US ignored oil smuggling warning in light of UN oil-for-food program

Jan 14, 2005 01:00 AM

The United States ignored warnings Iraq and Jordan were involved in large-scale oil smuggling outside the scope of the UN oil-for-food program in early 2003, a newspaper investigation reported.
The joint report by the Financial Times and Italy's Il Sole 24 Ore was published as scrutiny intensified over the UN program following allegations of corruption and mismanagement.
"We will look into the details of the Financial Times story," US State Department spokesman Richard Boucher told in Washington.

The report said one major deal netted $ 50 mm ($ 65.35 mm) for the Iraqis involved and a further $ 150 mm ($ 196.05 mm) in profits from the sale of the oil.
"Overall, the operation involved 14 tankers engaged by a Jordanian entity to load at least 7 mm barrels of oil," the Financial Times said.
The report said the warnings to the British and Americans about the illegal operation came from multiple sources -- traders whose legal cargoes were delayed because oil was diverted to the illegaloperation as well as UN inspectors.
"Although the financial beneficiaries were Iraqis and Jordanians, the fact remains that the US government participated in a major conspiracy that violated sanctions and enriched Saddam's cronies," the report cited an unnamed former UN official as saying.

The report said Washington ignored the warnings, justifying the smuggling on the grounds that Jordan, an ally, needed the oil to build reserves before the expected invasion of Iraq. A senior State Department official denied that.
"That was not our policy," the official said.
The report noted most of the oil never reached Jordan, ending up at the Middle East Oil Refinery in Alexandria, Egypt, a refinery in Aden, Yemen, and Malaysia and China.
"This operation was not permitted under the Security Council resolutions dealing with the oil-for-food program," the newspaper quoted UN inspector Michel Tellings as saying.

The report said the oil was loaded at Iraq's Khor al-Amaya terminal in early 2003 on behalfof a Jordanian company without UN authorisation and sat for several months in large tankers in the Gulf waiting for a buyer willing to handle the cargo.
Tellings alerted the US and British delegations at the United Nations. A Dutch firm hired by the world body to oversee oil loading operations in Iraq also reported the operation to the US-led Multinational Interception Force in the Gulf enforcing the oil embargo. But no action was taken.

The State Department responded at the time to reports of oil being loaded at Khor al-Amaya by passing on the information to the interdiction force, Mr Boucher said. While he noted the force boarded and inspected more than 15,000 vessels while the sanctions were in effect and diverted more than 1000, he said Washington was still looking into whether action was taken over the loadings in the report.
The report also said the smuggling was approved by the Jordanian government, which provided documentation stating the oil was legal -- despite the fact that it clearly was not.

The Bush administration demanded that UN Secretary-General Kofi Annan be held accountable for mismanagement in the now-defunct oil-for-food program. UN internal auditors have found management lapses in the $ 64 bn ($ 83.65 bn) program, but no corruption among UN officials.
For years after the 1991 Gulf War, the United States appeared to turn a blind eye to illicit trade in Iraqi oil products occurring openly across the Turkish and Jordanian borders.

Source: The Courier Mail
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