A team of international forensic investigators is preparing to blow the lid off the much-disputed U.N. oil-for-food program in Iraq and will present new evidence of corruption at an upcoming congressional hearing that directly will implicate world leaders and top U.N. officials, Insight has learned.
Investigators, led by Claude Hankes-Drielsma and the KPMG accounting firm, currently are in Baghdad sifting through mountains of Saddam Hussein-era records seized from his Oil Ministry and the State Oil Marketing Organization that detail payments by Saddam to his legions of foreign friends and political supporters. An Iraqi newspaper, Al-Mada, published the list of 270 recipients of special "allocations" (also known as vouchers) in January. But as Insight goes to press, the testimony of Hankes-Drielsma on April 22 before the House International Relations Committee is expected to provide new evidence of widespread international corruption.
In a scathing letter sent to U.N. Secretary-General Kofi Annan on March 3, which he made available to Insight, Hankes-Drielsma called the U.N. program "one of the world's most disgraceful scams," and said that "based on the facts as I know them at the present time, the U.N. failed in its responsibility to the Iraqi people and the international community at large."
In an earlier letter to Annan, to which he received no reply, Hankes-Drielsma noted that allocations of "very significant supplies of crude oil [were] made to ... individuals with political influence in many countries, including France and Jordan," both of which supported Saddam and his regime to the bitter end.
Under the U.N. program, the Dutch company Saybolt International BV was paid hefty fees to inspect oil tankers loading Iraqi crude in Basra, to make sure no cheating took place. "Now it turns out that the inspecting company was paid off," one investigator said, "while on the ground, individual inspectors were getting cash bribes." Saybolt denies it received an oil allocation, although the Iraqi documents show it was down for 3 million barrels.
Saybolt spokesman Peter Box tells Insight that the company's own investigation of two known incidents of "topping off" involving the oil tanker Essex in 2001 "found no involvement of our staff at that particular time." Saybolt continues to operate in Iraq today, although it now has an "entirely new group of people," Box adds.
Among the revelations at the April 22 hearings, Insight has learned from investigators directly working on the case, will be new details of oil vouchers allegedly granted to Patrick Maugein, a prominent crony of French President Jacques Chirac, said to total 72.2 million barrels.
Maugein's involvement in the U.N.-approved oil deals is significant, investigators say, because he is believed to be a conduit for backdoor payments to Chirac and his family. It was Chirac who spearheaded a worldwide coalition last year that opposed the U.S.-led invasion of Iraq and tried desperately to keep Saddam in power.
When the allegations of backdoor payments first surfaced in a Paris courtroom in 1998, Maugein swept them aside as "pure fantasy." And in a statement provided to Insight, he denies having raised funds for Chirac, his family or his political campaigns. But as more evidence begins to leak from the archives of Saddam's former oil ministry, such denials may become harder to sustain.
The vouchers were assigned to two trading companies, identified in the Iraqi documents as Trafigura and Ibex, both of which were involved in the Essex incident. Investigators say they believe both companies are tied to Maugein, either through beneficial ownership or contractual arrangement. Vouchers for an additional 11 million barrels were granted to Maugein business partner Cabecadas Rul de Soussa, according to the original Al-Mada list. The ties between de Soussa and Maugein were first revealed by Therese Raphael of the Wall Street Journal Europe.
Asked about the allegations by Insight, Maugein denied he was involved with either company, although he did acknowledge knowing their principals, with whom he had worked as an oil trader with Marc Rich in Switzerland. He insisted that all his dealings with Iraq were legal and conducted through the oil-for-food program. "Patrick Maugein bought oil for his refinery in Mantua, Italy," a spokesman said. "All the oil deals were run by the U.N. They were paid through the U.N. and monitored by the U.N."
But those denials might not withstand the onslaught of the documents about to be released, investigators say. "Already we've got details of all the accounts held in the names of individuals," one investigator tells Insight in an exclusive interview. "On these records are exact details of which accounts were held by whom," including the foreign proxies and their ultimate beneficiaries - in Iraq and overseas.
