Contact l Sitemap

home industries issues reasearch weblog press

Home  » Campaigns » Current Campaigns » War & Disaster Profiteers Campaign

IRAQ: Oil-for-Food probe hits U.S. Oil Companies

Exxon, Chevron and El Paso Are Named in CIA Report On Hussein-Era Program

by By Jess Bravin in New York, John D. Mckinnnon in Washington and Russel Gold DallasWall Street Journal
October 13th, 2004

Federal investigators are focusing on four American oil companies and three U.S. citizens who allegedly received vouchers for oil from Saddam Hussein as he sought to flout United Nations sanctions.

The U.S. attorney's office in Manhattan also is investigating corruption allegations against the former head of the U.N. Oil-for-Food program, Benon Sevan, according to a person familiar with the case.

The U.S. companies -- including Exxon Mobil Corp., ChevronTexaco Corp. and El Paso Corp. or their predecessors -- and individuals were identified in the Central Intelligence Agency's 1,000-page report on the Hussein regime's campaign, though their 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, released last week, described efforts by the Hussein regime to manipulate the Oil-for-Food program in its favor, circumventing U.N. mandates, and possibly U.S. law.

A federal grand jury in Manhattan is investigating whether there was corruption in the Oil-for-Food program. Exxon, El Paso, and Chevron previously confirmed that they were among companies to receive subpoenas. 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: Oscar Wyatt, of Houston; Shakir al Khafaji, of West Bloomfield, Mich.; and Samir Vincent, of Annandale, Va. Together, the companies and individuals received vouchers valued at 111 million barrels of oil, according to the Duelfer report.

Officials stressed that the allocation of vouchers -- negotiable instruments that could be traded for Iraqi oil -- wasn't necessarily criminal and that no one has been charged with an offense.

In May 2002, a page one article in The Wall Street Journal 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. The Duelfer report, which relied on captured Iraqi documents and interrogations of Mr. Hussein and officials of his regime, estimated the former Baghdad government had illegally collected $11 billion, in part by selling the oil below market price and receiving the difference through kickbacks. It also says Mr. Hussein gave oil vouchers to influential people and organizations overseas.

The U.N. Security Council blocked Iraqi oil sales to punish Mr. Hussein following his 1990 invasion of Kuwait. During the 1990s, however, Security Council members such as France and Russia sought to end sanctions, contending they were 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. A U.S. Treasury spokeswoman said the department is reviewing the license it granted to those who participated in the Oil-for-Food program.

A Chevron spokesman said yesterday that the San Ramon, Calif., company was cooperating with the investigation and added that "all purchases of Iraqi crude by ChevronTexaco were made in full compliance with all applicable laws."

El Paso, of Houston, in 2001 took over the assets of Coastal Corp., a company once run by Mr. Wyatt. It has since sold off all its refining assets, according to an El Paso spokesman, who said the company is cooperating with the investigation. Exxon, of Irving, Texas, couldn't be reached; it previously said it was "responding appropriately" to the subpoena. In recent days, a lawyer for Bayoil, John Kotelly, wouldn't say whether that company had received a subpoena.

The individuals named couldn't be reached for comment.

It is unclear how the investigation will affect the companies named. Big publicly traded 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 unstable political systems and histories of corruption. It isn't unusual for the companies to face subpoenas and investigations as a result. Major oil companies have extensive written policies prohibiting bribing officials or violating international sanctions.

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. The names were included in versions sent to congressional committees, however, and officials 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.

Mr. Sevan, a Cypriot and a career U.N. official, has denied wrongdoing. Although high-ranking U.N. officers enjoy diplomatic immunity from prosecution, U.N. Secretary-General Kofi Annan has said he will waive the immunity for any U.N. employee an independent panel appointed by Mr. Annan and headed by Paul Volcker, former chairman of the Federal Reserve, finds has broken the law.

Citing former Iraqi officials, the Duelfer report says Mr. Sevan received vouchers for 13 million barrels of oil and redeemed 7.3 million barrels.

Copyright 2004 Dow Jones & Company, Inc.

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.