Friday, August 19, 2005

THERE WAS ONLY ONE WAY that the media would treat UNSCUM as what it really is: a mega-scandal. And that way has emerged, since Claudia Rosett (who deserves more than ever a Pulitzer for her pursuit of this subject) has discovered the involvement on the Oil-For-Food fraud of none other than... Enron!
Since the Oil for Food program came to an end in 2003, it has been described--accurately enough--as oil for palaces, oil for terror and oil for fraud. Now it turns out the U.N. relief program in Iraq was also oil for Enron.

Among the great scams of our time, there's a near-poetic inevitability to the convergence of the twain. When I first wrote about Oil for Food on these pages, almost three years ago, the analogy that came instantly to mind was Enron. Lo! Much scandal and many questions later, investigators for Rep. Henry Hyde's International Relations Committee have unearthed documents showing that shortly before Enron imploded in late 2001, the company, among its other deals, was shelling out millions, some of it into Swiss bank accounts, to buy Iraqi crude exported by Saddam under Oil for Food.

Not that Enron did business directly with Saddam's regime in violation of U.N. sanctions, or even did anything clearly illegal. Rather, the tale of its guest appearance in Oil for Food illustrates why in some ways the U.N. scandal dwarfs even Enron. Under cover of Oil for Food, Saddam's system of bribes, payoffs and kickbacks, ultimately totaling billions, ran through chains of often obscure middlemen in places such as Cyprus and Switzerland. Enron shows up on one of the outer spokes of Oil for Food's global web, dealing with a trans-Atlantic crew of companies and characters engaged not only in fraud, but allegedly linked to arms traffic, payoffs to the Kremlin and kickbacks to Saddam's regime. Along the way, this gang did its bit to comply via Oil for Food shipments with Saddam's policy of enforcing the Arab League boycott against Israel.

One of the most telling documents the Hyde committee investigators have come across is a fax addressed to Enron Reserve Acquisition Corp., dated March 27, 2001, and accompanied by U.N. approval papers needed to clear through U.S. customs two shipments of Iraqi oil, worth millions. Named on this fax are three companies that have in recent times become infamous on the Oil for Food investigations circuit: Russia-based Rosnefteimpex; Italy-based Italtech; and Bahamas-based Bayoil Supply and Trading Ltd., owned by a U.S. citizen, David Chalmers, who was also the sole shareholder of a Texas-based company, Bayoil (USA). The arrangement outlined in the fax shows that despite a mandate to minimize middlemen, U.N. Oil for Food officials had approved the sale of oil by Saddam's regime to Rosnefteimpex and Italtech. These companies in turn had sold their oil allocations to Bayoil, which was busy in this instance completing one of several onward sales to Enron.
Keep on reading.

UPDATE. The esteemed Cori Dauber and I had the same thought.

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