Tuesday, November 22, 2005

The Bihar Election - A Sobering Result

Hard work pays

The comprehensive and allround drubbing that Lalu’s RJD and its allies have received at the hands of the People of Bihar, has important lessons for everyone and should have a sobering effect on all political parties- winners and losers alike.

The way, in which the electorate has rubbed Lalu’s face in the mud with even his proxy Chief Minister barely managing to win, shows what an angry voter can do, given a chance to exercise his franchise freely without fear.

Before the results are analysed and before all the parties in the drama hopefully try to learn their lessons, the greatest accolades must go to the Election Commission of India and, in particular, K.J.Rao, who deserves to be given an award not only by the people of Bihar but also by the People of India. K. J. Rao, the man on-the-spot, showed, perhaps for the first time in Bihar, how free elections without the shadow of violence and fear hanging over the electorate could be conducted, given the will. What he has achieved has a more symbolic significance that is not limited to the just concluded elections. Hopefully, he has instilled confidence in the electorate to vote for those they really want to vote to power in future elections. Hopefully too, he has injected some courage in a weak-kneed bureaucracy and law and order machinery to do their duties without fear.

Phir Milenge?

For Lalu, the humiliation is total. The elections have proved that his bluff and bluster and the confidence in having an intimate knowledge of the mood of the Bihari people and its politics was just bravado. With his arrogant ways, he managed to coerce his allies into doing his bidding in Bihar affairs. In compelling UPA Government to go for dissolution of the Bihar Assembly, he obviously calculated that if fresh elections were held under the President’s rule, he would have enough say and pull in the administrative machinery to manage and win more seats than he did in the February 2005 elections and come back to power in a comfortable position. His gamble failed miserably. First, with the judgment of the Supreme Court pronouncing the dissolution unconstitutional, the entire UPA Government blackened its face. Next, an alert and watchful opposition kept on highlighting and objecting to any actions of the Governor that seemed to be favouring Lalu or his cronies. This continuous pressure effectively reduced the opportunity for maneuvering of the Government machinery under the President’s rule. Last but not the least, he did not reckon with the strong determination of the Election Commission to ensure a fair election and the ability of K.J.Rao to wield the stick and make the administration comply with his directions.

While Lalu has lost his battle of the ballot, he must be given credit for his contribution in achieving a better balance in the caste and social equations in Bihar for all time to come. It is unlikely that Bihar will ever revert to the position when the upper castes ruled the roost. This and nothing else, has been his positive achievement in the years that his party has been in power in Bihar. There is not much besides this during his time that can be described in positive terms. If anything, he has admirably helped Bihar retain its backwardness.

Me? CM?

What happened?

Ram Vilas Paswan, the one person many want to paint as the villain has also bitten dust. When he parted ways with the other UPA allies for the election, his conclusions had some logic. He rightly calculated that the alliance did not have enough chance to win a majority. Continuing with them would have only placed him in the same position that the RJD and allies are finding themselves in now. While fighting together, he would not have been entitled to get more seats to contest. Even if they were to win the fresh elections under Lalu’s strategy, it would have further strengthened Lalu’s position and diminished his own. On the other hand, if he were to fight the elections on his own and improve his earlier tally by contesting on more seats, he could talk from a stronger position and leverage his position either with the alliance or the opposition. The only way he could distance himself and fight on his own was to play the Muslim card as neither Lalu nor the other allies (for different reasons) could have agreed to his demand for a Muslim CM. The results have shown him that either way, he has been the loser. It has been a lose-lose situation for him and either way, he could not have done much and had to take the gamble.

The other allies of the UPA, the Congress as well as the Left Parties have maintained their insignificant positions of ‘also ran’ in the State politics and can do nothing much but hope to do better the next time round. For the present, the big comfort they will have is that it would not be necessary to put up with the antics of the allies from Bihar and to that extent, the defeat is a blessing in disguise, especially for the Congress.

For the NDA and the Chief Minister-designate Nitish Kumar, although they are riding on the crest of a wave, it is going to be a tough task to achieve development and maintain the delicate balance between the caste formations and groups, not underestimating the mischief-making capabilities of the opposition parties.

The biggest lessons that every political party and students of the democratic process in India have to learn for the future have to be found by analyzing the reasons of defeat of the RJD led alliance and the winning by the JDU led alliance.

