Global Policy Forum

Treasury's Role in Illicit Iraq Oil Sales Cited


Senator Releases E-Mail From Parties Involved in Shipments Banned by U.N.

By Colum Lynch

Washington Post
February 17, 2005

The Treasury Department provided assurances that the United States would not obstruct two companies' plans to import millions of barrels of oil from Iraq in March 2003 in violation of U.N. sanctions, according to an e-mail from one of the companies. Diplomats and oil brokers have recently said that the United States had long turned a blind eye to illicit shipments of Iraqi oil by its allies Jordan and Turkey. The United States acknowledged this week that it had acquiesced in the trade to ensure that crucial allies would not suffer economic hardships.

But the e-mail, along with others released this week by Sen. Carl M. Levin (Mich.), the ranking Democrat on the Senate Governmental Affairs panel's Permanent Subcommittee on Investigations, provides evidence that the Bush administration directly abetted Jordan's efforts to build up its strategic reserves with smuggled Iraqi oil in the weeks before the United States invaded Iraq in March 2003.

The illicit oil exports took place outside the Iraq oil-for-food program, which the United Nations administered from 1996 to 2003. While allegations of corruption and mismanagement in that program are under investigation by five congressional committees, the Justice Department and a U.N.-appointed panel, the illicit oil exports outside the program have received less scrutiny. According to investigators, Iraq received more revenue from those exports than from the alleged oil-for-food kickbacks.

"The bulk of [Saddam Hussein's] illicit oil sale revenues actually came from the money he received from unregulated sales of Iraqi oil, entirely outside of the oil-for-food program, primarily to Turkey, Jordan and Syria," Levin said at a hearing Tuesday on the U.N. management of Iraqi oil revenue. "We and the rest of the world looked the other way from those sales even though they were prohibited by the U.N. sanctions regime."

Levin disclosed Tuesday an e-mail describing how a Jordanian company, Millennium for the Trade of Raw Materials & Mineral Oils, sought approval from a U.S.-led international naval fleet to ship oil from an unauthorized Persian Gulf terminal at Khor al-Amaya. But the latest document reveals that Odin Marine Inc., a Stamford, Conn.-based shipping broker hired by Millennium to charter oil tankers, obtained a green light from officials at the Treasury Department's Office of Foreign Assets Control. Representatives of the Treasury Department and the Pentagon declined to comment on the trade. State Department spokesman Richard Boucher said the administration is reviewing the e-mails, which Levin provided on Tuesday, and will prepare a response. Efforts to reach officials at the Jordanian mission to the United Nations were unsuccessful.

The United Nations imposed trade sanctions on Iraq in 1990 after its invasion of Kuwait. The U.N. Security Council established the oil-for-food program in December 1996 to enable Iraq to sell oil and buy food, medicine and humanitarian goods. Under the program, Iraq was permitted to export oil from two terminals, at Mina al-Bakr on the Persian Gulf and Ceyhan in Turkey, with the proceeds placed in a U.N.-controlled bank account. The United Nations never authorized Hussein's government to export oil from Khor al-Amaya. Iraq sold $8 billion worth of oil to Jordan, Syria, Turkey and Egypt outside the oil-for-food program, according to a report by CIA adviser Charles A. Duelfer.

Jordan, which relied almost entirely on Iraqi oil for its domestic energy needs, bought more than $4.4 billion worth of Iraqi crude. Most of the oil was trucked across the Jordanian border to a refinery outside Amman. Jordan authorized Millennium to charter several supertankers to ship massive quantities of oil from Khor al-Amaya on the eve of U.S.-led invasion, according to an e-mail from a Millennium employee.

Howard Jaffe, an attorney for Odin, wrote in a March 4, 2003, e-mail that he had phoned an official at the U.S. Office of Foreign Assets Control to seek approval for Millennium's oil shipments. Efforts to reach that official, a Foreign Service officer now based at the U.S. consulate in Jerusalem, were unsuccessful Wednesday. "She called me back in about 2 hours and said that her office was 'aware of the shipments and has determined not to take action,' " Jaffe wrote to an executive at Odin. ". . . It appeared that they do not want to harm Jordan by interfering with its quest for oil before the impending conflict by seizing it."

Jaffe declined to comment on the contents of the e-mail, citing confidentiality agreements with other companies involved in the trade. But he said the U.N.-authorized Maritime Interdiction Force, which was led by a U.S. commander, "was very aware of what was happening. Inasmuch as it was set up by and for the United Nations, they knew or should have known what those guys were doing." Ahed Sokhon, a representative of Millennium, assured the oil shipping companies it had contracted that the trade was legal. In an e-mail obtained by the Senate committee, Sokhon said the U.S. government's decision to waive sanctions on Jordan indicated that Millennium's activities had the "full endorsement of both the executive and legislative branches of the United States."

"Jordan has blanket cover from the UN," he wrote. "The safe passage of the vessels going in and out loaded with Iraqi crude oil [is] a reflection of the legitimacy of our transaction." Sokhon said in a telephone interview from Amman that "anything we have done has been with the knowledge of the concerned authorities. We have not been involved in any illegal or illegitimate activities."

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