Sunday, July 6, 2008

The Oil-for-Food scandal revisited

One of the names that cropped up in the final report of the Independent Inquiry Committee into The United Nations Oil-For-Food Programme was the Malaysian Prime Minister Abdullah Ahmad Badawi. Malaysia was the fourth highest purchaser of oil - RM1.8 billion.

Malaysia Today

On Sunday, the BBC reported as follows:

The Iraqi government has said it will file lawsuits in US courts against firms and people suspected of illegally profiting from a UN programme. The UN oil-for-food programme allowed Saddam Hussein's government to sell oil in order to buy humanitarian supplies during UN sanctions from 1996-2003. An inquiry found that 2,200 firms paid $1.8bn in bribes to Iraqi officials.

Iraqi government spokesman Ali al-Dabbagh said in a statement that the legal action was to recover damages and hold those who benefited from the illegal activity accountable for their actions. "The oil-for-food programme was subject to huge financial scandals by companies and others [who] conspired with Saddam Hussein to embezzle large sums of money through kickbacks, inflated prices and the supply of shoddy goods," he said.

A UN-commissioned inquiry headed by former US Federal Reserve Chairman Paul Volcker found that 2,200 companies in 66 countries had paid kickbacks to Iraqi officials to win supply contracts under the $60bn (£30bn) programme. The Iraqi statement did not name the firms or people the legal action will target nor when and in which courts the suits will be filed.

Two years ago, this was what the BBC said:

More than 2,000 firms linked to the UN oil-for-food programme in Iraq were involved in making illicit payments to the Iraqi government, a report says. It found Saddam Hussein received $1.8bn (£1bn) from firms including Daimler Chrysler and Volvo, and it also named individuals said to have benefited.

More than half of the 4,500 companies - from 60 countries - involved in the oil-for-food programme paid kickbacks or surcharges to the Iraqi government, Mr Volcker reported. The single largest bribe came from a Malaysian trading company, Mastek, which paid Iraq $10bn over a prolonged period, the report found.

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PM & The Oil for Food Scandal
The Oil-for-Food Programme was established to allow Iraq to sell oil in exchange for food, medicine and other vital supplies. It did not take long however for the Iraqi government to abuse the programme by demanding kickbacks from companies. Several investigations were launched and voluminous reports written.

One of the names that cropped up in the final report of the Independent Inquiry Committee into The United Nations Oil-For-Food Programme was the Malaysian Prime Minister Abdullah Ahmad Badawi. Studying Chapter Two of the report, Malaysia was the fourth highest purchaser of oil under Phase IX of the programme (circa 2000 and above). This amounted to a figure of US$500 million or RM1.8 billion.

The report names Mastek Sdn Bhd as one of the companies that paid bribes to Iraqi officials amounting to US$10 million. The Prime Minister publicly denied any involvement in the scandal. He only recommended several people to participate in the Oil-for-Food Programme in his capacity as (then) Deputy Prime Minister. Malaysiakini was threatened by government officials for reporting on Abdullah Badawi's involvement.

The current Foreign Minister Syed Hamid issued a statement saying that the Prime Minister had nothing to gain from obtaining oil in Iraq. The Iraq Survey Group that prepared the report concluded that a person in the programme could profit by US$0.65 per barrel of oil obtained.

Returning to Mastek Sdn Bhd, it is listed as a saw timber company. Mastek Sdn Bhd was at that time a dormant company which was revived by three persons, namely:

Noor Asiah Dato' Mahmood (Abdullah Badawi's sister-in-law)
Faek Ahmad Shareef (Noor Asiah's ex-husband)
Jaya Sudhir (businessman)
After it's revival it became a crude oil company, participating in Phase VII to Phase IX of the Oil-for-Food Programme. Currently Mastek Sdn Bhd is listed as a computer software develpoment company.

Prior to Phase IX, Mastek Sdn Bhd received roughly 7.5 million barrels of oil. During Phase IX however, Mastek Sdn Bhd's oil allocation rose to 39.5 million barrels. This coincided with the time when Abdullah Badawi cemented his position as the Deputy Prime Minister, after the sacking of Anwar Ibrahim. In fact, this was the single largest allocation of oil during the entire Oil-for-Food Programme.

The report specifically stated that Iraqi officials gave such a large allocation to Faek Ahmad because of his relationship to Abdullah Badawi. In written documents, Iraqi officials referred to Faek Ahmad as "Mr. Faek Ahmad Shareef/for the benefit of Abdullah". According to the definition of corruption as defined by the Anti-Corruption Agency, translated as below:

“Any officer of the civil service using his/her position or post in the service to obtain bribes/benefits regarding any decision made by the person or making a decision regarding any matter, in which he/her, his/her family members, friends or partners have a stake in the matter, whether direct or indirect.”

