Supplying Iraq With Prohibited Commodities

Overview

¶Despite UN sanctions, many countries and companies engaged in prohibited procurement with the Iraqi regime throughout the 1990s, largely because of the profitability of such trade.

Private companies from Jordan, India, France, Italy, Romania, and Turkey seem to have engaged in possible WMD-related trade with Iraq.
The Governments of Syria, Belarus, North Korea, former Federal Republic of Yugoslavia, Yemen, and possibly Russia directly supported or endorsed private company efforts to aid Iraq with conventional arms procurement, in breach of UN sanctions.
In addition, companies based out of the following 14 countries supported Iraq’s conventional arms procurement programs: Jordan, the People’s Republic of China, India, South Korea, Bulgaria, Ukraine, Cyprus, Egypt, Lebanon, Georgia, France, Poland, Romania, and Taiwan.
The number of countries and companies supporting Saddam’s schemes to undermine UN sanctions increased dramatically over time from 1995 to 2003 (see figure 54).
A few neighboring countries such as Jordan, Syria, Turkey, Egypt, and Yemen, entered into bilateral trade agreements with Iraq. These agreements provided an avenue for increasing trade coordination and eventually led to sanctions violations.

¶The countries supporting Iraq’s illicit procurement changed over time. These changes reflected trends based on Saddam Husayn’s ability to generate hard currency to buy items and the willingness of the international community to criticize those countries selling prohibited goods to the Regime. The following sections addressing each country have been grouped according to when evidence indicates they began supporting Saddam’s illicit procurement programs.

Procurement Suppliers During the Decline Phase, 1991 to 1996

¶ISG has identified entities from three countries that began supporting Iraq with illicit procurement during the post-Gulf war “decline” phase in the Regime: Romania, Ukraine, and Jordan. Romania and Ukraine had just emerged from the Soviet bloc with an excess of military hardware and expertise and a need for hard currency. Jordan, which profited primarily from allowing transshipment, argued that Iraq was a major trading partner before 1991 and trade with Iraq was a necessity.

Romania

¶According to a high-level official of the former Iraqi regime, trade between Iraq and Romania flourished during the Ceauscescu era (1965 to 1989). The IIS had an active presence in Romania throughout this period and MIC engineers were active in procurement programs directed from the Iraqi Embassy in Bucharest.

In the mid-1990s, reporting indicated that the Iraqi MFA and MIC were both interested in changes to Romanian export controls over nuclear, biological, and chemical weapons and their associated technologies.

¶According to documents identified by UNSCOM in Operation Tea Cup, Iraq reestablished a procurement relationship with the Romanian firm Aerofina in February 1994. The Iraqis and Romanians conducted two to three delegation visits between Bucharest and Baghdad to discuss sending Romanian missile experts to Iraq to assist with design and guidance control problems in the Al Fat’h missile, later called the al Samud, and to obtain missile parts and related raw materials.

By August 1994, several procurement contracts had reportedly been signed.
In November 1995, Iraqi sent a letter to Aerofina requesting that the missile repair part shipments be temporarily stopped due to concerns over the quality of the goods.
As a result of UNSCOM’s operation, the Romanian Government acknowledged in 1998 that Aerofina sold Iraq weapons parts in 1994 via an intermediary company in Jordan.

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¶According to a source with good access, a Romanian source provided analytical equipment and testing for SG-4 tank gyroscopes and gyroscopes intended for missile applications to Iraq in the late 1990s. This equipment may have been used to ascertain the quality of illicitly imported gyroscopes because Iraq could not manufacture them domestically. The name of the Romanian supplier was not specified.

¶In March 1998, Iraqi intelligence conducted an operation to smuggle weapons and military equipment from Romania in violation of UN sanctions, according to a reliable source. Walid al-Rawi, an IIS agent stationed in Romania, was sending pictures of tanks and military equipment available for sale from Romania back to Baghdad. An Iraqi diplomatic pouch was used to transfer the photographs. There is no further information concerning the type, number, or source of the conventional military goods purchased.

