listed under African-Middle East (Panama), has received several vouchers. The last one for 1.5 million barrels appears to coincide with Mr. Sevan's visit to Iraq and his meeting with Iraq's Deputy President Taha Yassin Ramadan in February, 2002. At the meeting, Mr. Sevan was quoted by Babil, the daily which was owned by Saddam's son Uday, as stating that the program "suffers from paralysis." Following his meeting with Sevan, Ramadan declared: "We call on the United Nations to exercise its role to ensure proper implementation of the memorandum of understanding on the Oil for Food Program." [5]

The Iraqi government daily Al-Thawra compared Sevan to "other honest employees of the United Nations," Dennis Haliday(an Irish national) and Hans von Sponeck (a German national) who served, in succession, as UN Representatives in Iraq for Humanitarian Affairs. [6] Until the fall of Saddam these two UN officials had given numerous interviews on visual and written media denouncing the UN sanctions as harmful to the people of Iraq.

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Vouchers to Iraqi Immigrants

There are a number of individuals who are listed as Iraqi immigrants, who appear on the Duelfer Report but not in Al-Mada. There is Zkyad al-Hadi with two shipments, 1 million barrels each, lifted on his behalf by what appears to be the same company although listed under two different spellings, one time as Berinco and the other time as Perenco. It is identified as a British company.

A second immigrant is Riad Al-Taher, with 2 million barrels lifted by Bulla Resources, an Irish company.

A third immigrant is Fa'iq Sharif, who was allocated 3 million barrels but lifted 3.588 million by a Malaysian company named as Trade Year. This is not the only instance of oil being lifted in excess of the allocation identified by the voucher. However, no explanation was offered for this discrepancy.

The designation of these individuals as "Iraqi immigrants" is equally intriguing, given Saddam's relations with Iraqis in exile. One can only surmise that these three individuals were serving the interests of the regime in one capacity or another.

Names of Individuals in the Duelfer Report not Included in Al-Mada

The Duelfer report lists a number of individuals and organizations who, by their designation, would appear to be non-end users, and should have been included in Al-Mada list. The following is the list by country and the number of oil barrels approved:

Malaysia

Abdallah Badawi (2 million), currently Prime Minister of Malaysia and fighting allegations of corruption in his country.

Iran

Mujahideen Khalq, multiple vouchers. This is an Iranian terrorist organization which was sponsored by Saddam and allowed to operate from Iraqi soil against Iranian targets. They sold their vouchers through Century Marketing, which is listed as a British company.

Romania

Ion Christian Nicolae (1.5 million barrels)

Russia

Mr. Yelloshin (3 million barrels) – head of Russian President's office

Mr. Gutzariv, Member of the Duma (Parliament), 2 million barrels lifted by Slavneft.

Peace and Unity Party (multiple vouchers) – lifted by Lukoil

Yugoslavia

Yugoslav Radical Party (4 million barrels)

Not Performed or Nil

Among those listed in Al-Mada are a number of individuals and organizations who, according to the Duelfer report, have not exercised the right to sell the vouchers and are listed either as "not performed" or "Nil." Nevertheless, their inclusion in the voucher system suggests the extent to which the Iraqi regime had gone to garner the friendships of those favored by it as potential political assets.

Among these are the Armenian Foreign Ministry, Hungarian Interest Party, Najah Wakim and Osama Ma'rouf (Lebanon), Nigerian Ambassador to Iraq, the Social Democratic Party of the Ukraine, and "the sons of the Congolese President" (not clear whether it was Congo, Kinshasa, or Congo Brazzaville). One should also mention the many individuals and entities who lifted only partial allocations of crude oil.

Remaining Questions

While the Duelfer report sought to be comprehensive it has nevertheless raised a number of unanswered questions, viz.:

1. How does one distinguish between a voucher recipient who was meant to make a quick and handsome profit through the sale of the voucher to an intermediary (non-end user) and one - particularly a company - which may have received vouchers to lift oil at discounted prices under condition that it pay the regime a surcharge or a kickback?

2. Who were the intermediaries and how did they operate? What was their margin ofprofit and did they have to share it with an Iraqi entity? Was there any restriction regarding to whom they could sell the vouchers?

c. How did the process work? Who issued the vouchers and how were they transmitted through the channels? Are there copies of vouchers available for review?

Conclusion

The Oil for Food Program has generated a massive international scandal involving governments, political parties, and individuals in many countries. It has demonstrated the extent to which the Iraqi regime was prepared to travel to bribe individuals and organizations, some of which were at the pinnacle of power in their countries, and to circumvent the sanctions regime imposed on Iraq by the Security Council after its invasion of Kuwait.

As mentioned earlier, there are many on-going and simultaneous investigations of the program. It is an iceberg of a scandal, and this report has hardly touched the tip of it. Many documents remain sequestered by the investigative bodies and a vast amount details are either unknown or under wrap.

The United Nations has earned in excess of $1 billion for administering the program. Legitimate questions have been raised about the probity and accountability of some of those who were made in charge of the program. The outcome of the investigations could have a profound impact on the United Nations itself.

* Dr. Nimrod Raphaeli is Senior Analyst of MEMRI's Middle East Economic Studies Program.