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Demolishing the Volcker myth

By: Raju Santhanam & Akrita Reyar It is open to speculation. On April 21, 2004, an inquiry committee is mandated by the United Nations to uncover corruption in oil dealings in Iraq. At least on the face of it. The committee is “supposed” to be “independent” and is headed by Paul Volcker, former Chairman of the United States Federal Reserve.

By Akrita Reyar | Updated: Sep 24, 2014, 16:15 PM IST

By: Raju Santhanam & Akrita Reyar
It is open to speculation. On April 21, 2004, an inquiry committee is mandated by the United Nations to uncover corruption in oil dealings in Iraq. At least on the face of it. The committee is “supposed” to be “independent” and is headed by Paul Volcker, former Chairman of the United States Federal Reserve. The Objective the UN says is - The independent inquiry shall collect and examine information relating to the administration and management of the Oil-for-food Programme, including allegations of fraud and corruption on the part of the United Nations officials, personnel, agents, as well as contractors, including entities that have entered into contracts with the United Nations or with Iraq under the Programme. The Independent Inquiry Committee or the IIC releases its fifth and final report on October 27, 2005. It says the committee documented extensive manipulation of the Oil-for-food Programme by Saddam Hussein, whose regime diverted $1.8 billion in illicit surcharges and kickbacks from the humanitarian purposes of the Programme. It says more than 2000 companies were involved in illicit payments. Companies and other individuals and entities, which paid the illicit kickbacks came from some 66 member states, while those paying illicit surcharges on oil purchases came from, or were registered in, some 40 member states. The programme Originally conceived as a “temporary” programme to bring food and medicines to the Iraqi population, the Oil-for-food Programme stretched to seven years, divided into 13 phases, with more than $100 billion in transactions (over $64 billion in oil sales and almost $39 billion for food). IIC finds that as early as Phase II of the Programme, the Government of Iraq began directing oil allocations to particular countries and individuals, clearly favoring countries “friendly to Iraq” and individuals perceived as being able to influence public opinion in favor of Iraq. As of Phase IV, the committee continues to record that Iraqi leaders decided to deny American, British, and Japanese companies direct oil allocations due to the opposition of these countries to the lifting of sanctions on Iraq. At the same time, Iraq leaders gave preferential treatment to France, Russia, and China because these countries were permanent members of the Security Council and perceived to be more favorable to lifting of the sanctions. Imposition of Surcharge The IIC says that in the early fall of 2000, the Government of Iraq ordered that surcharges be imposed on every barrel of oil sold under the Programme. The surcharge scheme, implemented by the Ministry of Oil and SOMO (State Oil Management Organization), lasted for over two years from the middle of the Phase VIII through the middle of Phase XII when it was effectively stopped with the advent of retroactive pricing. After the imposition of mandatory surcharges oil sales increasingly took the form of contracts with front companies, backed financially and technically by several international trading companies willing to facilitate surcharge payments. Iraq’s largest source of illicit income from the Programme came from “kickbacks” paid by companies that it selected to receive contracts for humanitarian goods under the Programme. These payments to the Iraqi regime were disguised by various subterfuges and were not reported to the United Nations by Iraq or the participating contractors, the IIC finds. Reactions A close look at the report clearly raises the doubts that the report could well have been scripted in the United States and against countries that have been voicing opposition to its policies in Iraq. The question here is – Could the motive of the findings have been to destabalise countries or individuals opposing the US and its policies especially in Iraq. It is no surprise then that most countries and individuals named by the report have slammed its findings. Expert in these countries, who have looked at the papers say the documents seemed to be fake and signatures false. Most countries have also found no need to indict those named and have instead found startling revelations about the report including those of forgery. In fact the Volcker report did not even make it to front page news. Some have even called for the writers of the report to be punished. The Conspiracy Theory In the Indian context… First, former Foreign Minister Natwar Singh or the Congress Party find no mention in the main body of the 631 page report. They mysteriously are added in Table 3 of the annexure later where Natwar Singh and the Congress along with Bhim Singh as non-contractual beneficiary. Second, the IIC is supposed to have sent notices to those named in the report. But in an interaction with media, Paul Volcker says he does not know who