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For The Record  

FTR #463 Interview with Lucy Komisar about Saddam’s Money Network

Recorded June 6, 2004
REALAUDIO

Supplementing information set forth in FTR#’s 413, 417, 423, this program documents Saddam Hussein’s financial machinations and highlights the institutions and individuals involved in secreting his ill-gotten gains out of Iraq. In addition to lucrative arms deals with major munitions makers (with kickbacks to the manufacturers), Saddam utilized the petroleum trade to amass an enormous fortune, which was transferred abroad. Much of the discussion centers on Saddam’s use of the same networks employed by Al Qaeda to finance their operations—the Al Taqwa complex in particular. The Saddam money machine touched many bases—American and European—and many powerful institutions and individuals have been compromised through their transactions with the Iraqi dictator. Some have lost their lives as a result of their dealings with Hussein.

Program Highlights Include: The role of Ahmed Idriss Nasreddin (an Al Taqwa founding director) in the Saddam financial network; the role of Bank Al Taqwa in the Iraqi money constellation; SICO director (and colleague of Nazi operative Francois Genoud) Baudoin Dunand and his role in the Saddam financial constellation; review of Dunand’s connections to the bin Laden milieu; review of the Clearstream network and its use by Al Taqwa affiliate Banca del Gottardo; the Gottardo “Satan” account used by Saddam lieutenant Al-Mahdi; American financier Marc Rich’s dealings with Saddam through Iranian intermediaries; Saddam’s other American assistants; a partial enumeration of major weapons deals with European munitions firms; the suspicious death of Gianluca Boscaro—hired to investigate the Saddam money machine; discussion of the failure of American investigative authorities to adequately investigate (or even comprehend) the Saddam financial conduits and repositories; the Italian “Clean Hands” investigation of Saddam’s machinations; a partial chronicle of the names of Saddam’s subordinates involved with his financial dealings. Note that this description features text of Lucy’s answers that is derived from her article for UPI and is not a verbatim presentation of her on-air recitation. Be sure to access her important article.

1. D: In our previous interviews, we’ve spoken about the Clearstream network. Review that network for us briefly. L: Reviews how “euro-dollars” led to the creation of the Clearstream “Clearinghouse” and Ernest Backes’ role in that. She reviews how the system of unpublished accounts grew up. (For more about this topic, see FTR#458.)

2. D: In your In These Times article “Explosive Revelation$”, you detailed how Clearstream was used by the Al Taqwa network. L: “Following the September 11 attacks on the World Trade Center and the Pentagon, the United States started focusing its investigation on the financial trail of Osama bin Laden and the al-Qaeda network. Like any other large, global operation, international terrorists need to move large sums of money across borders clandestinely. In November, U.S. authorities named some banks that had bin Laden accounts, and it put them on a blacklist. One was Al Taqwa (‘Fear of God’) registered in the Bahamas with offices in Lugano, Switzeland. Al Taqwa had access to the Clearstream system through its correspondent account with the Banca del Gottardo in Lugano, which has a published Clearstream account (No. 74381).”

3. L: “Ahmed Huber, a Swiss director of the bank who is a radical Islamist and Hitler admirer, acknowledged in 1995 that wealthy Saudi Arabians were large contributors to the Al Taqwa bank. The just-revealed list of shareholders demonstrates further connections between important individuals in moderate Middle Eastern countries and a financial network allegedly vital to bin Laden. But bin Laden may have other access to the unpublished system. In what he calls a ‘spectacular discovery,’ Ernest Backes reports that in the weeks before CEO Andre Lussi ws forced to leave Clearstream last may, a series of 16 unpublished accounts were opened under the name of the Saudi Investment Company, or SICO, the Geneva holding company of the Saudi Binladen Group, which is run by Osama’s brother, Yeslam Binladen (some family members spell the name differently.)”

4. L: “Yeslam Binladen insists that he has nothing to do with his brother, but evidence suggests SICO is tied into Osama’s financial network. SICO is associated with Dar Al-Maal-Al-Islami (DMI), an Islamic financial institution also based in Geneva and presided over by Prince Muhammed Al Saoud, a cousin of Saudi King Fahd, that directs millions a year to fundamentalist movements. DMI holds a share of the Al Shamal Islamic Bank of Sudan, which was set up in 1991 and partly financed by $50 million from Osama bin Laden.”