Al-Rawi used Qatar and Dubai in the United Arab Emirates (UAE as transshipment points for the illicit goods. Bribes were used to circumvent customs inspections at ports.

¶Al Rawi obtained financing for the military goods by requesting money from Baghdad. If approved, the cash was reportedly sent to Romania via Geneva.

¶According to captured documents, Romania’s Uzinexport SA was contracting in October 2001 to provide Iraq with equipment, machinery and materials linked to a magnet production line for an Iraqi V-belt drive project. This company worked with a mix of Iraqi front companies and intermediaries that were representing the MIC, the Iraqi lead for the project. The magnets—assembled by the Iraqis with Romanian help—could have been suitable for systems used to spin gas centrifuge rotors for the enrichment of uranium. Although there is no evidence that the magnets were employed in the production of gas centrifuges, the capability to indigenously produce magnets would have allowed Iraq to maintain knowledge and skill-sets in this area.

The various front companies and trade intermediaries involved in the project included the Jordanian branch of the Iraqi firm Al-Sirat, the Jabir Bin-Hayyan General Company, the Aa’ly El-Phrates company, and the Ali Al-Furat Trading Company. Jordan may have also been used as a transshipment point for the magnet technology.
Captured documents indicate that the total sum of the contract awarded to Uzinexport for the V-belt project was $4,607,546. This was paid though a combination of cash, letters of credit, oil, and raw materials.

Ukraine

¶Ukraine was one of the first countries involved in illicit military-related procurement with Iraq after the first Gulf war. Iraqi delegation visits to Ukraine were first evident in 1995. These visits were reciprocated in Iraq from 1998 to 2003. The highest-levels of the Ukrainian Government were reportedly complicit in this illicit trade as demonstrated by negotiations conducted in regard to the sale of a Kolchuga antiaircraft radar system to Iraq in 2000. In addition, Ukrainian state and private exporting companies independently facilitated the transfer of prohibited technologies and equipment, mainly in the missile field, to the embargoed Regime.

¶UNSCOM’s Operation Tea Cup (1995 to 1998)

¶From 1995 to 1998, UNSCOM inspectors conducted “Operation Teacup,” an operation designed to reveal Iraq’s efforts to procure prohibited military and WM- related goods.

The operation was launched after the defection of Saddam’s son-in-law, Husayn Kamil, in 1995. Thousands of WMD-related documents were captured by the UN at Husayn Kamil’s chicken farm, including the al Samud contracts (see the Husayn Kamil and The Saga of the “Chicken Farm” Documents- ments insets in the Regime Strategic Intent chapter.)
As a result of this sting mission, the UN videotaped Iraqi buyers (including Dr. Hashim Halil Ibrahim Al ‘Azawi) negotiating with Romanians for prohibited gyroscopes.

¶According to IIS memos to the Iraqi Embassy in Kiev, Ukraine, was an important political ally for Iraq. After the initial business contacts in the mid-1990s, the government of Iraq embarked in a diplomatic exchange with Ukraine in 2001. ISG judges that Saddam’s goal with this relationship was to gain access to Ukraine’s significant military production facilities, including a large portion of the former Soviet space and rocket industry.

The recovered IIS memos further indicated that the former MIC Director Huwaysh visited Ukraine in 2002 hoping to develop a closer industrial partnership.
By 2001, the commercial exchange between the two countries reached $140 million. Captured documents indicate that Iraq strove to make “sure that the Ukrainian share from the oil for food program [got] bigger” to encourage further trade between the two countries.

¶ISG has recovered further documentation disclosing representatives from Ukrainian firms visited Iraq to coordinate the supply of prohibited goods from the early 1990s until the onset of OIF. Information supplied by an Iraqi scientist indicates that Iraqi delegations visited Ukraine in 1995.

