The Middle East Media Research Institure
Inquiry & Analysis - Iraq
April 21, 2004
MEMRI Analyst's Testimony Before Congress on the U.N. 'Oil for Food' Scandal
Today, MEMRI Senior Analyst Dr. Nimrod Raphaeli testified about the U.N. 'Oil
for Food Program' before the House Committee on Government Reform's subcommittee
on National Security, Emerging Threats and International Affairs. The following
is his testimony:(1)
Mr. Chairman: On January 25, 2004 the Iraqi daily Al-Mada published a list of
270 individuals and entities who were beneficiaries of Saddam Hussein's oil
vouchers. The Middle East Media Research Institute, or MEMRI, translated the
list from Arabic and made it available to non-Arabic readers on January 29.
Mr. Chairman: In my presentation I will address five questions that we have
frequently been asked:
First, what are these oil vouchers and how were they used?
Second, who were the beneficiaries?
Third, is the list authentic?
Fourth, what other means did Saddam Hussein use to subvert the Oil for Food
Fifth, could the administrators of the Oil for Food Program have been unaware of
the regime's subversion of the Program?
I shall now answer the questions briefly and in that order.
In May 2002, or two years before the oil vouchers achieved their present
notoriety, MEMRI issued a special dispatch titled "Iraq Buys and Smuggles its
Way out of UN Sanctions."(2) That dispatch catalogued techniques that were being
used to subvert the Oil for Food Program, including the use of vouchers to buy
In brief, Saddam Hussein granted oil vouchers to various beneficiaries -
individuals as well as public and governmental entities - who could then sell
them to oil dealers or agents operating from the Rashid Hotel in Baghdad. The
agents would then sell the vouchers to oil companies which, in turn, would
submit them to the State Oil Marketing Company or SOMO, to collect the oil. Both
the beneficiary and the agent collected quick and handsome profits. A one
million barrel voucher surrendered against $0.25 per barrel earns $250,000.
The beneficiaries were from 52 countries and included 19 political parties, and
numerous politicians and journalists. Russia led the way among countries, with
46 recipients for a total of about 2.5 billion barrels. Significant individual
recipients include the president of Indonesia, the prime minister of Libya, the
former prime minister of Yemen, a former French minister of interior, and Mr.
Patrick Maugein who, according to French sources, is a financial supporter of
French President Chirac.
Finally, the beneficiaries included the sons of the former Egyptian leader Gamal
Abdul Nasser, the President of Lebanon Emil Lehoud, and the perennial Syrian
minister of defense Mustafa Tlass.
There is a propensity among totalitarian regimes to keep accurate records of
their misdeeds. The first half of the last century provides several examples.
Saddam's regime provides another.
What gives credence to the authenticity of the list is the statements by many of
those implicated that they had received the vouchers for goods which they
provided under the oil for food program. These statements are, at best,
disingenuous. Under the program, contracts had to be approved by the U.N., and
upon the delivery of goods, the U.N. would reimburse the suppliers from the
escrow account held at the French bank BNP-Paribas. No official contracts were
financed by oil vouchers. Hence, if vouchers were granted they were given either
as bribes or as payment for illicit goods, which could not be purchased under
the program itself.
Despite the sanctions, the regime of Saddam Hussein perfected a number of
methods to sell oil for personal gains.
a. By the admission of Saddam Hussein's own son, Uday, Iraq exported to Syria
approximately 200,000-250,000 b/d through the Kirkuk-Banias pipeline. Syria
never denied it.
b. Trucks carried diesel oil from Kirkuk to southern Turkey. The Kurds who
controlled northern Iraq were happy to collect transition fees.
c. Small Iraqi ships carried crude oil across the Persian Gulf mainly to Qatar
for transshipment elsewhere. Many were intercepted and quite a few sank causing
d. Grains and other food supplies imported under the program were re-exported.
e. Legal shipments of oil were topped up by varying quantities with the excess
sold for the benefit of the regime.
f. Invoices were inflated - a practice commonly referred to as pricing transfer.
On February 18, a month after the list was first published by Al-Mada, Mr.
Shashi Tharoor, United Nations Under-Secretary-General for Communications and
Public Information, wrote a letter to the editor of the Wall Street Journal
professing ignorance of wrong doing. That letter makes two curious assertions.
First, it protests, "No one at the United Nations has yet seen the original
list." Note, please, that Al-Mada had published the list one month earlier.
Second, it offers an elaborate explanation of procedure. "The oil buyer had to
pay the price approved by the Security Council Sanctions Committee into a U.N.
escrow account, and the U.N. had to verify that the goods purchased by Iraq were
indeed those allowed under the program." Mr. Tharoor then introduces the caveat:
"But the U.N. had no way of knowing what other transactions might be going on
directly between the Iraqi government and the buyers and sellers." Now comes the
shocker: Mr. Tharoor says, "The program itself was managed strictly within the
mandate given to it by the Security Council and was subject to nearly 100
different audits, external and internal, [I repeat, Mr. Tharoor says, '100
different audits'] between 1998 and 2003 and, as the secretary-general has said,
this produced no evidence of any wrongdoing by the U.N. Official."
It is odd, indeed, that all these audits, paid for from $1 billion collected by
the UN to administer the program, could not find one of the several
infringements of the program that had been noted two years earlier by MEMRI -
which has no access to official records.
Thank you Mr. Chairman.
(1) April 21, 2004.
(2) See MEMRI Special Dispatch No. 382, May 20, 2002, "Iraq Buys and Smuggles
Its Way Out of UN Sanctions," http://www.memri.org/bin/articles.cgi?Page=countries&Area=iraq&ID=SP38202
The Middle East Media Research Institute (MEMRI) is an independent, non-profit
organization that translates and analyzes the media of the Middle East.