Loose Canons

Saddam’s Bought Russians

Two reports to be released today by a Senate subcommittee detail just how brazenly Iraq bribed Putin & Company.

By 5.16.05

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Russia's stubborn pro-Saddam stance in the UN Security Council brought Vladimir Putin's party and political machine enormous financial rewards in the form of bribe money coming from the UN Oil for Food Program, according to two detailed reports being released today by the Senate Permanent Subcommittee on Investigations (PSI). Those bribes have fueled Putin's drive to restore authoritarian government in Russia. It is more than just corruption. Senate investigators say Saddam's penetration of the Russian political system was so deep that it could -- and did -- cause the passage of pro-Iraqi measures in the Russian Duma.

Senators Norm Coleman (R-MN) and Carl Levin (D-MI) sent their investigators to Iraq where they interviewed 16 former top officials of Saddam's regime. The staffers and their Senate bosses have been digging through thousands of documents in Iraq and here, including the corporate records of Texas oil trader Bayoil. And they have struck investigative gold.

From the speed with which the Senate investigators hit paydirt, it's easy to see why the Volcker team hasn't even attempted to chase the leads that were staring them in the face. If Volcker's crew had been serious, they could have pursued the big smell emanating from the Russian side of the oil transactions Saddam had been making. The Senate investigators detected the strong odor of rotting fish when they reached the obvious conclusion that Russia -- an oil exporter -- had somehow been the recipient of about 30% of the oil allocations (i.e., oil contracts awarded) under the Oil for Food scam without a drop of the OFF Program oil being delivered to Russia. The Senate investigation to date has concluded that one of the Russian government's most capable "fixers" -- one Vladimir Zhirinovsky -- was only the most visibly corrupted Russian official. Digging a bit deeper, the PSI folks found that the Russian Presidential Council, Putin's Unity Party (latterly named the "United Russia Party"), the Congress Party and Russia's minister of foreign affairs all received massive oil allocations from the UN program.

Cut back to the Iraqi side of the ledger. According to the PSI reports, the large oil transactions were doled out to those doing Saddam's bidding and those he wanted to seduce. Saddam approved many of the transactions personally, while others were approved by his chief henchmen including his veep, Taha Yasin Ramadan, and Foreign Minister Tariq Aziz. According to the PSI reports, Ramadan said that the oil allocations -- which could be sold for large commissions -- often resulted in profits for the recipients and were intended as "compensation for support" in the UN Security Council. (Tariq Aziz told the PSI that Putin's party received a large number of oil allocations because Russia was taking positions in the Security Council that favored Iraq. Those positions pressured the Security Council to end the sanctions regime without forcing the completion of the WMD inspections.)

When Saddam got a bit greedier the allocations also resulted in "surcharges" paid back to Saddam's regime. These "surcharges" (in the Bronx, we called them "kickbacks") of up to 30 cents per barrel were paid into special bank accounts that were under the control of Saddam's regime and were used to fund terrorism, weapons purchases, and pretty much everything else Saddam was forbidden under the 1991 cease-fire agreements that granted him a reprieve he didn't deserve. (PSI plans more reports on how the funds were used to pay for terrorism and arms purchases.)

TO BE FAIR TO PUTIN, it's likely that the oil allocations to ensure his loyalty to Saddam only began after he began, in the summer of 2000, to pressure the UN for an end to the sanctions against Saddam. But once Putin and his cronies began receiving this "compensation for support," they were loath to see it end. And they put their pay to good use. The Russian Presidential Council the PSI report names is, according to Senate investigators, the mechanism Putin has used to consolidate power over local governments in his drive to return Russia to autocracy. (PSI says that the RPC has been referred to by other names by other sources. It is apparently the Presidential State Council established by Putin about a year after he was elected in 1999.) Funded by Iraqi bribe money, Putin has used the Council to bring pressure on regional officials to surrender power to the Kremlin. This is part and parcel of Putin's anti-democracy campaign that saw ballot alterations and pressure on media in the 2003 Duma election, increased Putin's control of the judiciary, and may yet end the direct election of regional governments.

The RPC apparently began receiving oil allocations at the behest of Aleksandr Stalevitch Voloshin, who is credited with a large role in Putin's rise to power. Voloshin ran Putin's first presidential campaign, helped create the "Unity Party" and -- as the PSI report says -- has been described as "a guide for those who needed things 'fixed' at the Kremlin." According to one source PSI quotes, "the Putin-Voloshin link is the strongest link in the [Russian] political game." Voloshin, himself a recipient of oil allocations, sent a friend, Sergei Isaakov, to Iraq to sign many of the oil allocation contracts for the Russian Presidential Council.

According to the PSI report on the Russian Presidential Council, the RPC received oil allocations amounting to 90 million barrels. These allocations were passed through Russian government intermediaries (strawman companies appointed and apparently controlled by the RPC) and sold through the Texas oil trader Bayoil. Bayoil, in turn, paid commissions to the Russian government middlemen which amounted to millions of dollars. In just the period of August through October 2000, Bayoil paid $1.9 million to two named strawman companies, "Haverhill" and "Rusnaftaimpex" on oil allocations to the Russian Presidential Council. On one allocation contract, PSI estimates the payments to RPC -- aside from what was paid to the strawmen -- amounted to about $850,000. Multiplied over the 90 million barrels, the profits to Putin's political machine could easily amount to tens of millions of dollars.

The Senate PSI will hold hearings on these reports tomorrow, and more and more details of how Saddam's bought Russians served him in the UN will come out. PSI's investigation will continue and -- because Coleman and Levin won't let this go -- will penetrate deeper and deeper into the swamp of Oil for Food. And while they do, the UN remains adamant in its coverup of the scandal. It's still business as usual in Turtle Bay. Even on the most important issue we face today.

WHILE OIL FOR FOOD GRABS the headlines, the Iran nuclear problem festers. The EU-3 are about to be forced to admit the utter demolition of their diplomacy by the Iranian mullahs. The negotiations have come to naught, and the Iranians are threatening to resume the enrichment of uranium (which they probably never stopped) if the Eunuchs don't cave in. Thankfully, Britain is on the brink of agreeing with us to demand that Iran be brought before the UN Security Council for sanctions. British realism, albeit a little late, is welcome. But shall we trust the UN with the most urgent threat to our security, knowing the Security Council's members are for sale?

Some say Iran will be able to manufacture nuclear warheads in six months. Others say two years. In short, we have no damned idea when the mullahs will be armed with nukes, but we do know that a nuclear Iran is a risk the civilized world can't take. We know the only thing the UN will do is debate and delay. It is incapable of decision or action. There will be demands for inspections, and arguments about how they shall be done. Iran will go back and forth, cooperating and refusing, standing on its "rights" as a sovereign nation, a UN member in good standing. The debate will end when Iran announces its nuclear arsenal. Why should the UN debate further, mon ami? The game, she is over, yes?

TAS contributing editor Jed Babbin is the author of Inside the Asylum: Why the UN and Old Europe Are Worse Than You Think (Regnery, 2004).

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About the Author
Jed Babbin served as a Deputy Undersecretary of Defense under George H.W. Bush. He is the author of several bestselling books including Inside the Asylum and In the Words of Our Enemies. He is coauthor (with Herbert London) of the new book The BDS War Against Israel. You can follow him on Twitter@jedbabbin.