By 1998, the Iraqi Al-Karamah State Establishment hosted numerous visits from Ukrainian suppliers seeking contracts assisting Iraq with its missile program.
Mr. Yuri Orshansky, from the Ukrainian Company MontElect, led the Ukrainian visits. Orshansky’s relationship with Iraq began in September 1993 when he arrived in Baghdad accompanied by Dr. Yuri Ayzenberg from the Ukrainian firm Khartron, a known company with missile guidance system design capability. Within 2 months, an Iraqi delegation reciprocated the visit to Ukraine.
While in Ukraine, Orshansky, Ayzenberg, and General Naim (the head of Iraq’s Scud missile guidance program) executed a “protocol” amounting to an outline of future cooperation between the parties for missile-related technologies.

¶Professor Yuri Orshansky and the MontElect Company

¶Yuri Orshansky, a professor of electronics and director of the Ukrainian MontElect Company, was the key facilitator between Saddam’s Regime and Ukraine.

He was a member of the Iraqi Ukrainian Committee for Economic and Trade Cooperation.
In December 2000, he was made an honorary consul for Iraq in Kharkov.
For his efforts, Orshansky was awarded 1.5 million barrels of oil by Taha Yasin Ramadan. From 1998 to 2000, he also received more than 6 million barrels from Saddam via the secret oil voucher system. Iraq’s State Oil Marketing Organization (SOMO) estimated that Orshansky earned about $1.85 million in profit from these gifts (refer to Known Oil Vouncher Recipients, Annex B).

¶Between 1993 and 1995 Orshansky traveled to Iraq at least six times. During this period, Iraq sent at least four delegations to Ukraine.

¶Orshansky continued to visit Iraq in 1998 to 2003 and, through his company MontElect, he transferred a range of equipment and materials to the Al-Karamah State Establishment including:

Engines for surface-to-air Volga 20DCY missiles in 2001.
300 liquid fuel motors to be used in al Samud I missiles.
According to a former Iraqi government official, Iraq also signed a contract with Orshansky for the design and building of a plant and build a plant to produce tiethylamine (TEA) and xlidene—the two components of TEGA-02 (missile fuel).

The technology included guidance components for surface-to-air missiles, assistance in the development of batteries for the latest antiaircraft missiles, providing equipment for missile research and possibly assisting in the establishment of a college for training of missile expertise.
Cooperation was initiated by Iraq requesting quotes on a test stand for rocket motors, a series of gyroscopes and accelerometers for missile-guidance systems and high precision machine tools for manufacturing missile components.

¶In 2000, the Ukraine-Iraq relationship became public-knowledge when the Ukrainian Government was implicated in selling Iraq a Kolchuga antiaircraft radar system. President Leonid Kuchma was accused of personally approving the Kolchuga sale, worth $100 million, via a Jordanian intermediary.

Evidence of Ukrainian Government complicity in the sale to Iraq was based on a secret 90-second audio recording made 10 July 2000 by Mykola Melnychenko, a former counter-surveillance expert in a department of the Ukrainian Security Service (SBU), according to press reports. The recorded conversation involved President Kuchma, Valery Malev, the head of Ukspectsexport, a state export agency, and Leonid Derkach, the former SBU Chairman. Kuchma allegedly authorized Derkach to export 4 Kolchuga radar systems to Iraq via Jordan. Kuchma also gave Malev permission to bypass export controls for the deal.
Initially, Ukrainian Government denied the allegations but then changed its position on the issue several times. First, it denied that the meeting had ever taken place. Later it admitted that the meeting had taken place and that President Kuchma had authorized the sale, but argued that the sale had not been completed. (No Kolchugas have been found in Iraq.)
It is interesting to note that the Government of Ukraine lifted export restrictions on Kolchuga radars four days after Kuchma authorized the sale to Iraq. After this deal, Ukraine and Iraq signed a trade and technical cooperation agreement in October 2000. Ukraine parliament ratified the agreement in November 2001.