5. L: “Furthermore, one of SICO’s administrators, Geneva attorney Baudoin Dunand, is a partner in a law firm, Magnin Dunand & Partners, that set up the Swiss financial services company SBA—a subsidiary of the SBA Bank in Paris, which is controlled by Mahfouz Salim bin Mahfouz, part of the Mahfouz banking family.”

6. D: Kroll Associates conducted an investigation of Saddam’s financial operations that provided the foundation for the information in your UPI article. Tell us about that. L: “A confidential December 2001 report by Kroll, the international investigative agency, said that two Swiss companies, MEDP Corporation SA in Lugano and Midco financial SA (in liquidation), were the holding companies that handled the money Saddam skimmed. It said, ‘Whilst in Geneva Barzan was believed to have participated in financial schemes that included I the year 2000 the illegal sales of Iraqi petrol’ and the purchase of weapons.”

7. “The unpublished report, authenticated by Kroll board chairman Jules Kroll, was commissioned by Kuwait after the Gulf War in an attempt to locate Iraqi assets it could claim as compensation. Jules Kroll explained, ‘In 1990 we were given the assignment and paid by the government of Kuwait.’ He said the goals were to identify Iraq’s procurement network and to find assets outside that would be used to fuel the regime and buy weapons. The 2001 report was an update of the 1991 report.’”

8. “Kroll investigators discovered that one of the middlemen helping Saddam was Marc Rich, the U.S. tax-evader pardoned by President Clinton. Rich had been indicted by the United States in 1983 on charges he evaded more than $48 million in taxes and illegally bought oil from Iran during the 1979 hostage crisis. He fled the United States and settled in Switzerland. Kroll said, ‘We came up with evidence that through Marc Rich’s Spanish subsidiary, he was using some Iranian cutouts—specifically [Shapour] Bakhtiar, Iranians, whose family was close to Saddam—he was using them to negotiate arrangements as it related to oil.’”

9. “The work was all turned over to OFAC (the Treasury Department’s Office of Foreign Assets Control),’ Kroll said. That means the Clinton administration knew about Rich’s aid to Saddam. The Kroll report also dealt with Nadhmi Auchi, reporting the Italian intelligence view that he was a ‘high-level Iraqi defense procurement and intelligence agent.’ After Roger Watson [in 1987] became Saddam’s financial consultant, he also became an adviser to Auchi’s International Company of Banking and Financial Participations (CIPAF). The totals from skimmed oil revenues and contract kickbacks from the late 1970’s through the oil-for-food 90’s have been estimated by U.S. officials to reach $30 or $40 billion.”

10. “Jules Kroll said that until 9/11, a few staff members at the Treasury’s Office of Foreign Assets Control ‘were the only ones spending any energy on this issue in any organized way.’ He said, ‘The level of ignorance at the CIA was total, at the FBI it was beyond total. The law enforcement and intelligence community in the U.S. was behind the curve. It was of little interest to them,’ he said.”

11. D: Describe for us some of the areas of overlap between the Al Qaeda money networks and those used by Saddam to conduct his financial transactions. L: “The key Iraqis in the operation were Said Rahim Hussein Al-Mahdi and Madhmi Auchi. Al-Mahdi was sent to Lugano because his father-in-law, Talaak el Naboulsi, an Egyptian soldier and member of the Muslim Brotherhood, was then working in Geneva for Barzan. (Barzan is now in U.S. custody.) Al-Mahdi set up his system of secret companies and accounts with the assistance of the prominent asset managers (also known as trustees or fiduciaries) Elio Boradori in Lugano in the southern, Italian-speaking part of Switzerland, and Enrico Walser and Engelbert Schreiber, in Vaduz, Lichtenstein. He would also use managers in Panama, and the Bahamas. The same jurisdictions would be used to launder money in the oil-for-food sales in the 1990’s.”

12. “Al-Mahdi established MEDP (Mediterranean Enterprise for Development and Projects), registered in Lugano, with subsidiaries—generally just paper shells—in New York (MEDP USA at 900 Third Ave., New York, incorporated in 1984), London, Paris, Milan, Vienna, Tokyo, Seoul, and Sao Paolo. Its subsidiary in Baghdad was chaired by Nazir Auchi, Nadhmi’s brother. These shells, in turn, had shares of other companies that carried out the money laundering and arms purchases.”

