Monday, March 01, 2004
Oh how it just keeps coming. The New York Times has a nice long article on the "Oil for Penthouses Program."
"Hussein's Regime Skimmed Billions From Aid ProgramI would like to point out that I was aware of the corruption in the oil-for-food program back in high school. The claim that both the UN and the New York Times were unaware is patently false. There's a reason that those right-wing republican whackos started calling it the "Oil for Palaces" program from the very beginning.
By SUSAN SACHS
Published: February 29, 2004
BAGHDAD, Iraq — In its final years in power, Saddam Hussein's government systematically extracted billions of dollars in kickbacks from companies doing business with Iraq, funneling most of the illicit funds through a network of foreign bank accounts in violation of United Nations sanctions.
Millions of Iraqis were struggling to survive on rations of food and medicine. Yet the government's hidden slush funds were being fed by suppliers and oil traders from around the world who sometimes lugged suitcases full of cash to ministry offices, said Iraqi officials who supervised the skimming operation.
The officials' accounts were enhanced by a trove of internal Iraqi government documents and financial records provided to The New York Times by members of the Iraqi Governing Council. Among the papers was secret correspondence from Mr. Hussein's top lieutenants setting up a formal mechanism to siphon cash from Iraq's business deals, an arrangement that went unnoticed by United Nations monitors.
Under a United Nations program begun in 1997, Iraq was permitted to sell its oil only to buy food and other relief goods. The kickback order went out from Mr. Hussein's inner circle three years later, when limits on the amount of oil sales were lifted and Iraq's oil revenues reached $10 billion a year.
In an Aug. 3, 2000, letter marked "urgent and confidential," the Iraqi vice president, Taha Yassin Ramadan, informed government ministers that a high-command committee wanted "extra revenues" from the oil-for-food program. To that end, he wrote, all suppliers must be told to inflate their contracts "by the biggest percentage possible" and secretly transfer those amounts to Iraq's bank accounts in Jordan and the United Arab Emirates.
"Please acknowledge and certify that this is executed in an accurate and clear way, and under supervision of the specified minister," Mr. Ramadan wrote.
Iraq's sanctions-busting has long been an open secret. Two years ago, the General Accounting Office estimated that oil smuggling had generated nearly $900 million a year for Iraq. Oil companies had complained that Iraq was squeezing them for illegal surcharges, and Mr. Hussein's lavish spending on palaces and monuments provided more evidence of his access to unrestricted cash.
But the dimensions of the corruption have only lately become clear, from the newly available documents and from disclosures by government officials who say they were too fearful to speak out before. They show the magnitude and organization of the payoff system, the complicity of the companies involved and the way Mr. Hussein bestowed contracts and gifts on those who praised him.
Yet his policy of awarding contracts to gain political support often meant that Iraq received shoddy, even useless, goods in return.
Perhaps the best measure of the corruption comes from a review of the $8.7 billion in outstanding oil-for-food contracts by the provisional Iraqi government with United Nations help. It found that 70 percent of the suppliers had inflated their prices and agreed to pay a 10 percent kickback, in cash or by transfer to accounts in Jordanian, Lebanese and Syrian banks.
At that rate, Iraq would have collected as much as $2.3 billion of the $32.6 billion worth of contracts it signed since mid-2000, when the kickback system began. And some companies were willing to pay even more than the standard 10 percent, according to Trade and Oil Ministry employees.
Iraq's suppliers included Russian factories, Arab trade brokers, European manufacturers and state-owned companies from China and the Middle East. Iraq generally refused to buy directly from American companies, which in any case needed special licenses to trade legally with Iraq.
In one instance, the Coalition Provisional Authority, the American-led administrators in Iraq, found that Syria was prepared to kick back nearly 15 percent on its $57.5 million contract to sell wheat to Iraq. Syria has agreed to increase the amount of wheat to compensate for the inflated price, said an occupation official involved in the talks.
