Were Americans Profiting From Oil-For-Food Scams?

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Saddam’s Oily Deals
Were Americans Profiting From Oil-For-Food Scams?
Mark Hosenball, Newsweek

Jan. 24 issue - If you’re puzzled by the Oil-for-Food scandal, don’t feel bad. Government investigators have been working the case for months, and still they fear they might need years to figure out who profited from helping Saddam Hussein beat U.N. sanctions against his regime. In 1996 the U.N. Security Council signed off on a program allowing Iraq to sell oil for hard currency to buy food and medicine. Now a growing mass of evidence has emerged that Saddam wrung billions of dollars in illegal profits from the humanitarian program, aided by money-hungry collaborators outside Iraq. Many American conservatives are demanding the resignation of U.N. Secretary-General Kofi Annan for failing to curb Saddam’s blatant abuses of the program.

But Saddam’s oil-trader friends may just walk away. To bring a case in the United States, prosecutors would need proof that an American knowingly paid kickbacks to Saddam’s regime. By CIA estimates, the dictator collected $229 million in illegal surcharges for oil sales, on top of the roughly $9 billion his regime earned from smuggling petroleum. A report from the CIA’s Iraq Survey Group says U.S. refiners stopped buying oil directly from Iraq in September 2000, when Saddam began demanding an illegal 10-cents-a-barrel kickback on Iraqi crude. Iraq’s oil kept flowing to U.S. buyers nevertheless. Investigators say Saddam’s middlemen hid their tracks in a labyrinth of shadowy intermediaries and numbered-account havens.

Investigative officials in New York and Europe are trying to unravel the mysteries of the Oil-for-Food business, looking closely at the dealings of numerous companies and individuals. One businessman under scrutiny is Ben Pollner, a U.S. trader based in Switzerland. Law-enforcement sources say he emphatically denied any wrongdoing when questioned by representatives from the office of Manhattan District Attorney Robert Morgenthau last year in New York. No charges have been filed against Pollner or his firms. Still, a glimpse into his transactions may offer some sense of the convoluted nature of the trade. A top European investigator says two Pollner companies in Geneva are believed to have handled as much as $4 billion in Oil-for-Food deals, reselling some crude to big U.S. refiners like ExxonMobil.

In at least a few instances, the oil’s provenance raises troublesome questions. Sources say Pollner bought millions of barrels from an obscure outfit calling itself Fenar Petroleum. NEWSWEEK has obtained a copy of one Oil-for-Food contract that puts Fenar’s offices at an address in Liechtenstein. But Fenar’s phone number connects instead to a building near Hyde Park in London-a building where one of Pollner’s companies, Taurus Petroleum, has offices. The contract was signed on Fenar’s behalf by Musbah Ladki, whom NEWSWEEK has identified as a 48-year-old Beirut businessman. An ExxonMobil spokeswoman, acknowledging that her company bought Iraqi oil from Taurus, insists that any deals were "in full compliance with U.N. resolutions." Pollner and Ladki did not respond to numerous requests for comment from NEWSWEEK. But investigators have questions of their own, and are not yet ready to abandon the trail.