13. “A father-and-son team in Liechtenstein, whose business is setting up shell companies and secret bank accounts, worked to move the money of both Saddam and al-Qaeda. Engelbert Schreiber and his son Englebert Schreiber Jr. are listed as founder or board member of Mediterranean Enterprises Development Projects; Tradex; Techno Service Intl.; Saidomin; and Executive Flight Assistance, all Liechtenstein companies that handled arms sales and payoffs for Saddam. They are also listed on corporate documents for NASREDDIN International Group ltd. Holding (Liechtenstein). Ahmed Idriss Nasreddin, on the U.S. terrorist blacklist, was a founder of Al Taqwa, the bank that moved money for al-Qaeda and which was closed down by the United States after 9/11. The Schreibers declined to respond to numerous requests for comment.”

14. “One of the men linked in documents to several Panama shell companies used in the Saddam laundering network was Baudoin Dunand, a Swiss lawyer who is administrator of the Saudi Investment Company (SICO), the Geneva investment affiliate of the bin Laden family conglomerate, run by Osama bin Laden’s half-brother Yeslam Binladen. (They spell their names differently.) Mr. Dunand declined to respond to repeated requests for comment.”

15. “The Banca del Gottardo in Lugano, Switzerland, moved al-Qaeda money via the Al Taqwa bank, a shell bank that operated through correspondent accounts at the Gottardo branch in Nassau. It also handled payments for the Saddam money network. The bank’s spokesman wrote, ‘Please be advised that we do not intend to make any comments or discuss any issues with you regarding the article you proposed in your e-mail.’”

16. “Banque Paribas, headquartered in Paris, with a significant portion of shares owned by Saddam’s cousin Nadhmi Auchi, moved money for the Al-Mahdi, moved money for the Al-Mahdi network in the 1980’s and was the bank chosen to handle the Iraqi oil-for-food payments. In fact, Iraq insisted that Paribas handle the oil-for-food escrow account. A corporate document for al Taqwa Trade, Property and Industry Co. Ltd. of Liechtenstein—an al-Qaeda network shell company also shut down by the United States—lists Banque Paribas, Lugano, where it had accounts. (Paribas in 2000 merged with another French bank to create BNP Paribas, with Auchi continuing as one of the largest shareholders.)”

17. D: The aforementioned Baudoin Dunand was involved with setting up shell companies used by Saddam as well. Tell us about that. [Note that Dunand was a friend of, and attorney for, Nazi banker Francois Genoud. See FTR#456]. L: Lucy described this in item #14.

18. D: Banco del Gottardo moved Al-Qaeda money through Al Taqwa and did the same for Saddam. Describe that further for us if you would. L: “Al Taqwa has for years enjoyed protection in Switzerland, where it moves money through correspondent accounts in the politically influential Banca del Gottardo, also in Lugano. Gottardo president Claudio Generali is a local vice president of the ruling Liberal Radical Party and a former finance minister of Ticino. Gottardo has New York correspondent accounts in Citibank and the Bank of New York, which gave Al Taqwa entry into the U.S. Replying to numerous queries about Gottardo activities, spokesman Franco Rogantini sent an e-mail declining to answer queries, then or in the future. A 1983 document shows $1 million transferred from the Gottardo ‘Satan’ account to Hamid Al-Tikriti’s account at the National Bank of Kuwait. The recipient—Abid hamid Mahmoud al-Tikriti—was Saddam’s presidential secretary and cousin, arrested by the United States in June 2003. In 1981, half a million dollars had been sent by Gottardo to Hamid al-Tikriti’s Kuwaiti bank account.”

19. D: Relate for us, if you would, the origins and evolution of this network. L: “Saddam Hussein began constructing his offshore operation in 1968 in Switzerland, aware that the country’s bank secrecy made it a prime place to organize the movement of illicit funds and the purchase of arms. That year, 11 years before his coup, Saddam sent his half-brother Barzan Ibrahim Hasan Al-Tikriti to Geneva to construct the network to launder secret commissions charged on sales of Iraqi crude oil. The system would also be used for kickbacks on purchase from Western arms dealers. Liechtenstein, which Swiss bankers and money-managers often use to handle dubious clients, was used to ensure even more impenetrable secrecy: real names of company and account owners would be hidden from law enforcers. The key Iraqis in the operation were Said Rahim Hussein al-Mahdi and Ndhmi Auchi. Al-Mahdi was sent to Lugano because his father-in-law, Talaak el Naboulsi, an Egyptian soldier and member of the Muslim Brotherhood, was then working in Geneva for Barzan. (Barzan is now in U.S. custody.)”