Iraq also created a variety of other, less lucrative, methods of extorting money from its oil customers. It raised more than $228 million from illegal surcharges it imposed on companies that shipped Iraqi crude oil by sea after September 2000, according to an accounting prepared by the Iraqi Oil Ministry late last year. An additional $540 million was collected in under-the-table surcharges on oil shipped across Iraq's land borders, the documents show.
"A lot of it came in cash," recalled Shamkhi H. Faraj, who managed the Oil Ministry's finance department under the old government and is now general manager of the ministry's oil-marketing arm. "I used to see people carrying it in briefcases and bringing it to the ministry."
United Nations overseers say they were unaware of the systematic skimming of oil-for-food revenues. They were focused on running aid programs and assuring food deliveries, they add.
The director of the Office of Iraq Programs, Benon V. Sevan, declined to be interviewed about the oil-for-food program. In written responses to questions sent by e-mail, his office said he learned of the 10 percent kickback scheme from the occupation authority only after the end of major combat operations.
In the few instances when Mr. Sevan's office suspected an irregularity, the statement said, it notified the sanctions committee, "which then requested member states concerned to investigate."
As the details of the corruption have recently emerged, law enforcement authorities in several countries said they had opened criminal and civil investigations into whether companies violated laws against transferring money to Iraq. Treasury Department investigators have also been helping the Iraqi authorities recover an estimated $2 billion believed to be left in foreign accounts. So far, more than $750 million has been found in foreign accounts and transferred back to Iraq, said Juan C. Zarate, a deputy assistant treasury secretary.
To some officials of Iraq's provisional government, what is perhaps most insulting is how little their country got for its oil money. Taking stock of what was bought before the American-led invasion toppled Mr. Hussein last spring, they have found piles of nonessential drugs, mismatched equipment and defective hospital machines.
"You had cartels that were willing to pay kickbacks but would also bid up the price of goods," said Ali Allawi, a former World Bank official who is now interim Iraqi trade minister. "You had rings involved in supplying shoddy goods. You had a system of payoffs to the bourgeoisie and royalty of nearby countries.
"Everybody was feeding off the carcass of what was Iraq."
Trade Embargo Imposed
The United Nations Security Council first imposed a trade embargo on Iraq on Aug. 9, 1990, one week after Mr. Hussein's invasion of Kuwait. It was kept in place after the Persian Gulf war in 1991, with the provision that sanctions would be lifted once Iraq destroyed its unconventional weapons and ended its weapons program.
But as living conditions deteriorated, the Council made several offers to let Iraq export limited quantities of oil to buy food and medicine. The two sides agreed on a mechanism only in 1996.
Late in 1999, after further tinkering, Iraq was permitted to sell as much oil as it wanted, with the proceeds going into an escrow account at Banque Nationale de Paris, supervised by the United Nations. The new rules also allowed Iraq to sign its own contracts for billions of dollars in imported goods.
As ministry officials and government documents portrayed it, the oil-for-food program quickly evolved into an open bazaar of payoffs, favoritism and kickbacks.
The kickback scheme worked, they said, because the payoffs could be included in otherwise legitimate supply contracts negotiated directly by the former government and then transferred to Iraq once the United Nations released funds to pay the suppliers."
There are two possibilities here. Either the UN is hopelessly corrupt, or they're incapable of doing the job if they aren't even aware of billions of dollars moving through a program THEY administered.
But as instapundit rightly notes, my favorite part is:
"In the high-flying days after Iraq was allowed to sell its oil after 10 years of United Nations sanctions, the lobby of the Rashid Hotel in Baghdad was the place to be to get a piece of the action. Please tell me this journalist is working on a story to name names. I can see how the legal side of that might take a looong time. Outing famous people as accessories to mass murder would tend to require damned solid proof, quite aside from any inclination to cover it up for friends and associates.
