Saturday, June 11, 2005[posted by jaed at 8:33 PM]
Oil for palaces
A few weeks back, the Weekly Standard had a useful article on the ins and outs of the oil-for-food scandal. One thing it clarified for me was something I had never quite understood, which is what these "vouchers" were and how they could be used to bribe people who weren't in the oil industry:
Whatever the intentions of its planners, the Oil-for-Food program actually worked like this: Iraq designated certain individuals or entities as potential purchasers of Iraqi oil. It gave them oil 'allocations' or 'vouchers' (not foreseen in the program as designed by the U.N.), which they could either use to purchase oil themselves or sell to third parties. Because the regime severely limited the number of recipients of these allocations, the recipients were able to resell the oil after attaching a surcharge--usually between 3 and 30 cents a barrel. Sales were usually a minimum of 1 million barrels, so the profits from the surcharges were significant.(Yes, I am going through my overstuffed "to-be-read" folder today. Why do you ask? ;-)
Beginning in 1998, Hussein began to shift his allocations from oil companies to politicians, journalists, and terrorist groups. Mark Greenblatt, a lead investigator for the Senate Permanent Subcommittee on Investigations, described it this way. 'His plan was simple. Rather than giving allocations to traditional oil purchasers, he gave allocations to foreign officials, journalists, even hostile terrorist entities, who then flipped their oil allocations to traditional oil companies in return for a sizable commission. In doing so, Saddam could give a foreign official or a journalist hundreds of thousands of dollars without ever paying a dime.'