[Mb-civic] US Gov. Always knew about Iraqi oil smuggling

[richard haase]

none
----- Original Message ----- 
From: "Alexander Harper" <harperalexander at mail.com>
To: <mb-civic at islandlists.com>
Sent: Thursday, January 13, 2005 10:57 AM
Subject: [Mb-civic] US Gov. Always knew about Iraqi oil smuggling


Are there no depths to the hypocrisy of the US Administration?

Al Baraka

US ignored warning on Iraqi oil smuggling
By Claudio Gatti in New York
Published: January 13 2005 01:31 | Last updated: January 13 2005 01:31

For months, the US Congress has been investigating activities that violated
the United Nations oil-for-food programme and helped Saddam Hussein build
secret funds to acquire arms and buy influence.


President George W. Bush has linked future US funding of the international
body to a clear account of what went on under the multi-billion dollar
programme.

But a joint investigation by the Financial Times and Il Sole 24 Ore, the
Italian business daily, shows that the single largest and boldest smuggling
operation in the oil-for-food programme was conducted with the knowledge of
the US government.

"Although the financial beneficiaries were Iraqis and Jordanians, the fact
remains that the US government participated in a major conspiracy that
violated sanctions and enriched Saddam's cronies," a former UN official
said. "That is exactly what many in the US are now accusing other countries
of having done. I think it's pretty ironic."

Overall, the operation involved 14 tankers engaged by a Jordanian entity to
load at least 7m barrels of oil for a total of no less than $150m (?113m) of
illegal profits. About another $50m went to Mr Hussein's cronies.

In February 2003, when US media first published reports of this smuggling
effort, then attributed exclusively to the Iraqis, the US mission to the UN
condemned it as "immoral".

However, FT/Il Sole have evidence that US and UK missions to the UN were
informed of the smuggling while it was happening and that they reported it
to their respective governments, to no avail.

Oil traders were told informally that the US let the tankers go because
Amman needed oil to build up its strategic reserves in expectation of the
Iraq war.

Last week Paul Volcker, head of the independent commission created by the UN
to investigate failures in the oil-for-food programme, confirmed that
Washington allowed violations of the oil sanctions by Jordan in recognition
of its national interests.

However, only a fraction of the oil smuggled out of Iraq reached the
Jordanian port of Aqaba. Most was sold to the Middle East Oil Refinery, in
Alexandria, Egypt; to a refinery in Aden, Yemen; and to Malaysia and China.
"This operation was not permitted under the Security Council resolutions
dealing with the oil-for-food programme," said Michel Tellings, one of the
two UN inspectors responsible at the time for the implementation of the
programme. "The volume of oil was not inspected and payments were not made
to the UN escrow account, as required by the programme."

In January 2003, Millennium, a little-known Jordanian company, asked Odin
Marine, a shipping broker based in Stamford, Connecticut, to find tankers to
load millions of barrels of Iraqi oil. Odin declined to comment.

"The ship owners were very wary," recalled another broker involved in the
deal. "They received papers from Jordan with all kinds of government stamps
claiming it was legitimate,but never actually received anything from the
UN."

In fact, no UN papers could have been provided since Millennium was not
allowed to lift oil from Iraq, and the port of loading, Khor al-Amaya in
southern Iraq, did not have UN authorisation to operate.

Nevertheless, shipping companies willing to take the cargo were found. "One
of the vessels I fixed was the Argosea, which was owned by the Greek
shipping company Tsakos," the broker said.

At the same time, Millennium chartered a couple of supertankers, including
the Empress des Mers, to hold its oil in the Gulf.

According to a spokesman for the Bahamian-based company that owned the
Empress des Mers, the vessel was to be loaded at sea from other tankers and
sit in the territorial waters of the United Arab Emirates off Fujairah, a
port at the entrance of the Gulf.

The operation was too big to go unnoticed. In the middle of February 2003,
UN inspectors began receiving calls from companies that were lifting oil
from Mina al-Bakr, the only UN-authorised port in southern Iraq.

The companies complained that tankers had suddenly appeared a few miles away
in Khor al-Amaya. Their activities had halved the pace of loading in Mina,
which was served by the same pipeline, leading to delays that were causing
demurrage fees.

Furious because the Iraqis had a history of refusing to reimburse those
costs, the lifters informed Mr Tellings who in turn notified the US and UK
missions to the UN.

Mr Tellings provided detailed information, including the names of some of
the ships spotted by inspectors in the area. He believed the tankers would
be challenged by the Multinational Interception Force (MIF), the force led
by the US navy that had been enforcing the embargo on Iraq.

"Three or four days later, I chased [the US and UK representatives] and
asked them what had happened with my information. They told me that they had
communicated it to their capitals and that they were puzzled themselves by
the lack of action."

US mission spokesman Richard Grenell said: "We were tireless advocates to
bring to the attention of the committee any and all oil smuggling and
illegal activity. But while the [oil-for-food] investigation is going on we
are not going to talk about specific issues."

Mr Tellings was not the only one who informed US authorities. Saybolt, the
Dutch company hired by the UN to oversee oil loading operations in Iraq,
reported the incident to the MIF.

On February 21 2003, when reports of the smuggling first appeared in the US
press, Jeff Alderson, spokesman for the Maritime Liaison Office (MLO), the
US navy office in Bahrain that co-ordinated the MIF activities, was quoted
as saying that he had "no information" about it.

His successor, Jeff Breslau, confirmed to Il Sole/FT that "we have no record
that we were warned" about the smuggling. But Il Sole/FT has discovered that
on February 17 2003, Saybolt sent an e-mail to the MLO about smuggling that
specifically mentioned the Argosea. The same day, the MLO sent a reply to
Saybolt acknowledging that notification.

For months, international traders looked for ways to make the cargo legal.

"There were plenty of letters from the Jordanian ministry claiming that the
oil was legitimate," saidone trader. "But we concluded that there was no way
that it could be legally bought."

Eventually, however, customers willing to take a chance were found. "After
six months, we were asked to discharge the oil," said the spokesman for the
Empress des Mers. The cargo was taken to Egypt, he added.

Out of this operation, traders estimate, Iraqis pocketed about $50m, all off
the UN books, while subsequent sale of the oil netted $150m in profits.

Millennium, the company that arranged the operation, is owned by Khaled
Shaheen, a Jordanian magnate who is president of Shaheen Investment &
Business (SBIG), and his two brothers, according to a company search.

However, Millennium clearly operated with the approval of the Jordanian
government. Papers exchanged with the shippers, and e-mails from Odin Marine
describe the company as "Millennium, for the trade of raw materials and
mineral oils for and on behalf of the Ministry of Energy and Mineral
Resources".

An e-mail sent on March 6 2003 by Odin Marine to confirm the fixing of one
of the vessels mentioned that "the Jordanian government through the Ministry
of Energy and Mineral Resources empowered Millennium to conduct this
transaction on their behalf, as per the attached power of attorney".

Claudio Gatti is a New York-based investigative reporter for Il Sole 24 Ore,
the Italian business daily



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