Financial Times: Volcker report implicates big oil companies in oil-for-food scandal: “Well-known international oil companies used traders to distance themselves from the illegal surcharges being paid under the United Nations oil-for-food deal in Iraq, the final Volcker report has concluded.”: “BP of the UK, Anglo/Dutch Royal Dutch Shell, Total of France, and Spain's Repsol were all named as examples of "established oil companies" involved in the oil-for-food programme before surcharges began in 2001.”: Saturday 29 October 2005
By Carola Hoyos in London
Published: October 29 2005
Well-known international oil companies used traders to distance themselves from the illegal surcharges being paid under the United Nations oil-for-food deal in Iraq, the final Volcker report has concluded.
But only one major oil company was shamed by the 623-page report: Texaco, part of Chevron, the US's second largest energy group. BP of the UK, Anglo/Dutch Royal Dutch Shell, Total of France, and Spain's Repsol were all named as examples of "established oil companies" involved in the oil-for-food programme before surcharges began in 2001.
Most of the naming and shaming came within the opaque world of oil traders, many of whom are based in Switzerland. Taurus, Glencore and Trafigura were named, as were some of their top executives. Vitol, Bayoil, Coastal, traders with at least one refinery, were also named. But the vast majority of the oil these traders bought from Iraq was sold on to large and independent refiners. Those refiners - well-known energy companies with petrol stations across the world, were left out of the report. But Volcker noted that they too were implicated.
The report states: "A more nefarious purpose for an oil trader, or oil company, to purchase oil from a contractor, rather than directly from Somo [Iraq's oil company], was to maintain an apparent distance from the payment of illicit oil surcharges."
Oil companies and oil traders included standard disclaimers that the seller had not paid surcharges. "This was done notwithstanding the near-universal market recognition that Iraqi oil could not be purchased without payment of a surcharge," the report said.
This legal precaution taken by the companies, many of which have in the past years gone to great pains to polish their reputations, appears to have helped the end-users of the Iraq oil to escape without scrutiny. One example highlighted by the report, however, showed how Texaco opened a letter of credit on behalf of Bulf Oil so that it could buy Iraqi crude oil.
Before buying the oil from Bulf, Texaco requested a letter from Bulf stating that no surcharge had been paid. Volcker, using Somo documents, showed that $490,790 in illicit surcharges was made to the Iraqi regime between February 8 and November 25 2001 in connection with the Bulf transaction.
Bulf's role in paying kickbacks to the regime of Saddam Hussein came to light earlier this month, when Robert Morgenthau, Manhattan's district attorney, announced that Midway Trading, a company based in Virginia, had pleaded guilty to paying kickbacks to Iraq under the oil-for-food deal. Midway had bought the right to lift Iraqi oil from Bulf Oil, then sold the oil on to Texaco.
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