Various arguments have been advanced for the results. Blame has been placed variously on Lalu, Paswan, President’s rule, no-development, corruption, misrule, caste equations, anti-incumbency factor etc. The conduct of the elections in a free and fair manner itself was a contributory reason.

It cannot be denied that anti-incumbency could certainly be a strong factor whenever in any election the ruling party is defeated. What is crucial for the political parties to understand, however, that there is a deeper, more fundamental reason that most of the parties so far have not been giving due attention to, if not altogether ignoring. That factor, which is really the bottom line, is:

The Quality of Governance, of which Development is just one component.

Sadly, in India, with the caste and class ridden social structures that we have inherited, most political and electoral calculations seem to revolve around caste and class considerations. So strong has been the belief in this system that election after election, those parties that base their calculations on appealing to and appeasing various castes or communities or specific sections of society, do succeed. Unfortunately, even the electorate gets swayed by these considerations, little realizing that in supporting parties on such parochial considerations and enabling them to win, the biggest sufferers are the people themselves. For, once the parties win based on appeal to these sections and come to power, development becomes secondary.

But this situation may be about to change if the subtle but perceptible message in the election results is grasped by the political parties. By all accounts, Lalu had admirably succeeded in playing upon the formulation of pandering to and winning over the Muslim-Yadav Vote to run the State for 15 years, not a short period by any reckoning. Nitish also had to exploit a different caste formulation and that has obviously helped him. But what should not be forgotten is that the JDU alliance has won seats across all castes, classes and across the entire State. This is the message that means that the voter may finally be realizing where his real interests lie. For most, this may be just a slight shift to be ignored but for those who can think long term, there is a lesson. The lesson is that playing upon caste, class, communities or religion have a limit to their usefulness. Once the saturation point is reached, the people will begin to look for concrete substance rather than the abstract talk of caste and community. This lesson does not apply just to those who want to exploit caste and religion but also holds good for those who exploit the theme of secularism. In the ultimate analysis, as the people get more educated and informed, Quality of Governance will be the main factor that will determine who will get elected. The sooner the political parties come to grip with these new realities and dump the baggage of the divisive factors of caste, class, religion and equally, the bogey of secularism to counter those who appeal to religion, the quicker will the country see real progress.

It remains to be seen which party will see the light of day first.

And lastly, there is a lesson also for the budding psephologists who are intent on predicting the election results. As before, none of them have come anywhere near predicting with accuracy the results of this election. This only goes to prove that the mind of the Indian voter remains unpredictable and unreadable, before, during or after he has caste his vote.

Saturday, November 12, 2005

The Volker Committee - The Inquiry at Home, Getting to the Root?

see previous

Clean hands ?

The Inquiry Committee of Mr. Justice R. S. Pathak should have commenced its work by now. According to the Government, he has reportedly got whatever authority he needed in order to complete its task. Thankfully, the Committee has not be told to inquire into the commercial dealings on the supply side but only asked to confine to the transactions where the Congress Party and its senior member are mentioned. Extending the inquiry to the commercial entities would have surely meant an exhaustive and fruitless exercise of going on a wild goose chase and diluting the importance of the principal transactions.

In the meantime, certain other actions being taken by other Government authorities under the Finance Ministry have been causing some ripples. On the face of it, the authorities concerned are bound to investigate into matters where there are suspected violations of the laws for the enforcement of which they are responsible. Therefore, the agencies are doing only what is expected of them.

What is raising eyebrows is the intensity with which the actions are being pursued and there is a clear likelihood that extending the investigations logically, could lead to some embarrassment for Mr. Natwar Singh and from which the Party itself would not be immune. And despite the Government’s avowed intention to get to the root of the matter, there is something more to this than meets the eye. Only time will tell what the motives are.

As to the possibility of The Inquiry Committee securing information and documents either by the efforts of Mr. Dayal or directly by itself, the chances indeed appear to be slim. The Volker Committee is in a hurry to wind up and it is unlikely that it will have the time to give due attention to any queries and requests that the Inquiry Committee may forward to it. Then there are important legal hurdles that may have to be overcome before the data and documents fully or in part can be made available to the Pathak Committee in a manner that they can be used as evidence. For one, much depends on the terms and conditions of the MOU under which the details upon which the Volker Committee has relied, were obtained from the Supreme Board of Audit of Iraq and the Coalition Provisional Authority. Second, as far as testifying witnesses are concerned, it would depend also on the conditions under which they agreed to testify. Thirdly, the Volker Committee is known to have come into conflict even with the U.S. Permanent Subcommittee on Investigations, by consistently refusing to share all information and key documents with the U.S. Committee on various grounds.

