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Serious problems with Volcker report

N. Ram

Chennai: A close look at the Volcker Committee report — in the context of its naming India's External Affairs Minister, K. Natwar Singh, in two tables purportedly showing "non-contractual beneficiaries" of Iraqi oil sales — indicates two major problems with the method of investigation.

First, there is no sourcing of the information provided in Tables 1 and 3 of the report to back up the listing of Mr. Singh as a "non-contractual beneficiary." Under the head "Sources of Evidence" for this section, there is an assertion that the information in the relevant tables is "broadly based on four sources." These are "databases and records" maintained by the United Nations; records of the Government of Iraq, primarily from the Ministry of Oil and the State Oil Marketing Organisation (SOMO); records from various financial institutions involved in the oil financing transactions; and records provided by "certain entities involved in the purchase of oil from Iraq."

Interestingly, Masefield AG — the specialised energy trading international company that is privately owned, based in Zug, Switzerland, and linked to the oil sales allegedly benefiting Mr. Singh and the Congress Party — is shown (in Table 1) not to have responded to the Committee's notice relating to the charge of making surcharge payments to Iraq. There is nothing on record that it was asked to confirm or deny allegations that Mr. Singh and also the Congress Party were "non-contractual beneficiaries" of Iraqi oil sales to Masefield AG.

Secondly and more troublingly, an elementary rule of fair play was abandoned in the case of the alleged "non-contractual beneficiaries" of the Iraqi oil sales. This contrasts with the elaborate procedure followed by the "Independent Inquiry Committee" in the case of companies that allegedly made "illicit" surcharge payments to Iraq for the oil transactions, and also companies that allegedly paid "kickbacks" for the sale of humanitarian goods. These companies were served notice to the effect that they were going to be named in the incriminating tables and were, therefore, being given a chance to respond.

Interestingly, when it went into allegations that persons associated with the former U.N. Secretary-General, Boutros Boutros-Ghali, were involved in Iraq-related corruption, the Volcker Committee seems to have been obliged to look closely at the evidentiary value of whatever information it had in hand. It found "no evidence... that Dr. Boutros-Ghali knowingly received proceeds of oil sales under the Programme or was in any way involved in these corrupt activities." Had a notice or letter gone from the "Independent Inquiry Committee" to India's Foreign Minister and separately to the Congress Party asking them for responses, surely the outcome would have been quite different from naming him and separately his party as "non-contractual beneficiaries" of millions of barrels of Iraqi oil sales, without any explanation, in a couple of tables in the Report.

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