War, Oil & Saddam’s Hidden Billions

Is money the root of most wars? Beyond lofty debates on peace vs. democracy, national sovereignty vs. anti-terrorism, the war to topple Saddam Hussein and his regime is also rooted in realpolitik and conflicting economic interests. It has now become fashionable for anti-war activists to oversimplify issues and demonize America for its war in Iraq as driven by its huge appetite for oil. What about the preponderance of reports that France and other anti-Iraq war countries are equally motivated by economic interests? How will the timid and politically clumsy Philippine government position the nation in this fast-changing geopolitical configuration, and its far-reaching economic implications?

True, securing oil away from tyrants and terrorist patrons like Saddam is vital to US national interest and world stability, but right or wrong, America has a long track record of championing freedom. It is tragic that lives have to be lost in war, but wouldn’t it be great if the Iraqi people are freed from the madman Saddam and become the first Arab democracy? Will a triumphant US rectify the errors of British colonizers who had arbitrarily carved out Iraq as a country, without allowing an independent Kurdistan homeland for the Kurdish people who once gave Muslims their greatest leader Saladdin?

French, Russian, German businesses with Iraq? France, the most vigorous Western opponent of the war, sold Iraq some $25 billion of weapons before the 1991 United Nations (UN) embargo according to a BBC report. The French parliament commissioned a report in September 2002 which estimated total French exports to Iraq since the economic sanctions at $3.5 billion. Coincidentally, anti-war states Russia and Germany have also exported billions to Iraq. In November last year at the Baghdad Trade Fair, France was the Western country with the biggest number of booths.

Arab Oil and Gas magazine said that the French government-controlled Total Fina Elf had expected huge contracts to drill the largest unexploited oil reserves in the world still in Iraq, but UN sanctions have prevented these deals from being finalized. In 1997, the Russian oil firm Lukoil signed a $20 billion deal with Saddam. If President George W. Bush succeeds in blasting away the Saddam Hussein dictatorship, US firms are expected to eclipse their French rivals in the race to tap Iraqi oil wealth.

Decisive victory in the campaign to oust Saddam Hussein and reconstruction of Iraq may bring down world oil prices to its ideal rate of $22 to $28 per barrel. Due to Saddam’s wars to invade neighbors Iran and Kuwait, and his brutal 1988 chemical war against his own Kurdish minority, all these had disrupted normal Iraqi oil production for two decades.

Iraq has over 110 billion barrels of proven oil reserves, the world’s second largest next to Saudi Arabia’s. In contrast, huge oil importer America owns about 30 billion barrels. Another natural advantage of Iraqi and Middle East oil was that it costs only $5 or less to produce each barrel of oil, while it costs $15 to produce each barrel of US crude oil.

Saddam Hussein is an epitome of the many corrupt Third World leaders who amass great wealth, despite the mass poverty of their own people. In its March 17 issue, Forbes magazine listed 65-year-old Iraq President Saddam Hussein as one of the world’s wealthiest despots with $2 billion in net worth. His wealth finances his 50 royal palaces nationwide and bribes to maintain the loyalty of his security forces. Saddam has been part of the exclusive Forbes list of the world’s wealthiest since 1999, having amassed his ill-gotten wealth by looting state coffers and engaging in smuggling oil for arms.

Not as rich as Saddam, but also listed are two corrupt dictators – Palestinian Authority President Yasser Arafat with $300 million and Cuban President Fidel Castro with $110 million (which is about one percent of his impoverished socialist nation’s gross domestic product or GDP). It is incredible that the wealth of these dictators mirror those of other corrupt leaders such as ex-Indonesian President Suharto who allegedly stole over $10 billion, ex-ARMM leader Nur Misuari and his alleged embezzled billions and many others.

International financial investigator John Fawcett told CBS News’ 60 Minutes show last month that Saddam Hussein controlled assets estimated to be between $10 and $20 billion, mostly earned from kickbacks from UN-sanctioned exports of Iraqi oil to raise funds intended to feed the Iraqi people.

However, if businesses want to gain Iraqi oil contracts, they must kick money back into the dictator’s banks which are beyond those of UN bank accounts. Observers believe much of Saddam Hussein’s ill-gotten wealth are stashed away in Swiss bank accounts due to the country’s strict secrecy laws. People in the Swiss government told CBS 60 Minutes they believe Saddam has people in Geneva to help him oversee his secret financial network.

Saddam’s interests include US magazines like Elle, Woman’s Day and Car and Driver through stocks he owned in a parent firm. These shares are now frozen. After this war ousts Saddam, will a new Iraqi government perhaps follow the Philippine example by organizing its own Presidential Commission on Good Government (PCGG) to track down and recover his ill-gotten wealth? Will the fall of Saddam send shock waves to other terrorist patrons, forewarning them to stop financial aid to terrorists masquerading as rebels? Can the US redeem itself from world criticisms by ensuring Iraqi self-determination and free enterprise to flourish?

Sept 2001
The Central Intelligence Agency says Saddam Hussein has joined the world's Top One Hundred Billionaires.