All in all, it seems to be an uphill task to secure any data, documents or information that may have value, especially evidentiary value, from the Volker Committee. But the Indian people are used to keeping their fingers crossed and waiting....

Friday, November 11, 2005

The Judiciary as the Conscience Keeper

see previous Article

For one more time in the recent past, the actions of the Executive have met with disapproval from the Supreme Court of India. (See Judgment here).

This time, the administrative action of the State Government in Uttar Pradesh withdrawing cases under POTA against Raghuraj Pratap Singh (a Minister in the State Government) and others in August 2003 was found to be unsustainable and its Orders withdrawing the cases and directing the Public Prosecutor to withdraw the cases were quashed.

Equally important is the Court’s direction to transfer the cases to a Court outside the State based on “the likelihood of miscarriage of justice” if the cases were to be run in Uttar Pradesh.

Coming close on the heels of the Supreme Court Order in Bihar Assembly Dissolution Case and the Judgment in Kanchi Shankaracharya Case, this Judgment serves as one more reminder to the people to be alert to the potential of such Executive actions to weaken the foundations of the Constitution on which our Democracy rests.

Once more, there are some who may try to portray such decisions from the Judiciary as denoting some kind of confrontation with the Executive or the Legislature. An attempt is also being made to interpret a recent Speech of the President of India as showing the President’s concern at the ‘encroachment’ of domains amongst the Executive, the Legislature and the Judiciary. An inference is sought to be drawn that his observations are an oblique reference to the Judiciary.

A perusal of the Speech of the President, however, does not lead to such a clear cut inference. The Speech is a fair presentation and reiteration of the ideas on the working of a Constitution that are already generally recognized and not in dispute. The one part of the Speech that can, perhaps, be construed as reference to the Judiciary, is found in the following paragraph (relevant part in italics):


Separation of Powers

The basic concept of the separation of powers would mean -

(a) The same persons should not form part of more than one of the three organs of the Government

(b) That one organ should not control or interrupt with the working of another, and

(c) That one organ of Government should not exercise the functions of another.


Those who have been voicing their feelings that the Judiciary is straying into the domains of the Executive or the Legislature, particularly the former, have tried to read in the Speech between the lines and are hinting that the President is concerned about this aspect. If the President, the highest Constitutional authority, was indeed referring to this, it is sufficient to require introspection by all the pillars of democracy to determine what corrective steps, if any are called for, need to be taken.

In this context, the comments of the Law Minister at a Seminar on ‘Social Responsibility of Lawyers” deserve notice. During the course of his speech, he is reported to have lamented at the difficulties of getting bail for the accused even in the higher courts. If his comments are confined to this aspect of civil liberties and if there are justifiable reasons for his conclusions, these can and should be objectively considered by the Judiciary. If, on the other hand, these comments are just a cloak for the Government’s irritation for certain adverse Judgments having a political impact, they are unacceptable.

Instead of hitting out at the Judiciary, the more appropriate course for the Government would be to ensure better governance in every sense of the word. The quality of Governance will become increasingly relevant in the future and with the lay public becoming more aware and the impact of the Right to Information Act percolating, there are bound to be more rather than less references to the Judiciary for preceived wrong actions or inaction of the Governments.

If any aberrations in the delicate balance between the organs of the State were indeed taking place, they would be best addressed by an objective and internal introspection within the pillars of the Democracy themselves. Placing them for public debate could mean politicising this sensitive area or bringing in a lot of subjectivity and uninformed comments that would only confuse the issues.

Wednesday, November 09, 2005

The Volcker Report - Continuing Agony for the Congress?

see previous

Finally, the Congress Party seems to have decided upon a course of action to try and maintain its credibility and control the fallout of the information contained in some of the Tables that are part of the Volker Committee Report.

But the different directions in which the actions are being taken, give an impression of continuing confusion. It is hard to decipher whether the actions show method, madness or method in madness.