Abdullah Badawi's role in the scandal skirts dangerously close to the definition of corruption. Besides Mastek Sdn Bhd, another Malaysian company implicated in the report is Tradeyear Sdn Bhd. Listed as it's non-contractual beneficiaries are Faek Ahmad as well as a certain "Mr. Abdullah Badawi".

Tradeyear Sdn Bhd was allocated 9.2 million barrels of oil, after paying surcharges (aka bribes) of US$116,000. 9.2 million barrels of oil translates to a profit of US$6 million. Looks like a certain "Mr. Abdullah Badawi" is laughing all the way to the bank.

A simple search of the report turns out another two Malaysian companies that implicated in kickbacks, Jawala Corp Sdn Bhd of Dato Majid Khan (US$1 million) and Petma Oil of Dato Paduka L.M.N Affendi (US$110,000). To it's credit, Petronas was charged with surcharges but refused to pay.

As far back as June 2006, Teresa Kok (MP for Seputeh) had raised the issue in Parliament. Now it is May 2007 and no action has been taken against the companies mentioned nor has any satisfactory explanation been given. It's no wonder that Parliament leaks. The report can be found here. (By Goldenhub)

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In September 2006, Malaysia Today published this piece by Matthias Chang:

THE FATHER OF ALL SCAMS
CORRUPTION AT THE HIGHEST LEVEL

Mastek Sdn Bhd: Owned By Noor Asiah Mahmood Supported By Pak Lah Made Obscene Commissions & Gave Kickbacks At The Expense Of Iraqis Suffering Under 12 Brutal Years of Sanctions

An Entire Family In The Cesspool of Corruption

Scomi
ECM Libra
UN Oil-for-Food Programme

The Dirty Little Secret Of Pak Lah: “Mr Clean”

Reading the headlines in the New Straits Times and the spin churned out by Pak Lah’s spin doctors, we were led to believe that Pak Lah personifies integrity and honesty.

But is Pak Lah really “clean?”

Pak Lah did launch a campaign against corruption and some patsies, politicians and businessmen who were no longer useful in his agenda were put on show trials, orchestrated to project his “Teflon” image.

Only just recently, Mr. Clean called on Muslim countries “to step up efforts to fight corruption.” He was quoted as saying that, “the current condition that Muslim countries find themselves in is deeply alarming and distressing. I am saddened when we consider Islam’s glorious legacy of culturally and scientifically advanced civilisations, all built on solid foundation of ethics and moral values.”

Like Dr. Jekyll and Mr. Hyde, Pak Lah has a fa├žade of Cleanliness but hides a rotten core!

What do you make of a person who preaches ethics and morality to fellow Muslims but in practice commits the most blatant corrupt practices?

This is a US$800 million question.

This is the scam committed by a Malaysian company supported by our Mr. Clean, Pak Lah in the United Nations Oil-for-Food Programme.

An international correspondent described it well when he said that:

“It was meant to be the “Mother of all Humanitarian Programs”, but has turned out to be the Father of all Scams!”

And a Malaysian company was right in the middle of this cesspool.

This is the DIRTY SECRET of Pak Lah!

READ ON.

Let me explain the Dark Side of Mr. Clean.

There are two reports on the Iraq Oil for Food scandal, namely:

1) Charles Duelfer - Comprehensive Report of the Special Adviser to the Director of the Central Intelligence on Iraq’s Weapons of Mass Destruction, September 30, 2004 (the “Duelfer Report” in short); and

2) Paul A. Volcker – Independent Enquiry Committee into The United Nations Oil-for Food Programme (Manipulation of the Oil-for-Food Programme by the Iraqi Regime) October 27, 2005 (the “Volcker Report” in short).

Both reports have named Pak Lah’s connection to the Oil-for-Food Programme via Malaysian companies.

The relevant companies are:

1) Mastek Sdn Bhd (50717-A)

Shareholders: Obata-Ambak Holdings Sdn Bhd - 379,200 shares Noor Asiah Binti Mahmood - 100,800 shares (Sister-in-Law of Pak Lah)

2) Tradeyear Sdn Bhd (361316-K)

Shareholders: Tradeyear Ltd - 2 shares

The Volcker Report specifically named Abdullah Ahmad Badawi as a “Non-Contractual Beneficiary.”

The Report defines such a beneficiary as “The name of the individuals and entities other than the named contracting party that were named in the Ministry of Oil records as the intended beneficiary of the oil allocation. In some instances, the named beneficiary is an official of the contracting party.”

