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Weapons of Mass Destruction (WMD)

Iraq Survey Group Final Report

Regime Finance and Procurement

Regime Finance and Procurement
A Word on the Scope of This Chapter1
Key Findings3
Chapter Summary7
The Regime Timeline9
Ambition (1980-919
Decline (1991-96)9
Recovery (1996-98)9
Transition and Miscalculation (1999-2003)10
Directing and Budgeting Iraq's Illicit Procurement11
Overview11
President and Presidential Secretary's Role in Illicit Procurement11
Presidential Diwan's Role in Illicit Procurement12
Diwan's Role in Supplemental Funding of Government Ministries12
Extent of Knowledge of the Former President of the Diwan13
Budgeting Iraqi Procurement14
General Government Budget14
Sources of Government Revenue14
Supplemental Budgetary Process14
Supplemental Budget Submission Procedure14
Approval and Authorization of Supplemental Funding16
Disbursal of Supplemental Funds18
Financing Iraq's Illicit Procurement19
Overview19
Iraqi Economy's Role in Illicit Procurement19
Economic Ambition (1980-91)19
Economic Decline (1991-96)21
Economic Recovery (1997-99)22
Economic Transition and Miscalculation (1999-2003)22
Iraq's Revenue Sources22
Bilateral Trade Protocols24
Phases of the UN OFF Program28
Disposition of UN OFF Funds28
Oil Voucher Process29
Secret Voucher Recipients30
Iraqi Oil Vouchers Provided to International Leaders31
American and British Oil Voucher Recipients33
Benon Sevan's Use of Iraqi Oil Vouchers33
Iraqi Intelligence Service Nominations for Oil Vouchers33
Oil Export Surcharges33
How Surcharges Were Collected35
Kickbacks on Commercial Goods Import Contracts35
Private-Sector Oil Sales37
Role of the SOMO38
SOMO's Relationship to the MoO40
Official Oil Accounts40
Banking and the Transfer of Financial Assets for Procurement45
CBI45
CBI's Role in Licensing Money Exchangers45
CBI's Role in Tracking Foreign Accounts for Iraq46
Iraqi Bank Holdings47
Funding of the Ministries47
The Use of Foreign Banks48
Use of Banks in Lebanon49
Use of Banks in Jordan49
Use of Banks in Syria50
Use of Banks in Turkey50
Use of Banks in Egypt50
Use of Banks in Belarus50
Regime Attempts To Recover Funds Prior to OIF51
The Role of Cash Transactions51
Iraq's Gold Reserves51
Executing Illicit Procurement in Iraq: Ministries, Commissions, and Front Companies53
Overview53
Ministry of Foreign Affairs53
MFA-IIS Connections54
MFA's UN Sanctions Counter-Strategy55
MFA and Iraq's Bilateral Protocols56
Ministry of Trade56
MoT's Role in Procurement57
Facilitating Illicit Procurement With Cover Contracts58
Facilitating Illicit Trade Through Commercial Attaches58
Ministry of Defense61
MoD Procurement Leadership61
MoD Procurement Directorates61
Budgeting and Financing Military Procurement62
MoD Procurement Process63
Procurement for the Republican Guard and Special Republican Guard64
Military Industrialization Commission65
Procurement Leadership in the MIC65
MIC: Benefi ciary of Illicit Funds66
MIC Banking and Financing66
Items Procured via the MIC's Link to Iraqi Intelligence69
MIC Front Companies72
Iraqi Intelligence Service77
IIS Procurement Leadership and Mission77
IIS Procurement Cooperation with Foreign Intelligence Services79
Items Procured by the IIS79
IIS Front Companies80
Special Security Organization82
SSO Procurement Leadership and Mission82
Iraqi Atomic Energy Commission82
Ministry of Transport and Communication83
Mission and Key Procurement Companies under the MoTC83
Ministry of Higher Education and Scientific Research84
University Collaboration With MIC84
Exploitation of Academic Exchanges for Procurement85
Ministry of Agriculture85
Ministry of Interior86
Front Company Conglomerates: Al-Eman and Al-Handal86
The Al-Eman Network88
Al-Handal General Trading Company90
Supplying Iraq With Prohibited Commodities93
Overview 93
Procurement Suppliers During the Decline Phase, 1991 to 199693
Romania93
Ukraine95
Jordan 100
Procurement Suppliers During the Recovery Phase, 1996 to 1998102
Syria102
Turkey104
South Korea107
People's Republic of China108
France111
Former Federal Republic of Yugoslavia112
Bulgaria113
Procurement Suppliers in the Transition and Miscalculation Phases, 1998 to 2003116
Russia116
North Korea119
Transportation Routes From North Korea to Iraq121
Payment Methods for North Korean Contracts121
Poland121
Methods Used To Hide Transshipment to Iraq121
Polish-Iraqi Procurement Financial Flows122
India122
Belarus125
Key Belarusian Individuals Linked to Illicit Trade With Iraq126
Materials, Equipment and Services Provided by Belarus127
Payments From Iraq to Belarus129
Taiwan129
Egypt130
Yemen131
Opening Conventional Trade With Yemen for Oil and Cash131
Yemen Emerges as an Intermediary for Iraqi Illicit Imports132
Importing Prohibited Commodities133
Overview133
Deceptive Trade Practices Supporting Illicit Procurement133
Use of Trade Intermediaries133
Disguising the Nature of Prohibited Goods134
Consealing the Identity of Commodities135
Discussing the Commodity's Destination137
Use of Illicit Smuggling and Transportation Networks137
Smuggling by Air138
Smuggling by Land138
Smuggling by Sea139
Smuggling via Jordanian Ports139
Smuggling via Syrian Ports142
Smuggling via the Arabian Gulf142
Annexes
A. Translations of Iraq's Bilateral Trade Protocols145
B. Known Oil Voucher Recipients167
C. Iraq's Budgetary Process201
D. Iraq Economic Data207
E. Illicit Earnings Sources and Estimation Methodology217
F. Iraqi Oil Smuggling221
G. Iraq's Banking System251
H. UN Security Council Resolutions Applicable to Iraq257
I. Suspected WMD-Related Dual-Use Goods and Procurement Teransactions261
J. The Procurement of Conventional Military Goods in Breach of UN Sanctions267
K. Suspected Intermediary and Front Companies Associated With Iraq291
L. Procurement Acronyms295

 

 



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