First, even while the political ramifications of the issues were being considered, the administrative machinery under the Finance Ministry already swung into action by putting immense pressure on one of the pawns in the game. It is unlikely that the ED and DRI, who are learnt to be regularly briefing the Finance Minister, would have started their actions like a loose cannon without authority from the highest level, considering the sensitivity of the matter. This has already led to the speculation that the actions are intended to ensure that there does no exist any incriminating evidence and further as a way to put pressure on the External Affairs Minister to submit to the party diktats. It remains to be seen whether the actions of the agencies take any formal shape in the coming days and weeks.

The next action was the appointment of Mr. V. Dayal to liase with foreign agencies to get their co-operation. As mandates go, he seems to be having a mandate as obscure as can be, when the country already has established channels to do precisely such work. Perhaps, with some justification too, the Government intends to ensure single source handling of this delicate task, bypassing a multiplicity of bureaucrats in Missions abroad.

Then followed the most significant action, that of divesting Mr. Natwar Singh of his portfolio. The divesting of his portfolio while retaining Ministership has been attributed to a combination of reasons. The initial reason was that as the Ministry would be involved in the work of obtaining various details from other Governments and agencies, it would not be fair for him to continue heading the Ministry, since his name was also involved. However, when seen in the light of the fact that Mr. Dayal was already appointed to do this job and subsequently, Mr. Justice Pathak, Retired, has been given independent authority, this reason could only be interpreted as a smokescreen. The more plausible reason is to take some of the wind out of the Opposition’s attack and to demonstrate the Government’s credibility in the eyes of the people. The other strong reason has to be found in the internal politics of the Congress party. It has been reported that several party colleagues and functionaries have been against him for quite some time. Apart from heavy weights like Pranab Mukherjee, others like Ambika Soni and Ahmed Patel also are not exactly fond of him. To a lesser extent, the name of the Finance Minister has also cropped up in this context. It is no secret that many within the party have not been amused by Mr. Natwar Singh’s supposed proximity to Mrs. Sonia Gandhi and his constant air of superiority (“we, the intellectuals” as he sometimes said during his interviews).

Be that as it may, this compromise solution has certainly gone some way to restore the party’s credibility to an extent and deflect from the Opposition’s sustained attacks.

It has been also declared that the Income Tax authorities will ‘look into’ the Returns of the private Indian entities named in Table 7. This announcement is apparently only to confuse the issue as these entities were essentially engaged in commercial transactions which have to be judged as such. They cannot certainly be equated with the issue of securing oil allocations in the name of a political party and its senior member.

All these steps were followed by the Government appointing Retired Chief Justice of India, Mr. R.S.Pathak with ‘full powers’ to examine all aspects related to this matter. It is not exactly clear yet what the precise Terms of Reference of this Commission would be and from what, would he derive his authority to do all that is necessary, particularly to obtain evidence or examine witnesses from foreign jurisdictions, other than mere ‘requests for co-operation’.

Before he could prepare a concrete plan of action, the Government already asked the Ambassador to U.S. to meet Mr. Volker, which he dutifully did.

All this makes one wonder whether the Government is taking a methodical approach or just trying to throw pebbles here and there to disturb the waters. As of now, there is just a slim chance that anything concrete will come out of the efforts to get at the truth, notwithstanding the impeccable credentials of the gentlemen who are given the tasks.

Now, for some nitty-gritty related to the Volker Report..

Without discounting the relevance of the names of Congress Party and Mr. Natwar Singh, it has to be said that there are some aspects related to the Report that do raise legitimate questions about the Report’s credibility in some ways.

First, the Report seems to have gone beyond its strict Terms of Reference (see here). As can be seen from the wording of the Terms, the intent was mainly to focus on whether the Oil-for-Food-Programme was handled properly or did something go wrong as far as the Management of the Programme by the UN was concerned. The reason for formation of the Committee itself arose out of allegations that some UN bureaucrats were involved in wrongdoing or mismanagement and that controls were lax. Considering the exhaustive details provided by the Committee naming thousands of entities with the implication that they were involved in wrongdoing, it clear that the Committee has covered a much broader canvas. It has gone into such great detail that it was not strictly not required to do, to come to conclusions on the precise, and carefully drafted questions raised in the Terms of reference. Unfortunately, the UN Secretary General being under pressure himself, was perhaps unable to do anything about this. He has done only what he could do, by merely ‘taking note’ of the final Report that covers these details.

