The Telegraph
Since 1st March, 1999
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Saddam ban bypass with oil 'vouchers'

Washington, Oct. 7: Saddam Hussein made $11 billion in illegal income and eroded the world's toughest economic embargo during his final years as Iraq's leader through shrewd schemes to secretly buy off dozens of countries, top foreign officials and major international figures, according to a new report by the chief US weapons inspector released yesterday.

Oil 'vouchers' that could be re-sold for large profits were given to officials including Indonesian President Megawati Sukarnoputri, French interior minister Charles Pasqua and former Russian presidential candidate Vladimir Zhirinovsky as well as governments, companies and influential individuals in Europe, West Asia and Africa, the report said.

Another recipient was Benon Sevan, the former top UN official in charge of humanitarian relief. Sevan ran the former oil-for-food programme designed to benefit the Iraqi people in the face of economic sanctions intended to cripple Saddam's regime, the report says.

The report, written by chief US weapons inspector Charles A. Duelfer, indicated that some of the oil vouchers were used legitimately by the recipients. Not all were fully cashed in, and some were not used at all. Companies or individuals from at least 44 countries received vouchers, the report said.

Russia, France and China were the top three countries in which individuals, companies or entities received the lucrative vouchers. Hussein's goal, the report said, was to provide financial incentives so that these nations would use their influence to help undermine what Duelfer called an 'economic stranglehold' imposed after Iraq's 1990 invasion of Kuwait.

'At a minimum, Saddam wanted to divide the five permanent members and foment international public support of Iraq at the UN and throughout the world by a savvy public relations campaign and an extensive diplomatic effort,' the report said.

Hussein's effort to thwart the embargo and divide the nations that supported it has long been known, but the Duelfer report reveals the lengths to which he went in attempting to defy the UN. The details could buttress Washington's contention that important players were preventing the UN programme from squeezing Saddam, forcing the US to launch a war to topple him.

Several American companies on the list, compiled from 13 documents kept by Hussein's vice-president and oil minister, were given vouchers to purchase billions of dollars of oil at discounted prices. The US companies are not named in the report.

The voucher system was particularly clever because the documents were negotiable and could be re-sold to oil companies or other buyers at profits of 10 to 35 cents per barrel. A voucher for 10 million barrels could generate between $1 million and $3.5 million to the holder.

The report notes that Indonesia's President was the recipient of a voucher that allocated her 6 million barrels. The former French interior minister received a voucher for 11 million barrels. The Russian foreign ministry received a voucher for 55 million, while Zhirinovsky got one for 53 million barrels and the Russian Communist Party's voucher totalled 110 million barrels.

An Iraqi newspaper said earlier this year that Sevan, whose activities are now under investigation for the by former federal reserve chairman Paul A. Volcker, received vouchers to purchase millions of barrels of Iraqi crude through several companies. The Duelfer report says that Sevan was allocated 13 million barrels of oil, of which 7.3 million were cashed in.

Sevan has denied the charges and claimed to friends that he is the victim of a smear campaign.

Hussein's multi-pronged strategy also included secret deals with neighbouring countries to circumvent UN sanctions by smuggling oil, which reaped profits for both sides, and illicit government-to-government trade agreements. The subsequent success in turn 'emboldened' Hussein to pursue programmes related to weapons of mass destruction, the Duelfer report says.

'Despite UN sanctions, many countries and companies engaged in prohibited procurement with the Iraqi regime throughout the 1990s, largely because of the profitability of such trade," Duelfer reported. In turn, Hussein sought to make the embargo a 'paper tiger,' the report says.

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