This New York Times article reports that federal investigators are focusing on four American oil companies and three U.S. citizens with Houston connections who allegedly received vouchers for oil from Saddam Hussein as he sought to flout United Nations sanctions.
The U.S. companies include Exxon Mobil Corp., ChevronTexaco Corp. and Houston-based El Paso Corp. Exxon, El Paso, and Chevron previously confirmed that they were among companies to receive subpoenas. The Times also reported that the U.S. attorney’s office in Manhattan is investigating corruption allegations against the former head of the U.N. Oil-for-Food program, Benon Sevan.
The companies and the individuals were identified in the Central Intelligence Agency‘s 1,000-page report on the Hussein regime’s campaign, although the names were redacted from the publicly released version. While confirming that sanctions had prevented Iraq from obtaining weapons of mass destruction, the report by arms inspector Charles Duelfer’s report describes efforts by the Hussein regime to manipulate the Oil-for-Food program in its favor by circumventing U.N. mandates and federal law. Others identified in the Duelfer report as receiving the vouchers include Bayoil, a closely held Houston oil company, and three individuals who campaigned to end the Iraq sanctions, including long-time Houstonian Oscar Wyatt. Together, the Duelfer report alleges that the companies and individuals received vouchers from the Hussien regime valued at 111 million barrels of oil.
The U.N. Security Council blocked Iraqi oil sales to punish Hussein following Iraq’s 1990 invasion of Kuwait. During the 1990s, U.N. Security Council members such as France and Russia sought to end sanctions by contending that they were primarily harming Iraq’s civilian population. As a compromise, the U.S. and Britain agreed to the Oil-for-Food Program, which was intended to allow carefully monitored sales of Iraqi oil to pay for humanitarian supplies.
Consequently, the allocation of vouchers — which are negotiable instruments that could be traded for Iraqi oil — was not necessarily criminal in nature and that no one has been charged with a criminal offense in connection with the investigation. However, a May 2002 Wall Street Journal ($) article reported that the Hussein regime had skimmed hundreds of millions of dollars and that several U.S. companies had been major consumers of Iraqi oil.
Relying on captured Iraqi documents and interrogations of Mr. Hussein and other Iraqi officials, the Duelfer report estimates that the Hussien regime illegally collected $11 billion through selling the oil below market price and receiving the difference through kickbacks. The report alleges that Mr. Hussein peddled influence through giving oil vouchers to powerful foreigners and foreign organizations.
Major oil companies have been under increasing pressure to line up new supplies as reserves in more-stable regions have declined, and this search often puts them in contact with countries with rampant corruption and unstable governments. As a result, it is not unusual for such companies to receive subpoenas and be the subject of such investigations.
The Duelfer report lists hundreds of foreign companies and individuals who allegedly received Iraqi oil vouchers — including Mr. Sevan — but not the U.S. companies and citizens. However, the names were included in versions sent to congressional committees and officials have confirmed their accuracy. Many of the names were disclosed in January when documents purportedly taken from Iraqi oil-ministry files were published in an Iraqi newspaper.