A Senate report released Monday accuses top Russian politicians, including advisers to President Vladimir Putin, of engaging in illicit transactions with Iraq during the U.N. oil-for-food program.
The report found that Iraqi dictator Saddam Hussein’s regime allocated 76 million barrels of crude oil to Vladimir Zhirinovsky, Russia’s deputy parliament speaker, and his political party between 1997 and 2002.
The report was made by the Permanent Subcommittee on Investigations of the Senate Homeland Security and Governmental Affairs Committee, one of several congressional panels probing the oil-for-food program. The subcommittee plans a hearing on its findings Tuesday.
The report estimated that Zhirinovsky profited by about $9 million in commissions after assigning his rights to companies that could actually take possession of the oil and sell it on the open market.
The report also said top Russian officials — including Alexander Voloshin, a former Putin adviser and one-time Kremlin chief of staff — and Putin’s United Russia party received oil allocations for 90 million barrels between 1999 and 2003.
Those allocations yielded profits of $3 million once the shipments were steered through Russian companies, the report concluded.
The subcommittee did not seek rebuttals from the men or their representatives, but Zhirinovsky has denied previous reports that he received any benefit from the oil-for-food program.
Former Iraqi Vice President Taha Yasin Ramadan — captured in August 2003 after the U.S.-led invasion — told investigators Iraq believed the Russian allocations provided “compensation for support” shown, especially at the United Nations.
Ramadan said Putin’s party received the largest allocations because it was Russia’s governing party, the report found.
“This is how Saddam Hussein used oil for food — to line his own pockets and and curry favor with politicians,” said Sen. Norm Coleman, a Minnesota Republican, the subcommittee’s chairman. “That is the reality.”
Coleman said Iraq abused the program “to take care of its friends … and throw money at [U.N.] member states.”
Not a drop of Iraqi oil entered Russia, which is a net exporter of oil, investigators found. Instead, the crude was shipped to the North American and European markets.
Since Saddam controlled the choice of oil buyers under the U.N. program, the regime thought of it as the “Saddam Bribery System,” the subcommittee said.
Another official said the allocations were a way of “buying influence,” the report said.
Tariq Aziz, Iraq’s deputy prime minister under Saddam, said Putin’s party received a large number of allocations because Russia took positions favorable to Iraq on the U.N. Security Council, where is it one of five permanent members.
Like Ramadan, Aziz is awaiting trial before a special tribunal in Iraq.
Saddam once instructed his officials to “show gratitude” to Russia when it threatened to use its veto to thwart a U.S.-British plan to toughen sanctions in the summer of 2000, the report said.
The oil-for-food program was launched in late 1996 to help Iraqi people hurt by sanctions put in place after the Persian Gulf War.
Individuals or companies from Russia, China and France received a majority of the Iraqi oil procured through the U.N. program between its launch and its demise, along with that of the Saddam regime, in 2003.
In all, a U.N. escrow account collected $64 billion for 3.4 billion barrels of oil sold, doling out two-thirds of the money to vendors who sold food, medicine, and supplies approved by the Security Council to Iraq.
The rest of the oil-for-food cash paid for program costs, weapons inspections and reparations to Kuwait, whose 1990 invasion by Iraq prompted the economic sanctions Iraq fought so hard to roll back — in part, the report said, by steering oil contracts to countries sympathetic to its view.
Ties to Bayoil
Iraqi oil ministry records cited by the subcommittee show that Zhirinovsky and Voloshin hired an American company, Houston-based Bayoil, as a middleman to take possession of allocated oil and sell it for a share of the proceeds.
Some payments to Bayoil went through a company in Cyprus called Haverhill, the report said.
Bayoil and its chief executive, David Chalmers, and two of his oil brokers are under federal indictment in New York for allegedly paying Iraq illegal surcharges for the oil.
Documents cited by the Senate subcommittee revealed for the first time that Bayoil’s alleged illegal transactions involved Russian oil deals.
Chalmers has denied any wrongdoing.
One reason the Senate subcommittee and the other congressional panels are probing the oil-for-food program is that starting in 2000, Saddam extorted several billion dollars by imposing a 10- to 30-cent-per-barrel surcharge on buyers who willingly paid it to bank accounts he controlled.
Saddam also extracted kickbacks on its payments for humanitarian goods.
Russia got about a third of the oil sold under the program.
According to the Senate report, Russian individuals and companies that paid surcharges to Saddam delivered cash to the Iraqi Embassy in Moscow.
When the cash stored in an embassy safe reached $3 million to $4 million, the report said, it was taken to Baghdad in a diplomatic pouch.
Zhirinovsky once complained that he was unable to pay his surcharges, and his allocations were then suspended, according to documents cited by the report.
“Pay or get nothing,” Ramadan told him, according to an interview cited in the report. Ramadan said in lieu of cash, Zhirinovsky offered to give Iraqis a school building he owned in Moscow.
The Russian oil deals, as well as parallel deals the subcommittee alleged last week in a report about British Parliament member George Galloway and former French Interior Minister Charles Pasqua, will be the subject of Tuesday’s public hearing.
Both Galloway and Pasqua have denied the allegations. Coleman sent a letter to Galloway Friday inviting him to Tuesday’s subcommittee hearing, which Galloway plans to attend. (Full story)
“I’ll be going there to give them hell,” Galloway told CNN last week.
Coleman and Sen. Carl Levin of Michigan, the committee’s ranking Democrat, told Galloway last week to “be prepared to provide sworn testimony.”
The subcommittee contacted the British Embassy to expedite his visa application.
“We will be ready for him if he decides to show,” said spokesman Andy Brehm.
Coleman said Saddam used his illicit oil profits to rebuild his military capacity, echoing a conclusion by former Iraq weapons inspector Charles Duelfer.
Duelfer’s report for the CIA last year was the first to detail oil allocations to Russian and other political figures around the globe.
“In the end, I think you have to have some personal responsibility,” Coleman said, reiterating his call for U.N. Secretary-General Kofi Annan to resign his post due to his mismanaged oversight of the U.N. humanitarian program.
“I do not believe Kofi Annan has the capacity to do the heavy lifting because there is such a shadow on his leadership,” Coleman said.