The first report was prepared at the behest of the Iraqi interim administration by the auditing firm KPMG and the British law firm Freshfields Bruckhaus Deringer. Labeled "highly confidential," the report was leaked to London's "Sunday Times" on 3 October.
Three days later, on 6 October, the U.S. Central Intelligence Agency (CIA) released a three-volume report by Charles A. Duelfer, head of the Iraq Survey Group. After a detailed investigation, the report concluded that Hussein did not possess weapons of mass destruction at the time of the U.S.-led invasion last year, but it also contained a lengthy description of irregularities in the OFF program and the oil-voucher schemes.
"All oil majors were involved in this.... All companies that took part in Iraq projects were connected to this."
The "Saddamgate" scandal began when the Iraqi daily "Al-Mada" in its 25 January edition published a sensational expose of companies, organizations, and individuals who allegedly were bribed with hundreds of millions of barrels of supposedly free oil by Hussein in return for political support and as payment for items forbidden under the pre-war embargo on Iraq. Titled "President's, Journalists, and Political Parties Received Millions Of Oil Barrels From Saddam," the paper claimed that documents from the Oil Marketing Company; an Iraqi company affiliated with the Oil Ministry, listed some 270 names of alleged recipients (see "RFE/RL Organized Crime and Terrorism Watch," 16 February and 4 March 2004).
Soon after this expose was published, a number of investigations began to ascertain if the charges contained. in the Iraqi documents were true.
The UN -- facing potential embarrassment for the way the OFF program had been handled and the fact that initial reports named the head of the OFF program at the UN, Benon Sevan, as having received 9.3 million barrels of oil from the Iraqi regime --initiated its own investigation headed by Paul Volcker, the former chairman of the U.S. Federal Reserve. This commission has not yet completed its work.
The Duelfer report states: "According to Tariq Aziz (the former Iraqi foreign minister now held captive by the coalition), Taha Yasin Ramadan al-Jizrawi, and Hikmat Mizban Ibrahim al-Azzawi, the oil-voucher program was managed on an ad hoc basis by regime officials.... The Iraqi Intelligence Service, ambassadors, and other senior Iraqi officials also commonly made nominations for oil allocations.... Saddam [Hussein] personally approved and removed all names on the voucher recipient lists."
The KPMG-Freshfields report summarized in "The Sunday Times" found that the office of Russian President Vladimir Putin profited from the cheap oil and that Russia, China, and France, all members of the UN Security Council, were given top priority by Hussein's regime.
According to "The Sunday Times," "The report claims that Russians had a prominent role. They received 'unprecedented priority' and were allocated a third of all Iraqi oil -- most of which was resold to other countries. Besides Putin's private office, those named as having received oil include political parties, Russian oil firms, and the Foreign Ministry."
The Duelfer report also notes that: "In Russia, oil voucher gifts were directed across the political spectrum targeting the new oligarch class, Russian political parties and officials."
According to the initial report in "Al-Mada," 798 million barrels of crude oil were allegedly given to 46 Russian individuals and organizations. Most of the oil bought by Russian companies from Iraq under the OFF program was resold on the open market, and most of it apparently went to the United States. Most of the oil never went to the Russian market, and what became of the money is a mystery.
According to a study carried out by the Washington and Hague-based Coalition for International Justice (CIJ) in September 2002 titled "Sources of Revenue for Saddam & Sons," the Russian prosecutor's office began an investigation into the whereabouts of up to $15 billion in proceeds that Russian companies received from Iraqi oil sales. This investigation was never completed.
Also implicated in the KPMG-Freshfields report, is a French oil company linked to a close associate of French President Jacques Chirac. The company is alleged to have teamed up with the Iraqi regime to bribe a UN-appointed inspector monitoring exports of Iraqi oil.
The CIJ study noted that: "Iraqi officials have never hidden the reasons, prerequisites, or criteria behind their choices of contractors under the Oil-for-Food (OFF) program: indeed they have stated many times that the money will flow to those who demonstrate political support for Baghdad in the international arena."
"Al-Mada" noted in January that among the more well-known individuals and organizations that allegedly received oil for support are the Bulgarian Socialist Party, former French Interior Minister Charles Pasqua, former Prime Minister Megawati of Indonesia, former British deputy George Galloway, the Popular Front for the Liberation of Palestine, a number of major Russian oil companies such as LUKoil and Rosneft, the state-owned gas monopoly Gazprom, the pro-Kremlin Unity party, the communist parties of Russia, Ukraine, and Belarus along with some 270 other recipients.
All the Russian organizations mentioned in the initial report in "Al-Mada" denied any improprieties soon after the article was published. After the Duelfer report was issued most continued to deny any involvement, according to "The Moscow Times" on 8 October.
However, according to "The Moscow Times," a source from one of the Russian oil companies mentioned in the Duelfer report said: "All oil majors were involved in this.... The state played a large role. Almost all -- no, not just almost all -- all companies that took part in Iraq projects were connected to this."