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LIBYA: The minister, the Tory donor and a contract to supply oil

by Robert Winnett, and Rowena MasonThe Telegraph (UK)
September 2nd, 2011

An oil firm whose chief executive has bankrolled the Conservatives won exclusive rights to trade with Libyan rebels during the conflict, following secret talks involving the British Government.

The deal with Vitol was said to have been masterminded by Alan Duncan, the former oil trader turned junior minister, who has close business links to the oil firm and was previously a director of one of its subsidiaries.

Mr Duncan’s private office received funding from the head of Vitol before the general election. Ian Taylor, the company’s chief executive and a friend of Mr Duncan, has given more than £200,000 to the Conservatives.

Vitol is thought to be the only oil firm to have traded with the rebels during the Libyan conflict. Oil industry sources said that other firms including BP, Shell and Glencore had not been approached over the deal. One well-placed source said this was “very surprising” because other companies would have been keen to be involved.

Last night the Coalition was under pressure to disclose details of Mr Duncan’s role in securing the deal, worth about $1billion (£618million). The firm is thought to have supplied fuel and associated products to the rebels and traded oil on their behalf.

The controversial firm has previously been fined for breaching sanctions and paid money to Arkan, the Serbian warlord, allegedly for oil contracts.

Sources at other oil firms described the situation as “highly unusual”. Companies are rushing to secure deals with the rebels in Libya, which has some of the largest oil reserves in the world. An Italian oil firm sent a tanker to Benghazi during the conflict but was forced to turn away from the port.

Mr Duncan, a minister in the Department for International Development, is reported to have arranged the setting up of a special “Libyan oil cell” which brought together officials from the Cabinet Office and Foreign Office to stop the Gaddafi regime benefiting from its control of oil reserves. The oil cell is said to have been key in paving the way for deals between Vitol and the rebels.

The Government’s exact role was shrouded in secrecy. The rebels did not have access to significant sources of finance, meaning that Vitol agreed to deals without upfront payments and is understood to only now be receiving funds. The Gaddafi regime had assets frozen in London and elsewhere and Vitol may have wanted assurances that this money would be released to the rebels in the future, as is now happening.

Sources close to the deal also said that the Government helped secure insurance for the Vitol shipments. It is thought that details of the Libyan oil cell emerged following briefings from those close to Mr Duncan. The minister is said to have described the cell as “the Duncan plan” to friends.

John Mann, a Labour MP, last night called for an inquiry and demanded to be told whether Gus O’Donnell, the Cabinet Secretary, had cleared the “extraordinary deal”. “This is the worst kind of government giving a company that paid Alan Duncan a secret deal,” he said. “It is just like the way Arab dictators behave. Or the way some of the American deals were done in Iraq after the war.”

Last night, Downing Street officials said there had been no impropriety. They confirmed that Mr Duncan had attended meetings with Vitol as part of attempts to avoid a humanitarian crisis if rebel-held areas ran out of fuel.

“The Government did not lobby on Vitol’s behalf,” a spokesman said. “The company had an existing commercial relationship with the National Transitional Council. We are confident that the correct procedures were followed.”

Vitol declined to comment. However, sources close to the firm said that, although the Government had “clearly been helpful” in facilitating the deal, the American government and others were also involved. “Many companies were asked to get involved, but no one else was prepared to step up,” said one source. “There was a payment and safety risk.”

In 2008, it emerged that Mr Duncan’s private office was being funded by donations from the chairman of Vitol.

In the 1990s, Vitol paid $1 million to Arkan, a war criminal, to act as a fixer on a business deal in Slobodan Milosevic’s Serbia that had collapsed. In 2007, the company was fined over the oil-for-food scandal for dealing with the Iraqi government under Saddam Hussein. Vitol pleaded guilty to larceny in a New York court and paid $13 million to the Iraqi people in restitution.

Mr Duncan recently gave up a directorship in Arawak Energy, which was part-owned by Vitol and which he had registered with the parliamentary authorities.




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