20. D: Would you describe some of the machinations of these individuals? L: “Al-Mahdi established MEDP (Mediterranean Enterprise for Development and Projects), registered in Lugano, with subsidiaries—generally just paper shells—in New York (MEDP USA at 900 Third Ave., New York, incorporated in 1984), London, Paris, Milan, Vienna, Tokyo, Seoul, and Sao Paolo. Its subsidiary in Baghdad ws chaired by Nazir Auchi, Nadhmi’s brother. Thee shells in turn had shares of other companies that carried out the money laundering and arms purchases.”

21. D: The network used by Saddam ranged around the world and entailed transactions with many of the world’s principal arms manufacturers. What were some of the companies with which the Saddam network transacted? L: “The offshore networks directed by the two men were crucial intermediaries for such weapons merchants as Messerschmitt-Bulkow-Blohm Helicopter and Military aircraft Group/MBB (Germany), Thyssen Industries (Germany), Airbus (the consortium of French, German, Spanish and U.K. companies), and Dassault (France), which used them to pay kickbacks and, after international embargoes were established, to hide illegal sales. For example, a 1982 bank transfer from the Nassau branch of the Banca del Gottardo in Lugano notes a credit to MEDP’s “Satan” account of 33,000,00

0 French francs (about $6 million) from Dassault International. On a trip to Paris in January 1985, al-Mahdi signed a contract with Dassault International whereby the company was instructed to send payments to an account at the Indosuez Bank branch in Lugano.”

22. D: Tell us about the “Satan” account in Banca del Gottardo. L: She describes the founding of the account, described in the answer to the previous question. [This account is described in considerable detail in FTR#413.]

23. D: You write of a number of Americans involved in the Saddam networks. Who were some of them? L: [After discussing Marc Rich, described above, Lucy goes on to describe the activities of other Americans.] “Al-Mahdi’s network used Panama shell companies set up by Roger E. Watson, who had dual American-Panamanian citizenship. An official Panama document dated 1985 lists Watson as vice-president of a company called Radistal; the president was Giuseppe Poggioli, a Lugano financial consultant who acknowledged in an e-mail that Al-Mahdi was his client. Watson and Poggioli were also officers of another Panama shell company, Dumynta. Poggioli said about Watson, ‘I think he was the Consul of Panama in Lugano, but I am not 100-percent sure. I have no more contact with him since 1986 or 1987.’”

24. D: What happened to Mr. Al-Mahdi? L: “In 1985, Al-Mahdi ws called back to Baghdad and imprisoned by Saddam, who suspected he was skimming funds, and he was beheaded in 1986. Then, there was a conflict over who would get the late Al-Mahdi’s cash. More than a decade after his death, family members sought to recover goods they claim were stolen by the Swiss partner, Poggioli. They hired a Swiss lawyer, Gianluca Boscaro, who went to court in Milan, Vaduz and Lugano, backing up their claims with documents from Saad Al-Mahdi’s files.”

25. “In August, 2000, attorney Diane Francois, representing Al-Mahdi’s widow, wrote to Jean-Paul Gut, president of Aerospatiale Matra Lagardere International in Paris, noting that Al-Mahdi ‘was one of the consultants of your company for Iraq and in this capacity was remunerated according to the sum of the sales concluded by your company with the Iraqi state.’ In other words, this ‘consultant’ had been getting kickbacks. She wrote, ‘it appears that from the end of 1984, your company stopping paying Mr. Al-Mahdi the sums that were due him, and Madame Lina El Nabulsi estimates at more than 44,865,000 French Francs [more than $8 million] the debt of your company to Al-Mahdi’s heirs.’”