The Volcker Report indicated that Abdullah Ahmad Badawi had written a letter to Taha Yassin Ramadan on November 13, 2000 recommending a delegation headed by Mr. Faek Ahmad Shareef and Noor Asiah Mahmood (the sister-in-law of Abdullah Ahmad Badawi) for the purposes of obtaining oil allocation.

The question that needs to be asked of Pak Lah is – “Why did you make those recommendations when the two companies referred to above were merely acting as middleman?”

Petronas, our the national oil company was already involved legitimately in the Oil-for-Food programme, and as the Volcker Report showed clearly that when the Saddam Government demanded kickbacks, Petronas refused to give kickbacks!

In the Volcker Report, it is clearly stated that a kickback of US$10,916,241 were demanded of Mastek Sdn Bhd, of which US$9,803,960 were paid, leaving a balance of US$1,112,281 unpaid.

In the case of Tradeyear Sdn Bhd, the sum of US$116,870 of kickback was demanded and the amount was paid in full.

The amount of moneys involved in the transactions was staggering. We can only imagine the amount of commissions earned by Mastek Sdn Bhd, owned by Noor Asiah Mahmod, the sister-in-law of Pak Lah.

While Petronas took up only 13,276,782 barrels of oil valued at US$264,111,195 from an allocation of 14,100,000 barrels, the above two stated companies in comparison took the following:

Mastek Sdn Bhd: Allocated: 45,000,000 barrels of oil
Took : 43,614,685 barrels of oil
Value : US$884,919,027

Tradeyear Sdn Bhd: Allocated : 9,200,000 barrels of oil
Took : 9,094,996
Value : US$171,771,487

When we add the two values, the amount earned exceeds US$1 billion!!

From interviews conducted with one Mr. Jaya Sudir (August 19, 2005) the Volcker Report states that Mr. Faek Ahmad Shareef had leveraged his connection with Abdullah Ahmad Badawi. A review of Iraqi documents confirms that Iraqi officials associated Mr. Faek Ahmad Shareef with Mr. Abdullah Ahmad Badawi as references to Mr. Shareef’s oil allocation in SOMO (State Oil Marketing Organisation) documents appear in some instances as “Mr. Faek Ahmad Shareef/for the benefit of Abdullah.”

In the case of Mastek Sdn Bhd, Pak Lah’s sister-in-law was directly involved in the payment of kickbacks. Pak Lah who was then the Deputy Prime Minister had admitted writing the letter of recommendation in support of the company’s application of oil allocation under the Oil-for-Food programme. There is therefore a “conflict of interest” when Pak Lah as the Deputy Prime Minister made the said recommendation.

Additionally, while serving as Deputy Prime Minister and without the knowledge of the then Prime Minister and or the Cabinet, Pak Lah placed himself in a situation whereby his personal as well as the government’s integrity have been brought into question.

What Action Must Be Taken?

In a similar situation that obtained in India, where the then foreign minister, Mr Natwar Singh was alleged to have benefited from the Oil-for-Food programme, the said minister was removed from the highest decision making body of the ruling party (the Indian Congress Party). Mr. Natwar Singh subsequently resigned from the government, notwithstanding his protests of innocence. The scandal was also alleged to have implicated Mr. Natwar Singh’s son.

It is inconceivable that Pak Lah having called upon all Muslim countries to fight corruption should be allowed to continue with his charade and to remain in office as the Prime Minister of Malaysia and President of Umno.

Pak Lah by any measure is tainted by the corrupt practice of his sister-in-law, Ms Noor Asiah Mahmood who has admitted making kickbacks in the Volcker Report.

When the scandal first broke out, Pak Lah pretended not to know anything about it. Pak Lah did not inform the government and the Malaysian people that his sister-in-law was a key figure in the scandal. It was only after the publication of the Volcker and Duelfer Reports, that he “claimed” that he was not involved in the scandal. In such scandals, it is often difficult to establish the money trail.

But what is important is that Pak Lah is tainted by his recommendation of his sister-in-law for the oil allocation and the kickbacks.

If it was not right for Pak Lah to approve the ECM Libra-Avenue merger because of a conflict of interest, as his son-in-law was the beneficiary, likewise it is not right for Pak Lah when he was the Deputy Prime Minister, to recommend his sister-in-law. They made obscene profits at the expense of fellow Muslims who were suffering from 12 years of brutal economic sanctions! 500,000 children died as a result of the sanctions. This is Blood Money!

We demand a Judicial Inquiry into this sordid affair!

Pak Lah must resign as President of Umno and Prime Minister of Malaysia!

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