Secondly, more important from the point of view of both the Congress Party as well as Mr. Natwar Singh, it is apparent that neither were served any notice. Only Table 1 of the Report (Oil Allocations and Sales Summary by Contracting Company) mentions against each of the entities named their responses. The Congress Party and Mr. Natwar Singh have been shown only as beneficiaries (Table 3 ), and there is no mention against their names regarding their response, implying that no notices were sent to them. The only notice that was sent was to the Contracting Party i.e. in this case Masefield AG, who did not respond to the same. Strangely, responses were also sought from entities supplying goods (Table 7), but apparently not from the beneficiaries of oil allocations (Table 3), nor from entities who are supposed to have paid the oil surcharges(Table 5) where the names of Sahgal and Hamdaan appear.

This point is particularly relevant to understand how the Committee has gone about doing its job. There were a set of Guidelines issued called “Investigating Guidelines” that clearly provided under No. 2 (g) that before the Committee makes an adverse finding against a ny person or entity in a written report, such person or entity shall be informed of the proposed findings…”. (See here). If this has not been done – and there is no indication in the Report that it has been done – this creates a serious infirmity in the Report. This, in effect, compromises the entities named without even a basic opportunity to respond. Unfortunately, the Guidelines themselves state that they shall not form the basis of any legal action if they are not followed.

The third point of relevance is that the Guideline further provides (Para E.2) that “consideration will be given to referring investigative information and findings to the appropriate national authority”. There is no indication that this has been done.

As has been seen from denials of wrongdoing by various private entities in the last few days, it is unfortunate that the publication of the Tables is causing serious harm to public perceptions about the named entities without their having a chance to clear their position. The Report has been made available to the world by the Committeee itself when it would have been more appropriate for the Report to be published by the UN Secretary General who set up the Committee and assigned it the task of inquiry.

For such reasons and the manner in which data has been collected from various authorities involved (in terms of a so-called Memorandum of Understanding with them), doubts have been raised about the Committee’s credibility elsewhere too.

Even if motives are not attributed, it does show its sloppiness and disregard for any adverse effect of the publication of the Tables on thousands of entities. After all, it was the management of the Programme that was under scrutiny NOT the third parties named and prejudged in the Report without due process.

Coming back, however, to the central point that has given rise to the political storm in the country, viz. the mention of the Congress Party and Mr. N. Singh, the question still remains : WHY should their names be there at all in the first place? The oil allocations were made by the Iraqi Government to various entities in a systematic manner and in accordance with certain internal procedures. It would be foolhardy to think, as some have suggested, that perhaps some other individuals obtained the allocations falsely using these two names. Even if the Iraqi regime was defeated in a subsequent unjust war, it would be naïve to assume that the Government was run by novices who would be taken in by any individual claiming allocations in the names of such important individuals or political parties. The fact of the matter is that no one who was a party to the transactions would have imagined in their wildest dreams that information available with a sovereign country's Government would some day fall into the hands of others not entitled to have access to such data and moreover, would be misused in a sense by publicising the same in a near-cavalier manner.

As things stand, the Congress Party, as much as Mr. Natwar Singh, will have a lot of explaining to do even though in a legal sense, the inquiry may be vitiated.

Incidentally, but importantly, it is hoped that all these events will not indirectly lead to any subtle shifts in foreign policy that may please any foreign power.

see NEXT

Saturday, November 05, 2005

The Volker Report: Much ado...

Oil-for-food-for-money?-An embattled Minister and his Congress Party

The Congress Party seems to be completely rattled by some of the disclosures in the Independent Inquiry Committee into the UN Oil-for-Food Programme (Paul Volker Committee).

The Report on the Manipulation of the Oil-for-Food Programme was released on 27th October 2005 and has since raised a veritable storm in the Congress Party. The Party is acutely embarrassed at finding its own name as well as that of a senior party member and Union Minister in the exhaustive tables that form a part of the Report.

In a completely knee-jerk, mindless and needless initial reaction, The Congress Party immediately threatened to issue a legal notice to the UN in its own behalf and virtually left the Minister Mr. Natwar Singh, a loyal party member, to fend for himself despite the fact that he is specifically shown in the records as Member of the Congress Party, not as a mere individual.