The foundation for Saddam Hussein's fortune was laid in a secret deal Iraq made with the late Shah of Iran. The details are in a CIA secret report that has been sent to the World Bank and leading financi institutions. The report places Saddam's current personal fortune as close to 1.7 billion US dollars. The CIA reports says that the exact whereabouts of the money is not known - but suggests that some could be in Chinese banks in Hong Kong.

More certain is that the story of how Saddam came to join the world's top 100 billionaires has all the hallmarks of his ruthless style.

In 1978 the Shah knew that his rule was about to end and that the gilded Peacock Throne from which he had ruled with such brutality was about to go into meltdown. Entire cities in Iran had become closed citadels controlled by the clergy of the Ayatollah Khomeini.

Beyond the expanding borders of Islamic Fundamentalism, teams of the Ayatollah's accountants, trained by Wall Street and the Swiss banking system, were combing the world to try and confiscate the Shah's huge fortune. Over the years he had built up portfolios in every financial market. His investments on Wall Street alone were estimated at over 200 million US dollars.

Anticipating Khomeini's determination to confiscate the money in the name of the Islamic revolution, the Shah had made an incredible move to protect his wealth.

For months in 1978 his most trusted aides had held secret meetings in Paris and Geneva with representatives of Iran's sworn enemy - Iraq.

The Shah had reasoned that even the most diligent of the Ayatollah's accountants would be unable to gain access to Iraq's banks.

"The deal they were proposing was bizarre even by the old adage that money knows no barriers," confirmed Yoel Ben Porat, an acknowledged expert on Saddam's financial affairs.

Stripped to its essential the deal the Shah's men were proposing was breathtaking simple. The Shah would transfer a substantial portion of his personal fortune that had not been frozen by the Ayatollah's accountants into accounts to be managed by the Shah's surrogates. They would place the funds in Iraqi banks.

The bankers in Baghdad would receive a "handling fee" of 1.5 per cent for arranging this unique facility.

"It was a deal that could only have made Saddam believe that Allah was smiling on him," said David Jensen, a Hong Kong-based financial analyst.

"Until he came to power in July 1979, Saddam had been relatively impoverished. Raised in almost abject poverty, he had never had sufficient money to finance his grandiose schemes.

"And the war with Iran was biting ever deeper into the Iraqi economy. Loans from the United States, Britain and Europe were all tightly controlled. There was little opportunity for him to get his hands on ready cash," said Jensen.

The deal with the Shah changed all that. In a matter of days after the arrangements had been agreed, some one billion US dollars were withdrawn from US banks and transferred into accounts held by Iraq in Swiss banks.

From there the money was transferred to the numbered accounts Saddam Hussein held in Geneva, Paris, the Cayman Islands and the City of London.

The Shah was unaware of what had happened until he fled to the West in 1979. There he learned where his money had gone.

"His appeals to Washington to intervene fell on deaf ears," Ben Porat would recall. "The United States realised they had made a bad move in not backing the Ayatollah. The only card they could play was to support Saddam. There was no way Washington was going to ask him to pay back the Shah. The Shah was yesterday's man."

With his first billion safely stashed away, Saddam then turned to another unlikely source to advise him on how to enhance his easy-won fortune.

Financier Roland Rowland was invited to Baghdad by an Egyptian lawyer, Soubi Roushdi, a legal adviser to one of the Iraqi banks involved in ripping off the Shah.

For Saddm it was a perfect choice. Rowland had a deserved reputation as a financial terrorist, a manipulative conspirator. In the City of London he had become a detested figure. But in personality and ruthlessness, he matched Saddam.

Rowland, known as "Tiny" to his friends, had been born in India, the son of a German businessman and an Englishwoman. In his youth he had become a supporter of Hitler, a liking he shared with Saddam. The other attraction they shared was anti-Semitism.

Impressively rich and powerful, Rowland dazzled Saddam with his tales of financial acumen. Soon Saddam moved in exalted circles. From London came figures like Edward du Cann, a senior member of the Conservative Party, and Duncan Sandys, who had been Winston Churchill's son-in-law.

From them and others, Saddam learned the lessons of making his money work. His portfolios began to grow. Ten years after he had acquired the Shah's money, Saddam Hussein had doubled his fortune.

He arranged for the world's leading financial journals to be flown in from New York and London on the day of publication. Later, when the newspapers established web-sites, Saddam would pore over them.

The Gulf War proved to be a mere blip on his race to join the world's leading billionaires.

Mossad monitored a meeting between Saddam and the late King Hussein of Jordan in which the Iraqi leader threatened to bomb Amman - unless the king made "a contribution to the poor people of Iraq". The king refused.

After the Gulf War, Saddam turned the business of building his fortune over to his son, Uday. Reports that this centered on stealing money from the limited oil exports Iraq is allowed --to pay for essential medical supplies - have come from Western intelligence sources.

One way that Saddam and his son have been able to manipulate money is through the Internet. "There is no way to check on their activities on the Internet. By the time any investigation can get close, Saddam and his people will have moved on. Patrolling the Internet financial world is something that has yet to be effected. You can hide anybody and anything behind a web site," said David Jensen.

One thing for sure is that Saddam will have invested part of his billionaire's fortune in the most advanced computer system to roam the Internet.

This material is Copyright Gordon Thomas © 2000 Gordon Thomas

For publishing rights, contact the author at gordon@gordonthomas.ie

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