An energy-trading company in Annandale said yesterday that it did not pay kickbacks to Saddam Hussein's government from contracts it received to sell some 8 million barrels of Iraqi crude oil between 1997 and 2001 under the United Nations' oil-for-food program.
Phoenix International LLC, headed by Samir Vincent, an Iraqi-born U.S. citizen who worked before 2001 to improve relations with Baghdad, released a statement in response to last week's report by U.S. weapons inspector Charles A. Duelfer. The report included names of companies and individuals who traded in Iraqi oil, and it said some of them paid surcharges or kickbacks to Hussein's government for the right to trade in Iraqi oil.
Vincent was one of three U.S. citizens named in the Duelfer report. The other two were Oscar Wyatt Jr., a Houston oilman, and Shakir al-Khafaji, who lives outside Detroit.
A source familiar with Phoenix International's operations said that when the Iraqis sought to collect surcharges in 2000 on previous oil shipments, the company refused and as a result lost out on further Iraqi oil allocations.
Phoenix's statement said it was licensed in August 1997 by the Treasury Department to carry out oil contracts, five of which were allocated to it by the Iraqis under the U.N. program. At the time, Iraq was under economic sanctions and the U.N. program, which began in 1996, was designed to allow oil sales on the world market to generate money that he United Nations then spent to import food, medicine and nonmilitary goods into Iraq.
Iraq gave oil contracts to groups and individuals worldwide, chosen by Saddam to benefit his interests, Duelfer said. Those contracts, which Duelfer called "vouchers," could be transferred to major oil companies, sometimes at large profits to the original recipient.
Recipients included officials, such as Indonesian President Megawati Sukarnoputri and former Russian presidential candidate Vladimir Zhirinovsky, as well as governments, companies and influential individuals in Europe, the Middle East and Africa.
Phoenix was apparently originally chosen to get allocation contracts because Vincent, a decathlon athlete who participated in the 1964 Olympics for Iraq, had worked on bettering U.S.-Iraqi relations both before and after the 1991 Persian Gulf War. In 1999, for example, he helped get evangelist Billy Graham to invite some Iraqi clerics to visit the United States and accompanied them on the tour.
According to Duelfer's report, Iraq started in September 2000 to impose a 10-cent-a-barrel surcharge on oil allocations. Recipients were to deposit the surcharges in Iraqi bank accounts in Jordan and Lebanon, or to deliver the money to an Iraqi embassy.
When the Iraqis told Phoenix that it also was required to pay the surcharge, the company forwarded the Iraqis a letter from the Treasury Department in December 2000 saying licensees doing business with Iraq were not authorized to make surcharge payments, said the source familiar with Phoenix's operations, who would discuss the trades only on the condition of anonymity.
The Duelfer report said the Iraqi state oil company was told to refuse oil to anyone unwilling to pay the additional charge, and it noted that many refused.
Duelfer's report contains three references to allocations made to Phoenix that carry the notation, "although quantities of crude oil were allocated to the individual entities, no contracts were signed according to instructions from the former regime as they didn't pay surcharge due for their previous contracts."
Phoenix got a fee from Chevron for arranging the deal, the source familiar with Phoenix said. The Phoenix statement said, "No proceeds from Iraqi crude oil transactions were transferred by Phoenix International LLC or its agents to the government of Iraqi or to any individual in Iraq."
Chevron, which has since merged to become ChevronTexaco Corp., was listed in the Duelfer report as having received its own contracts from Iraq. Stan Luckoski, a company spokesman, said all transactions were legal. He would not confirm whether the company worked with Vincent to obtain oil from Iraq, saying those details were proprietary.
"ChevronTexaco's participation in the oil-for-food program was conducted in compliance with U.S. laws and with third parties whose contracts were approved by the United Nations," Luckoski said.