The Opposition parties, sensing that this was too good an opportunity to miss, immediately went into attack mode putting pressure on the Prime Minister to remove the External Affairs Minister. The media, especially the Television channels constantly on the look out for even molehills of snippets to convert into mountains of earth-shaking events, have been quick to grab this news to fill up their time. The Opposition attack and media presentations have succeeded in Mr. Natwar Singh being virtually pronounced guilty without trial. It appears too that his Party is not too worried about the focus on him while it tries to work out options to first defend itself. In this atmosphere of panic (Congress) and glee (the Opposition), it was left to the Left Parties to present a more mature and balanced initial reaction.

It is nobody’s case that anybody should go unpunished for any wrongdoing. At the same time, before anyone is hanged, it is necessary to have a somewhat broader view to place the matter in perspective. The allegations that are being leveled against the Congress Party and the senior Union Minister are not the result of any study, research or investigation within the country but are an incidental, unfortunate fall-out from a Report of a Committee related to a UN Programme for Iraq.

It is possible to appreciate different aspects of this matter only by examining the background for the Report, which is responsible for creating the ripples-termed as a storm- in the country.

Iraq and the Sanctions it faced (see)

On 6 August 1990, the United Nations Security Council imposed economic sanctions on Iraq in response to its invasion of Kuwait four days earlier. Under these sanctions, all imports into Iraq (except medical supplies) and all exports from Iraq were prohibited, unless the Security Council permitted exceptions. These sanctions were not only the toughest, most comprehensive sanctions in history but were also unprecedented in terms of longevity and its comprehensive nature.
As a result of these sanctions, and consequent inability to meet the basic needs of its people, Iraq suffered a disastrous humanitarian situation with regard to basic infrastructure, nutrition and health. In 1996, The 'oil for food' programme, which commenced in December 1996, allowed Iraq to export oil and use part of the money raised, which is kept in a UN bank account, to buy basic goods from other countries. Iraq was using its own money to buy these goods and the 'oil for food' programme was not "humanitarian aid". Details of the Programme can be found here and here.
Following allegations of irregularities involving UN personnel, the Secretary General appointed a high level committee in April 2004 to investigate the administration and management of the Programme. Contrary to the impression with some, the Committee was not set-up by the Security Council, which in its Resolution 1538 only welcomed the setting up of the Committee and called upon all to co-operate. The Terms of Reference of the Committee can be found here.