That was where the oil traders would gather whenever a journalist, actor or political figure would arrive in Iraq and openly praise Mr. Hussein. Experience taught them that the visitor usually returned to the hotel with a gift voucher, courtesy of the Iraqi president or one of his aides, representing the right to buy one million barrels or more of Iraqi crude.
The vouchers had considerable value. With the major oil companies monopolizing most Persian Gulf oil, there was fierce competition among smaller traders for the chance to buy Iraqi oil. And as long as Iraq kept its oil prices low enough, traders could make a tidy profit, even after buying the voucher and paying the surcharge.
"We used to joke that if you get one million barrels, you could make $200,000," Mr. Faraj, of SOMO, added, referring to a period when the vouchers sold for about 20 cents per barrel. "And yet the ones who got it were those people who used to come here and praise Saddam for his stand against imperialism."
Tarek Abdullah, an Iraqi-born trader living in Jordan, formed a company, DAT Oil, in Cyprus to take advantage of the Iraqi government's low oil prices.
"We all bought from those people who got the allocations," he said. "Sometimes they'd register the quantity under my name, but often the Iraqis wouldn't give us an allocation directly."
This is something to keep in mind when reflecting on the events of the past few years. I was aware of these things. You can bet that quite a few people in the government were aware too. Just as I and they were aware of the mass graves and torture and chemical weapons deployed against the Kurds. Now with the benefit of that 20/20 hindsight: was it wrong to invade Iraq? The cost, the rationale, and the prosecution of the war are other issues. Was it a morally or ethically bad thing to do?
If you cannot grant that simple principle then you have no place in civilized society.
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Meanwhile in Zimbabwe...
"President Robert Mugabe's government has set up secret camps across the country in which thousands of youths are taught how to torture and kill, the BBC has learned.I would like to point out that I've been talking about the shit going on in Zimbabwe here for years. Ignorance is no excuse. The UN reaction: Zimbabwe currently sits on the Commission on Human Rights. So who exactly is speaking to them regarding the human rights situation? The UN is worthless.
The Zimbabwean government says the camps are job training centres, but those who have escaped say they are part of a brutal plan to keep Mugabe in power.
Former recruits to the camps have spoken to the BBC's Panorama programme about a horrific training programme that breaks young teenagers down before encouraging them to commit atrocities.
Members of the youth militia are warned never to tell of their experiences inside the camps, and many refuse to be identified when talking about their experiences.
However one girl, Debbie, claims she was kidnapped and forced into a camp - where she was raped on her very first night.
I was raped again at night and they said no-one can complain because it's part of training
In accounts gathered by BBC Panorama from dozens of youths, it appears that for many of them the training in the camps begins with rape.
Debbie said she was raped three times on the first night, but claimed that the abuse didn't stop then.
She told the programme: "I was raped again at night and they said no-one can complain because its part of training."
She claims she used to share a blanket with an 11-year-old girl. The little girl was also raped night after night.
President Mugabe has visited the camps. Ministry insiders have told Panorama that his government knows what goes on inside them.
Food is often scarce. Youths are beaten until they succumb to orders. They are taught that their mission is to keep President Mugabe in power.
Panorama has also learned that some of the recruits are taught to torture his opponents.
Daniel was plied with alcohol and drugs, and learned how to electrocute his victims.
He said: "I would just touch, krr, krr - tell us information."
Asked if he thought it was OK to torture people, he added that it was "nice", because "your mind is disturbed".
During covert filming inside Zimbabwe, Panorama also spoke to a camp commander who told the programme that youths in his camp had been sent to kill opponents of President Mugabe.
He said: "In the area I am covering I heard of two. My superiors instructed that the people must be eliminated."
What is more frightening is that President Mugabe now wants every Zimbabwean youth to undergo training. We have been told they will be used to intimidate political opponents in next year's elections.
The commander added: "These guys are going to be used by the ruling party to keep the opposition out of power."
We put these allegations to Zimbabwe's government, but so far it has refused to respond."
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