The Telegraph
Since 1st March, 1999
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Natwar skids on oil scandal
- Iraq report casts cloud on minister’s ability to deal with US

Washington, Oct. 29: External affairs minister K. Natwar Singh has been critically damaged in his ability to handle India’s most important relationship abroad ' with the US ' because he is named as a beneficiary in a multi-billion-dollar bribery scandal associated with the UN-managed “oil-for-food” programme.

The truth may well be on Singh’s side as he claimed today in a statement from Frankfurt denying the allegations that figure against his name in a 632-page final report on the oil-for-food scheme by Paul Volcker, the former chairman of the US Federal Reserve.

But in the US, where bribery associated with the $60-billion scheme for Saddam Hussein’s Iraq is being systematically used to undermine the UN, anyone who figures in any document on the oil-for-food programme is seen as tainted.

An earlier report by the three-man Volcker committee reprimanded UN secretary-general Kofi Annan, top UN officials and the Security Council itself for ignoring the prolonged mismanagement of the programme.

Annan has been reduced to a virtual lame duck for the rest of his tenure, shorn considerably of his moral authority because of Volcker’s findings on his role in managing the oil-for-food programme.

Singh’s name appears as a non-contractual beneficiary in a section of the Volcker report which has tables of companies which were allotted millions of barrels of oil by Saddam under the UN programme, which allowed him to sell limited quantities of Iraqi oil to buy humanitarian supplies for Iraqi people and ease the effect of UN sanctions.

The external affairs minister, according to Volcker’s account, benefited from Saddam’s allocation of 4 million barrels of oil to Masefield AG, which is said to be a company based in Switzerland.

Masefield AG sold just under half that allocation in the international market, according to documents which the Volcker inquiry obtained from Iraq’s oil ministry.

Much of Volcker’s information came from this ministry, which was guarded by the Americans and not allowed to be looted following their invasion of Iraq.

Volcker employed 100 investigators in many parts of the world to ferret out details of this global bribery scandal: his inquiry, which produced five voluminous reports, cost $35 million.

Curiously, the same company, Masefield AG, is alleged in the tables as having sold one million barrels of oil in a separate deal which lists as a non-contractual beneficiary the Congress party, then in the Opposition.

Saddam allotted 4 million barrels in four different phases of the UN-supervised programme in deals which mention the Congress party as a beneficiary of those allotments.

Masefield paid surcharges totalling more than $63 million to the Baathist regime for lifting oil, according to tables in another section of Volcker’s report.

It was common practice under the oil-for-food programme for companies which were allotted oil to give kickbacks to the Iraqi regime for those allotments: these kickbacks were disguised as surcharges.

Similarly, companies which sold humanitarian supplies to Iraq often over-invoiced their goods and then returned part of such inflated costs to the Baghdad regime under the table.

The inquiry has determined that Saddam received $1.8 billion in kickbacks throughout the duration of the oil-for-food programme, which Volcker described as the “mother of all UN humanitarian programmes”.

Most conglomerates and pro-Saddam leaders who received oil allotments set up shell companies in tax shelters and other convenient locations to cover up their involvement in the bribery.

Notwithstanding the truth about its beneficiaries, Masefield AG is said to be a shell company that was set up to take advantage of the oil-for-food scheme.

Some of those so far discredited by the Volcker report include the French ambassador to the UN, Jean-Bernard Merrimee, Russian MP Vladimir Zhirinovsky, British MP George Galloway, Benon Sevan, the director of the humanitarian programme, and Annan’s son Kojo.

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