The Iraqi documents specifically tie Maugein to the 25 million barrels allocated to Trafigura Beheer BV, a company Maugein claims was a competitor of his own London-based SOCO International. Investigators say other information they have developed shows that Maugein could be a "beneficial owner" of Ibex Energy, a holding company registered in Bermuda that was awarded vouchers for 47.2 million barrels. "That is a very high allocation," an investigator tells this magazine. "If a Cabinet minister gets 12 million barrels, why would Ibex get 47 million barrels unless something much bigger was at stake?"
Other French recipients named in the Iraqi documents include former Interior minister Charles Pasqua (12 million barrels), former French U.N. ambassador Jean-Bernard Merimee (8 million barrels) and Lebanese-French middleman Elias Firzli (14.6 million barrels).
Firzli acknowledged in a lengthy interview with Insight in Paris that the Iraqis were desperate to meet with Chirac and were willing to pay a high price for access. Shortly before the war broke out in March 2003, Firzli says he introduced Iraqi diplomat Nizar Hamdoon - sent as an emissary from Saddam - to senior French government officials in Paris. But Firzli scoffed at the oil vouchers, calling them "small stuff compared to the billions of dollars people made in the 1980s."
Published reports to date have focused on oil vouchers granted to the head of the United Nation's oil-for-food program, Benan Sevan, who has been on an extended vacation since the allegations first surfaced at the end of January. He denied the charges through a U.N. spokesman. And Insight has learned that as investigators pursue the document trail, they believe they are getting closer to world leaders, including Chirac.
But can it be proved? "The Iraqi civil service, even under Saddam, was quite excellent. They kept meticulous records. Every order was cross-referenced, initialed and counterinitialed, so nobody could be accused of taking anything for himself," an investigator who recently returned from Baghdad tells Insight.
Rep. Henry Hyde (R-Ill.), chairman of the House International Relations Committee, sent a letter to U.N. Secretary-General Annan on April 1, which committee staffers tell this magazine was intended to "lay down a marker." It called the scandal "without precedent in U.N. history" and urged Annan to make his response "equally unprecedented." Annan has announced that he will name an independent panel to investigate.
Fears of a U.N. whitewash run high on Capitol Hill. Hyde urged Annan to take steps to ensure that all documents relating to the oil-for-food program "be preserved and secured," and asked that special measures be taken to protect potential whistle-blowers who could provide testimony on the illicit deals. The United States General Accounting Office, the investigative arm of Congress, told Hyde's committee recently that $10.1 billion of the estimated $60 billion handled by the United Nations under the program was paid in kickbacks, bribes and set-asides to Saddam and his cronies.
The KPMG forensic-accounting investigators were brought to Baghdad by the Iraqi Governing Council to get to the bottom of the scandal. But Insight has learned that the Coalition Provisional Authority (CPA), led by J. Paul Bremer, recently took over the investigation, just as the accountants were stumbling over evidence of corruption by Americans working for the CPA. "We were hearing stories of contractors passing envelopes with huge amounts of cash to CPA officials," an investigator says. "As much as $300,000 in cash passed hands."
Speaking from Baghdad, an Iraqi official confirmed to this magazine that the CPA was now in charge of these matters, although the Iraqi Governing Council was footing the bill. "We no longer have control over the documents or the investigation," the official said.
In Washington, the State Department's Bureau of International Organizations is in charge of relations with the United Nations. In preparation for the April 22 hearing, Chairman Hyde has sent two letters to Assistant Secretary of State Kim Holmes requesting that State provide full documentation of the oil-for-food program, including commercial contracts. Since the United States is a permanent member of the Security Council and a leading member of the U.N. Sanctions Committee, State has access to the full United Nations record but has been unwilling to make incriminating information public until now for fear of angering U.S. allies. France accounted for approximately 25 percent of all U.N.-approved trade with Iraq, according to an estimate by the CIA.
"Give France a break," says French ambassador to the United States Jean-David Levitte, writing in the Los Angeles Times. He said allegations that France condoned kickbacks or took bribes "are completely false and can only have been an effort to discredit France, a longtime friend and ally of the U.S."
Kenneth R. Timmerman is a senior writer for Insight and author of The French Betrayal of America, just released from Crown Forum.
