The Counter-deception Blog

Russians taking lessons from the pros: If claims of forgeries worked on Dan Rather and CBS News, they might work on the UN.

October 28, 2005 NYTimes.com

Russia Calls Evidence in Oil-for-Food Report Forged

By ANDREW KRAMER

MOSCOW, Oct. 28 - Russian officials responded today to a report accusing companies and politicians here of paying hefty kickbacks in the United Nations oil-for-food program for Iraq by saying the documents cited as evidence are actually forgeries.

An independent committee, led by Paul A. Volcker, the former chairman of the United States Federal Reserve, released the 623-page report on Thursday after an investigation that cost $33 million. The report included a detailed chapter on Russian oil companies and their dealings with the Iraqi government of Saddam Hussein.

Following its release, the United Nations secretary general, Kofi Annan, said that countries should use the report's conclusions to prosecute companies under their jurisdictions. Russia, along with France, had won preferential treatment under the oil-for-food program. It handled a third of all oil contracts from Mr. Hussein's government, first because Moscow supported Iraq politically and later, as Iraq became more desperate for money, because Russian oil companies began paying big kickbacks, the report said.

Oil industry analysts here have shrugged off the findings, noting that they probably will not lead to prosecutions in Russia, a country with enough money laundering and kickback scandals of its own.

The Russian minister of foreign affairs, Sergey V. Lavrov, remarked today he had not read the report, but said that at least some of the documents used to support the report's conclusions are counterfeits.

"Documents that were shown to us were forged on a number of occasions," Mr. Lavrov said, according to the Interfax news agency. Mr. Lavrov did not indicate which documents he was referring to, and a ministry spokesman declined to elaborate.

The chairman of the international relations committee in the upper chamber of Russia's parliament, Mikhail Margelov, said the "fabrications" had "cast a shadow" on the entire, years-long investigative effort of Mr. Volcker's committee.

The leader of the Liberal Democratic Party of Russia, Vladimir V. Zhirinovsky, who was accused in the report of paying an oil surcharge by transferring title of a Moscow building owned by his son to the Iraqi government, also called the report's supporting documents forged. "These are all fabrications," he was quoted as saying by Interfax.

Mr. Zhirinovsky tried, but failed, to regain title to the building after the United States toppled Mr. Hussein's government in 2003, according to the report. The building is now used as a school by the Iraqi embassy here.

A spokesman for Lukoil, Russia's largest private oil company, also accused of paying kickbacks, said the report's evidence was "unconvincing."

Yet so much oil company cash was passing through the Iraqi Embassy in Moscow in the late 1990's that Iraqi officials developed a system to send it to Baghdad in red canvas diplomatic bags, sealed with wax, on chartered flights, the report said. Each bag held $1.5 million in $100 bills.

Strangely, the embassy also issued receipts to Russian companies for the illegal surcharges and sent copies to Baghdad, the report said. An Iraqi administrative organ, the State Oil Marketing Organization, kept detailed records of the surcharges. Those presumably fell into United States hands after the invasion and occupation of Baghdad.

One of those receipts, a handwritten Arabic note with a line in Russian at the bottom noting a payment of $609,290 from the Russian company Zangas, was posted on the Volcker committee's Web site along with the report.

posted by Dr. Frank Stech  # 2:11 PM