Natwar Singh is and whether a notice was sent to him. Natwar Singh has already denied receiving any notice. The question is when he did not even know that Natwar Singh was the Foreign Minister of India, whom were the notices sent to. Third, none of the interim reports released by IIC make any reference to Natwar Singh and the Congress. But then, CIA releases a report of the Special Advisior to DCI (Director of Central Intelligence) on Iraq’s WMDs on September 30, 2004, which mentions the names of Bhim Singh, the Congress and Natora Singh in its annexure pages 818-186. The same names with certain modifications in the CIA report become Natwar Singh and find their way into the annexure of Volcker committee’s final report. The coincidence of names in the CIA report being mentioned in the Volcker report may be too much to prove. Fourth, the only other place where the name of the Indian minister seems to make an appearance is on the Al-Mada website. Interestingly, Al-Mada allegedly got documents from a group of Iraqi exiles including Fadhil Chalabi – a cousin of Ahmed Chalabi, whose faulty intelligence on WMDs helped Pentagon wage a war in Iraq. It is worth noting that when Ahmed Chalabi fell out with the US, his house was raided and all documents related with the Oil for Food scam were allegedly seized by Paul Bremer. Another questionable finding about Al-Mada is that the website also names organistaions that have nothing to do with oil, its distribution, storage or sale. They don’t have any far fetched links with affiliates dealing with oil. They include the Russian Orthodox Church and the Russian Communist Party. In case of individuals, the matter becomes even more curious. It mentions a journalist - Hamidah Na’na! Only that the journalist happened to defended the Saddam regime. There are more strange cases. There is Khalid, son of late Egyptian President Nasir, former Jordanian Parliament member Tujan al-Faysal, the current President of Indonesia, the son Syrian Defence Minister and the son the Lebanese President. Incidentally, all have ruffled the US feathers at one time or the other. Finally, Paul Volcker has admitted to having changed the language of the report to go soft on references related to business dealings by UN chief Kofi Annani’s son Kojo. This clearly undermines the authenticity of the report. In India, while the references are minimal the reaction has been very strong. The story has been splashed across media very prominently and the Opposition has left no opportunity to accost the government. After the news first broke, Natwar Singh gave up the portfolio of Ministry of External Affairs. Later controversial statements by his own aide and India’s ambassador to Croatia, Aneil Mathrani, have forced him to offer his stepping down from the Union Cabinet altogether on the Prime Minister’s return from Moscow. The decision also came after he was removed from the steering committee of the Congress. But in a statement to Zee News his son Jagat Singh said that he and his father would refuse to made scapegoats. In England……the most prominent case is of left-wing politician George Galloway. Not only is he a strong critic of the Labour’s policy of acquiescing with US especially on Iraq, his vociferous opposition to war in terror also resulted in his expulsion from the Labour Party. Not one to be cowed down, he called the report a “lie’, agreed to testify before the US Congress committee and floated his own party – the Respect Party. Already, the documents, alleging that Galloway had received a bribe from Saddam Hussein through Oil-for-food have proved to be forgeries. Media reaction in Britain to the report has been low key. And the matter has not come up for much debate. France, which has been Europe’s face of opposition to Iraq policy, too has not been spared. Charles Pasqua, a former interior minister of France who has been accused by U.S. lawmakers of involvement in corruption alleged that he has been caught in the crossfire of what he called a U.S. campaign against France. Not only did he deny claims that he received millions of barrels of oil from Saddam Hussein`s regime, Pasqua also said he had no link to a Swiss company that supposedly handled oil allocations on his behalf. He also said that he had never visited Iraq. In Russia, which has been named as the biggest purchaser of oil under the programme, the reaction has been most critical. Certainly, nobody has lost his position over the report. The Volcker report alleges Russia companies contracted for about $19.3 billion worth of oil from Iraq, about 30 percent of all oil sales during the time of the programme. It also says that the largest amount of illegal surcharge payments to Saddam’s regime went through the Iraqi Embassy in Moscow. It especially implicates Russia`s Communist Party and Liberal Democratic Party of Russia each receiving large oil shipments for their support of Iraq. It also points to personal involvement of such shipments by the chiefs of the two parties -- Gennadii Zyuganov and Vladimir Zhirinovsky The Russians have publically slammed the report saying the documents are false. Experts, who had been called to check the authenticity of the papers, have come out with a clear verdict. The signatures are fake.