October 07, 2004
Suitcases full of cash, secret bank accounts,
covert operatives, corrupt politicians on the take. A report
detailing alleged illicit U.N. Oil-for-Food deals with the
former Iraq government paints a portrait of Saddam Hussein
as an international gangster -- not a nuclear terrorist.
The financial schemes propped up Saddam's regime for more
than a decade and involved cloak-and-dagger efforts to hide
the alleged graft by dealing in front companies, untraceable
accounts, cash sales and smuggling, the report by the top
U.S. arms inspector said.
The report, delivered Wednesday by Charles Duelfer, who
was charged to investigate the extent of Iraq's weapons
programs, relies on internal Iraqi documents and extensive
interviews with members of the former regime now imprisoned
Although Saddam opposed the program at first, he quickly
realized it could be exploited and did so with mendacious
verve until the U.S.-led invasion in 2003, former Iraqi
Saddam was able to "subvert" the $60 billion U.N.
Oil-for-Food program to generate an estimated $1.7 billion
in revenue outside U.N. control from 1997-2003, Duelfer's
In addition to Oil-for-Food schemes, Iraq brought in over
$8 billion in illicit oil deals with Jordan, Syria, Turkey
and Egypt through smuggling or illegal pumping through
pipelines during the full period that sanctions were in
place from 1991-2003, the report says.
While the United Nations focused on delivering
humanitarian goods to an Iraqi population suffering from
international sanctions and the totalitarian regime,
Saddam's government devised elaborate ways to skim money
from deals sending oil out and goods in. The report spells
out how kickbacks were solicited and how money got to
Iraq tried to manipulate foreign governments, including
members of the U.N. Security Council by awarding contracts
-- and bribes -- to foreign companies and political figures
in countries who showed support for ending sanctions, in
particular Russia, France and China, the report says.
The former head of the Oil-for-Food program, Benon Sevan,
also is accused of receiving bribes in the form of vouchers
allowing him or companies tied to him to purchase 7.3
million barrels of oil, which would have netted $700,000 to
$2 million, depending on oil prices.
Sevan is among hundreds of companies, groups and
individuals on 13 secret lists kept by the Iraqi Vice
President Taha Yasin Ramadan and the Oil Minister, Amir
Rashid Muhammad al-Ubaydi.
"Saddam himself would recommend a specific recipient,"
the report says, "and the recommended amount of the
Russian and French companies were singled out by the
regime for special treatment, according to the report, with
politicians close to the French President Jacques Chirac
appearing on list, among them former French Interior
Minister Charles Pasqua and businessman Patrick Maugein,
"whom the Iraqis considered a conduit to Chirac," according
to the report.
The report says this allegation is unproven and the
governments and officials deny it.
Some of the bribes allegedly paid by Iraq involved cash
to covert operatives. Saddam's former secretary and
ambassador to Moscow, interviewed by Duelfer's group, claims
former Iraqi Deputy Prime Minister Tariq Aziz paid a cash
bribe of $15-to-20 million to a female colonel in the
Russian Intelligence Service.
"She wanted Aziz to accommodate the companies nominated
by the Russian Intelligence," according to the official,
said Abd Hamid Mahmud Al Khatab al Nasiri.
The most lucrative exploitation of the program involved
kickbacks from companies executing legal sales of oil. Under
the terms of the U.N resolution establishing the program,
Iraq maintained the right to determine who got contracts for
oil being exported and the humanitarian goods being imported
and to determine market prices.
In what the report calls, "an open secret," the Iraqi
government demanded illicit surcharges of 25-to-30 cents on
all barrels of oil bought, which buyers had to secretly pay
before the deals were sealed. They complied because the
Iraqis were selling slightly below market prices.
One of the most prolific purchasers of the oil was
Swiss-based Glencore run by one-time fugitive American
financier Marc Rich, which the report alleges paid over $3.2
million in kickbacks to the Iraqi government. Rich, formerly
wanted for tax-evasion was pardoned by President Clinton in
his last days in office.
The report says that the company denies any inappropriate
Most of the kickbacks were transferred to the Iraqi
government through secret bank accounts in Jordan and
Lebanon, from which "trusted Oil Ministry employees"
withdrew an estimated $2 billion, the report said. They hand
delivered the cash to Baghdad.
"Oil suppliers and traders, who sometimes brought large
suitcases full of hard currency to embassies and Iraqi
Ministry offices, so that the payments would be untraceable,
filled these illegal bank accounts," according to senior
Iraqi officials, the report says.
An additional $750 million was recovered in the accounts
after the war and returned to Iraq. The report alleges Iraqi
embassies in Moscow, Hanoi, Ankara and Bern were also used
to collect kickbacks from oil companies with the money
shipped back to Iraq in diplomatic pouches.
The Iraqis exploited deals for importing goods in a
similar manner. It cites the case of a Jordanian company,
the Al-Eman Group, which was made to deposit 10 percent of
the value of some deals in a Jordanian account before they
"When the goods were delivered to Iraq, the U.N. Iraq
account would pay the full contract price to Al-Eman," the
reports says. "At that point, the Jordan National Bank would
automatically kick back the performance bond to an Iraqi
account instead of returning it to Al-Eman, as would
normally be the case."
Elaborate methods were used to hide the secret accounts
in Jordan and Lebanon. Temporary accounts set up under false
names by Iraqi ministries were used for initial transactions
before money was spirited into accounts held by the Central
Bank of Iraq at the same banks. Iraq also used front
companies in Jordan and the United Arab Emirates to transfer
Once the money returned to Baghdad, the government had a
standard scheme for dividing the spoils. The government
routinely allocated 5-to-10 percent of the kickbacks to the
ministries who distributed the money to bureaucrats to
encourage them to continue soliciting bribes.
Another Iraqi scheme involved signing deals with foreign
companies for inferior or spoiled goods, while paying
premium prices. The Iraqi government often did this
knowingly, according to the report, under the understanding
that the differential would be paid in kickbacks.