US were among the largest buyers of Iraqi oil

Oct 11, 2004 02:00 AM

As Saddam Hussein pressed the UN oil-for-food relief program for more money, which he used to buy banned weapons, an unwitting ally may have been the American driver.
Almost until the eve of the invasion of Iraq in March 2003, US oil companies were among the largest buyers of Iraqi crude oil. The role that the companies, including ExxonMobil and ChevronTexaco, played in the oil-for-food program is now coming under greater scrutiny in the wake of a report by the chief arms inspector for the CIA that disclosed how extensively Saddam was abusing profits from the oil sales.

Executives at the two companies insisted that their purchases of Iraqi oil were not illegal or unknown in international oil markets in recent years. Industry analysts also said they did not know of any improprieties by the companies.
"All of our purchases of Iraqi crude were conducted in full compliance with the program," a spokesman for ChevronTexaco, Michael Barrett, said.

In 2001, Iraq was the source of 7 % of all US petroleum imports, ranking sixth behind the largest foreign suppliers: Saudi Arabia, Canada, Venezuela, Mexico and Nigeria, according to the Energy Department.
Yet although such imports were considered routine, disclosures about irregularities in how the Iraqi government selected partners to market the oil have led to several investigations of the program -- by the United Nations, congressional committees and a federal grand jury. The US Attorney's Office in New York has issued subpoenas to several US companies whose names appear on the Iraqi list as having received vouchers for Iraqi oil.

A spokesman for the House International Relations Committee said that the committee was exploring which oil companies had received Iraqi oil or had been trading in the vouchers.
While committee investigators had been concentrating on the connection between vouchers and Iraqi arms purchases, the report issued by arms inspector Charles Duelfer that named US oil companies as recipients of vouchers was now prompting the panel's investigators to expand their inquiry to include the US oil companies as well.

In the meantime, an investigator associated with the independent UN-appointed panel looking into corruption in the oil-for-food program said his group had not begun investigating whether or how US and other oil companies had benefited.
The panel, led by former Federal Reserve Chairman Paul Volcker, is concentrating on accusations of wrongdoing by UN employees and companies such as Cotecna Inspection of Switzerland and Saybolt International, a Dutch concern, which the United Nations hired to monitor parts of the program. The investigator said the panel would begin to focus on oil companies that received Iraqi crude oil, with or without UN authorization, only after this initial phase of the inquiry was completed, which is likely to be weeks or even months away.

The House Energy and Commerce Committee has also joined the inquiry, with the chairman, Rep. Joe Barton, R-Texas, sending a letter to UN Secretary-General Kofi Annan asking him to release "any information in UN possession which relates to the use of oil-for-food money to produce chemical weapons in Iraq."
The oil-for-food program, over its life, resulted in $ 64.2 bn in sales, making it the world's largest humanitarian relief program, US officials say. The amount of oil sold fluctuated as the program went on. At the start, in December 1996, Iraq was allowed to sell only $ 2 bn worth of oil every six months. That limit was raised to $ 5.26 bn every six months by December 1999 and then was lifted altogether, until the oil-for-food program came to an end in March 2003.

The program allowed Iraq the power to determine, with certain exceptions, whom it sold oil to and whom it bought goods from, based on the profits of the sale, according to the United Nations, but the United Nations had veto authority over all the contracts.
For a US oil company to participate, it first needed permission from Washington. The revenue ultimately financed $ 31 bn of humanitarian supplies and equipment, including $ 1.6 bn of oil-industry spare parts and equipment, among other items, according to the United Nations.

At the same time, Saddam was imposing illegal surcharges, collecting kickbacks and smuggling oil outside the approved program, generating almost $ 11 bn in illicit revenue, which he used to buy weapons and other prohibited items and to build palaces, the Duelfer report said.
Moreover, oil experts have said, the largest source of money from unreported oil sales was from Iraq's illicit sale of oil to neighbouring Turkey and Jordan.

Source: PIN
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