Monday, October 31, 2005


Volcker has accused Russian politicians and business leaders of corruption in the UN oil-for-food program in Iraq.

www.themoscowtimes.com/stories/2005/10/31/044.html

Russian politicians and business leaders on Friday issued a scathing response to a report documenting extensive corruption in the UN oil-for-food program in Saddam Hussein’s Iraq, saying some documents implicating Russian companies and individuals were fake.

A day after the report’s release, the head of the nation’s electricity monopoly said its authors should be punished for including the name of a former Kremlin chief of staff now serving as its board chairman. LUKoil suggested it had been named to divert attention from the world body’s own failings.

The report by the Independent Inquiry Committee led by former U.S. Federal Reserve chairman Paul Volcker accuses more than 2,200 companies and prominent politicians of colluding with Hussein’s regime to bilk the humanitarian operation of $1.8 billion in kickbacks and illicit surcharges.

The program allowed Iraq to sell limited and then unlimited quantities of oil, provided most of the money went to buy humanitarian goods to help ordinary Iraqi’s cope with UN sanctions.

Countries that opposed the sanctions — like Russia — were given priority, the report found. "Russian companies received almost one-third of oil sales under the program," worth some $19 billion, the 623-page report said.

Between March 2001 and December 2002, Russian companies alone paid $52 million in illicit surcharges to Hussein’s government, the report alleges.

Russian government and company officials denied any wrongdoing.

"On a number of occasions, the documents shown to us were forged; in particular, they contained fake signatures of Russian officials," Foreign Minister Sergei Lavrov was quoted as saying by Russian news agencies.

Mikhail Margelov, a Kremlin-connected senator in the Federation Council, said the report had not proved the guilt of the Russian individuals and companies that it mentioned. "The fake documents provided to the Russian side cast a shadow on the very process of the investigation, reducing the scandal and the problem to a dubious farce," he was quoted as saying.

The report targeted Alexander Voloshin, who at the time was the Kremlin chief of staff, and Vladimir Zhirinovsky, the ultranationalist lawmaker. Both have denied wrongdoing.

Anatoly Chubais, chief executive of United Energy Systems, where Voloshin now serves as board chairman, criticized the commission for naming Voloshin in its final report, asserting that the commission had checked his signature on oil contracts and found it was a fake. "I hope that those responsible for the mistake will be punished," Chubais said.

The report said Zhirinovsky owed Hussein’s government over $5 million in illicit surcharges on some 73 million barrels of oil he was allegedly allocated. Zhirinovsky covered part of the bill by transferring the title to a Moscow building to the Iraqi government, it said.

Zhirinovsky slammed the report as containing "fabrications." Interfax quoted him as repeating earlier assertions that he had never sold or bought "a drop of oil."

The report also listed Gazprom and LUKoil Asia Pacific as having paid nearly $1.5 million in illicit surcharges to secure crude contracts worth over $185 million. The report said LUKoil Asia Pacific was a LUKoil subsidiary. LUKoil spokesman Dmitry Dolgov said he had never heard of the subsidiary, adding that investigators had worked with Iraqi documents, which could have been forged. "Our contracts were concluded directly with the Iraqi Oil Ministry, having been checked with the UN oil-for-food commission," Dolgov said.

Dolgov alluded to the high-profile resignation of investigator Robert Parton from Volcker’s committee in April, reportedly because he believed it ignored evidence critical of UN Secretary-General Kofi Annan. "This creates the impression that this report is aimed at distracting attention from the oversights of UN officials and laying the blame with certain companies," Dolgov said.

Gazprom said its participation "was minimal and was carried out in full compliance with Russian and international law."

Zarubezhneft, a state-owned oil company that the report said was the largest recipient of Iraqi oil contracts, said that it had operated "in strict adherence … to the regime of international sanctions in effect."

Communist Party chief Gennady Zyuganov on Saturday described the report as "the largest-scale forgery in recent history."

"All the companies that wound up on Volcker’s list are competitors of American companies on the world market. … Over 2,000 American soldiers have been killed in Iraq, but Washington has gone off the deep end again —now they’re climbing into Siberia."