The Independent Inquiry Committee presented its final Report in October 2005. In its press release, the Committee claimed that there was extensive manipulation of the Programme and more than 2000 companies were involved in illict payments. It further claimed that Companies and other individuals and entities, which paid the illicit kickbacks came from some 66 member states, while those paying illicit surcharges on oil purchases came from, or were registered in, some 40 member states, according to the Report.
It is pertinent to reproduce excerpts from the Report. (see also here)
On December 10, 1996, after six years of facing export prohibitions as a result of sanctions, Iraq was authorized to sell its crude oil under the Oil-for-Food Programme. Iraq sold approximately $64.2 billion of Iraqi crude oil during the Programme.
Under Resolution 986 and the Iraq-UN MOU, Iraq could chose to whom it sold oil. It exercised its discretion to award oil contracts to its significant advantage. Two overriding factors determined Iraq’s choice of oil recipients. The first factor was influencing foreign policy and international public opinion in favor of ending sanctions against Iraq. Later in the Programme, Iraq sought to generate illicit income outside of the United Nation’s oversight. One source of illicit income was from so-called “surcharges” paid on crude oil contracts under the Programme. The Iraqi regime demanded that payments be made to Iraqi-controlled bank accounts and Iraqi embassies abroad. Iraq earned $228.8 million of income from these surcharges.
In allocating its crude oil, Iraq instituted a preference policy in favor of companies and individuals from countries that, as Tariq Aziz described, were perceived as “friendly” to Iraq, particularly those that were members of the Security Council. Russian companies purchased almost one-third of the oil sold under the Programme. The Russian Ministry of Fuel and Energy and the Iraqi Ministry of Oil coordinated the allocation of oil to Russian companies. French companies were the second largest purchasers of oil under the Programme overall. The Iraqi oil trade with French companies dropped significantly after Iraq imposed surcharges.If Iraq was dissatisfied with the political positions of a country, it stopped selling oil to that
country’s companies. Initially, Iraqi Vice President Taha Yassin Ramadan and Minister of Oil Amer Rashid convinced Saddam Hussein to allocate oil to companies based in the United States in an effort to persuade the United States government to soften its attitude toward Iraq.
According to Mr. Ramadan, Iraq shifted the oil to Russian companies when there was no perceived change in United States policies.5 Iraq’s policies did not prevent companies from disfavored countries from obtaining Iraqi crude oil. A substantial volume of oil under contract with Russian companies was purchased and financed by companies based in the United States and elsewhere. Many of the letters of credit executed under the Programme were financed by non-contracting companies. The
names of these companies typically did not appear on SOMO contracts or United Nations records.
Iraq awarded “special” allocations not only to companies, but also to individuals and their representatives. These individuals were influential in their respective countries, espoused pro- Iraq views, or organized anti-sanctions activities. They included present and former government officials, politicians and persons closely associated with these figures, businessmen, and activists involved in anti-sanctions activities. Iraq also allocated oil to political parties and organizations.
Instances of oil allocations to these individuals and parties are discussed in this Chapter.
Iraqi officials awarded these “special” allocations without regard to the beneficiary’s familiarity with the oil trading market. Some beneficiaries sought the assistance of intermediaries to arrange for oil sales. Others used front companies to enter into United Nations contracts and then sold the oil to established oil companies or traders who bought the oil for a premium over the United Nations official selling price for the oil. The premium covered the commissions owed to intermediaries and beneficiaries.
These layers of individuals and companies between the allocating and lifting of the crude oil resulted in transactions in which the United Nations could not determine from the face of the contract who was benefiting from or purchasing the oil. This lack of transparency took on added significance when Iraq instituted a policy to collect an illicit surcharge on every barrel of oil sold under the Programme.
Beginning in the fall of 2000, in the middle of Phase VIII, Iraq ordered its Ministry of Oil to collect surcharges. The surcharge phases ultimately extended until the fall of 2002, in the middle of Phase XII. Iraq initially set surcharges at $0.10 per barrel. At the end of 2000, Iraq tried to impose a surcharge of $0.50 per barrel, but soon reduced it to $0.25 to $0.30, and ultimately lowered it to $0.15 before the scheme ended. The Iraqi State Oil Marketing Organization (“SOMO”) ran a highly organized system to collect oil surcharges and maintained an extensive database to keep track of the payments. Every contracting customer, if not each beneficiary, was advised of the requirement. Surcharges were levied on each barrel lifted, that is, loaded by a tanker at the port. Surcharge payments were generally due within thirty days of the oil lift. Unless a higher official had given a company dispensation, SOMO prohibited a company from loading additional oil when surcharges were overdue. Surcharges owed on a contract were not always paid in full in one payment. Partial surcharge payments often were made in an effort to ensure that SOMO did not stop or delay future oil lifts.
As early as Phase II of the Programme, the Government of Iraq began directing oil allocations to particular countries and individuals. Iraqi officials took the position that it was within their discretion to sell oil to countries “friendly to Iraq” and individuals perceived as being able to influence public opinion in favor of Iraq. The Government of Iraq also believed it had the discretion to cease oil sales to companies based in countries perceived as less friendly to Iraq.
Subsequent oil allocations fell into two categories, which appear in SOMO allocation tables beginning in Phase II. “Regular” oil allocations were given to established oil companies, many of which regularly had purchased Iraqi oil prior to the imposition of sanctions and had proved to be reliable purchasers. “Special” allocations were given to individuals, organizations, and political parties considered to be “friends” of Iraq or perceived as holding political views supportive of Iraq. Sometimes, to cover all bases, oil allocations were granted to members of the opposition parties as well as the ruling political party.