26. “In 2001, Gianluca Boscaro filed lawsuits in Milan, Vaduz and Lugano on behalf of the family for $18 million damages against Poggioli and one of his collaborators. Talaat Mohamed Sudki el Nabulsi, the father of Al-Mahdi’s wife Lina el Nabulsi, had been involved in MEDP operations, so the family could provide Boscaro with evidence that Poggioli and his colleague had embezzled the MEDP companies and other assets. In August, 2002, Boscaro, 44, a European hang-gliding champion, was killed in a suspicious accident in qualifications for the world championship at Lake Orta, Italy. He was doing a maneuver under the paraglider when suddenly he plummeted to the ground. Investigators found that the cords had been damaged. According to journalist Paolo Fusi, who obtained Boscaro’s files, the lawyer had discovered and plotted the interrelationships between about thirty shell companies and fifty Iraqi accounts in Switzerland.”

27. D: Who succeeded Al-Mahdi after his death? L: “After Al-Mahdi’s death, Saddam divided control of the network between the directors of the subsidiary companies of MEDP, Iraqi businessman Mahhal Sheikh Kadirin London and the Lebanese Alfred Jawde in New York. Watson, who set up a residence in Como, Italy, replaced Borradori in 1987 as Saddam’s financial consultant and managed Panama shell companies for the network via his L.R. European Company. Poggioli said that he, Poggioli, also left the operation. Kadir and Watson could not be located, and Jawde declined to comment. Borradori was reached, but he is of advanced age and has difficulty communicating.”

28. D: In your article, you provide a wealth of specific documentation on the transactions conducted by many of these companies with the Saddam network. Detail some of these if you would. L: “On Aug. 13, 1990 document signed by International Aircraft Leasing Ltd. and Erfel Anstalt, both shell companies registered in Liechtenstein, noted past ‘consulting agreements’ with Airbus Industries, Blagnac, France, March 7, 1985, and with MBB, Munich, Feb. 19 and March 18, 1985; and a contract with Thyssen Industries AG, Essen, West Germany, Nov. 26, 1987. An Erfel record of that date sets out commissions from MBB and Thyssen totaling SF 720,000 ($432,000).”

29. “The United Nations enacted comprehensive trade and weapons embargoes against Iraq in 1990. However, a 1991 Erfel document notes a $255,875—5 percent—commission from Airbus and a $45,247—5 percent—commission from Thyssen. And a 1991 balance sheet for IAL cites a debt of 1,455,000 German marks due to Thyssen Industies AG, Essen, with FF 3,812 earmarked for Kensington Anstalt, an Al-Mahdi shell company. IAL prepared a chart that showed that from 1986 to 1991, it collected ‘commissions’ of $1,238,813 (Canadian) from MBB, $10,827,000 (U.S.) from Airbus, $3,900,000 (Canadian) from Thyssen, and DM 1,466,000 from Thyssen. Thyssen and Airbus, which now includes MBB, were sent the documents, but company officials declined to respond.”

30. D: In the early 1990’s, the Italian judiciary conducted “Operation Clean Hands” aimed at rooting out the endemic corruption in the Italian political system. This investigation wound up targeting Silvio Berlusconi [now PM] and also uncovered some of the machinations of the Saddam network. Tell us about that if you would. [Note that Berlusconi’s Italian investments had been managed by Pier Felice Barchi, Nada’s attorney.] L: “According to official Italian documents, Auchi used Panama to launder kickbacks for two contracts for the Iraqi military. An Italian parliamentary report in 1987 said that one of them, Dowal, set up by Watson, was used to collect $23 million in hidden commissions on Baghdad’s purchase of warships manufactured by the Italian shipyard, Cantieri Navali Riuniti. In another case, the Operation ‘Clean Hands’ (Mani Pulite) investigation in Italy revealed in 1993 that Auchi received about $40 million in hidden commissions to facilitate approval of a Franco-Italian engineering project to construct a pipeline from Iraq to Saudi Arabia. Italian banker Pierfrancesco Pacini Battaglia declared to investigators that he had received instructions to transfer these commissions to accounts in Panama established in the names of Iraqi officials.”

31. You had a great deal of difficulty getting your article published. Are you in a position to describe some of your travails in detail? Why do you think it was so difficult to get this article published? L: “The major US media turned it down. One major publisher says it looks bad when they run outside investigations because readers wonder why their own reporters didn’t get the story. Also, editors mostly don’t have a clue about the importance of the offshore system. Some asked me if any of the documents related to the near present! As if something doesn’t matter if it didn’t happen yesterday. Real reason: astonishingly bad journalism.”

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