It is in this background of Iraq desperately seeking to muster or retain support from friendly countries, governments, political parties and other entities that the ‘favours’ in terms of Oil Vouchers appear to have been made.
It is in the context of these inquiries that certain names, which have relevance to India have appeared in the Tables which form part of the Report. These data are essentially based on records of SOMO, the State Oil Marketing Organization who was in administrative control of the transactions. The Committee says that responses were sought from all those listed and has, indeed, appended a summary by nature of responses received. However, it must be remembered that the Terms of Reference of the Committeee had a specific purpose, viz.
a. to determine whether the procedures that were established were violated,
b. to determine whether any United Nations officials, personnel, agents or contractors engaged in any illicit or corrupt activities in the carrying out of their respective roles in relation to the Programme and
c. to determine whether the accounts of the Programme were in order and were maintained in accordance with the relevant Financial Regulations

It was not the job of the Committee to investigate the entities that have been mentioned in the Tables. Consequently, the inquiries made by the Committee to these entities and their responses or lack of them, as well as the conclusions reached have relevance only as regards its terms of reference. Therefore, the mention of certain names, which in any case are based on the databases of the SOMO, cannot be relied upon to prove wrongdoing on the part of these entities without due process of law.

Having said so, the Tables mention the following entities:
Oil Sales Summary by Contracting Company and Contract
Table 2
page 22
Indian Oil Corp. Ltd.
Barrels lifted Contract Value Surcharge Levied
42,582,387 USD 800,628,998 893,914 (entire outstanding)

page 29
Masefiled AG,
Barrels Lifted Contract Value Surcharge levied Surcharge Paid
2,936,788 USD 63,032,974 749,197 748,540

page 40-41
Reliance Petroleum Ltd.
Barrels lifted Contract Value Surcharge levied
2,832,881 USD 72,049,346 nil

Summary of Oil Sales by Non-Contractual Beneficiary
Table 3
Beneficiary: Congress Party India
Phase 10 Masefield AG
Mission Country : Switzerland
Barrels allocated : 1,000,000
Barrels lifted : 1,000,100
Phase 11,12 and 13
Barrels allocated 3,000,000
Barrels lifted nil (No contracting company per SOMO)
Reliance Petroleum Ltd.
Alcon Petroleum Ltd.
Mission Country: Liechtenstein & Switzerland
phase 9, 10 and 11
Barrles allocated 19,000,000
Barrels lifted 15,780,000

Bhim Singh
Phase 6,8,10,11,12,13
Barrels Allocated 7,300,000
Barrels lifted nil

K Natwar Singh
Phase 9
Barrels allocated 4,000,000
Barrels lifted 1,936,000

It is interesting to note that:
IOC has not paid the surcharge that was levied
The Congress Party apparently lifted only 1million barrels of the total 4 million allocated
K.Natwar Singh apparently lifted only 1.936 million barrels out of 4 million allocated
Bhim Singh did not lift a single barrel although a large beneficiary of the favour
Reliance Petroleum was a recipient of the oil allocations

The details above do indicate certain transactions in the name of the Congress Party and Mr. K. Natwar Singh but these are in themselves not conclusive to come to a conclusion on wrongdoing. Of course, from the point of view of political and moral propriety, the Government should initiate an inquiry into the matter and place the results of the inquiry before the people.
It would also be fair to pose a question whether the reported assertion by Volcker about the Committee having immunity is valid. After all, the Committee was appointed by the Secretary General to inquire into the management of the Oil-for-Food Programme. An independent Committee is not the same thing as the UN itself. Another issue related to the Inquiry by the Volker Committee that deserves to be mentioned is that the Inquiry itself has been conducted at a time when foreign forces are occupying Iraq after an unjustified attack on that sovereign country. It is also a point of issue whether the documents upon which the Committee relied could be said to have come into its possession by due process. It is also questionable whether the Committee was right in publicising and placing the Report in the public domain, even if it was done to demonstrate transparency. This Report would be used by the U.S. to further discredit the Iraq regime of that time and those who supported or were friendly to the country. Paul Volker and his colleagues went about earnestly trying to find illegalities, favours and kickbacks under the Saddam Regime. It is easy to find wrongs committed by a Regime that is no longer capable of defending itself.
(on a side note, those who are accused of wrongdoing in the Oil-for-food issue, could take a cue on defending themselves from the spirited defense by George Galloway, the British M.P. before a U.S. Senate Committee - see here and here and here).

Let it not be forgotten that the 1.8 billion dollars in illicit payments supposed to have been received by the Iraqi regime would be peanuts compared to the billions of dollars in contracts that the friends of Cheneys of this world have been securing in ‘re-building’ occupied Iraq. It would be interesting to see the considerable talents that Paul Volker and his team seem to have, being put to better use to investigate the state of affairs related to the utilization of funds for Iraq since the time other countries assumed effective control over Iraq.

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