¶The Iraqi IIS, MIC, and the associated MIC front companies also acquired military-related goods from Ukraine. According to information obtained in an interview with the former MIC Director ‘Abd al-Tawab ‘Abdallah Al Mullah Huwaysh:

In 2001, the IIS purchased five motors for unmanned aerial vehicles (UAVs) from the Ukrainian company Orliss for the MIC and Ibn Fernas. The Orliss company representative was by a female physician named Olga Vladimirovna. The motors were allegedly transported from Ukraine to Iraqi via Iraqi diplomatic pouch.
In another instance an “Olga” (most likely Ms. Vladimirovna from Orliss) was known to have assisted the MIC with a carbon fiber filament winding and insulating material project. She was also the point of contact, in late 2002, for a contract with an unspecified Ukrainian supplier for missile engines and gyroscopes, but none of these items were ever delivered. The MIC only received some models of the gyroscopes.

¶Figures 55 and 56 further illustrate the activity between the MIC, and the MIC front companies such as ARMOS, and Ukrainian military supply companies in 2002.

¶In addition to gyroscopes and motors, Iraq sought missile fuel from private Ukrainian companies. Huwaysh stated that Iraq approached Ukraine for diethylene triamine (DETA) and AZ-11 (a mixture of 89 percent DETA and 11 percent UDMH). The MIC intended to use the fuel for the HY-2 missile system. Iraq reportedly had approximately 40 HY-2 missiles but only had sufficient fuel for 15 of them. Iraq, however, never received either the AZ-11 or its components.

¶By 2003, recovered documents and intelligence indicate that the ARMOS Trading Company was playing a greater role an intermediary between Iraq and Ukraine. ARMOS was a joint venture with a Russian company established by MIC to import technology and assist in the acquisition of materials and equipment for MIC and other Iraqi ministries.

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ARMOS specialized in bringing both Russian and Ukrainian experts into Iraq and represented Russia and Ukraine during business transactions, mainly for the financing of military goods transactions (See the MIC Front Company section for further details on ARMOS).
Documents indicate that ARMOS and MontElect were involved in offers of military equipment for Al-Karamah in January 2003. Signatures on the recovered documents implicate ARMOS, Al-Karamah, Sa’ad General Company, the Trade Office of the MIC, and Dr. Sergey Semenov of MontElect. The documents also revealed the use of Syrian transportation companies and use of the Iraqi-Syrian Protocol to facilitate the transaction. Iraq made two payments of $405,000 for the equipment.

Jordan

¶Jordanian companies performed a variety of essential roles from 1991 through 1999 that aided and abetted Iraq’s procurement mechanism: transportation hub, financial haven, one of several illicit revenue sources, and overall illicit trade facilitator (see the Trade Protocol section). Firms from Jordan facilitated the transshipment of prohibited military equipment and materials to the Iraqi Regime. Iraqi front companies conducted the vast majority of this illicit trade. This trade included the following:

Captured documents reveal that a company called Mechanical Engineers and Contractors shipped missile parts to Iraq. Payment was made through the Jordan Investment and Finance Bank according to the guidelines established by the Iraq-Jordan Trade Protocol.
A high-level former Iraqi government official stated that during 2002, compressors used in nitric acid production and Russian missile control systems destined for MIC front companies were shipped through Jordan.
A $50 million contract was signed for the Iraqi Electricity Commission in 2002, for the purchase of Russian-made cables designed to withstand explosions.

¶Multiple sources indicate that the former Iraqi Regime also received offers from Jordanian companies for items such as global positioning system (GPS) equipment, metrological balloons, gyroscopes, video gun sights, electronic countermeasures equipment, and communications equipment.

In February 2003, Iraq’s Abu Dhabi Company sought to purchase a large quantity of field telephones and some frequency hopping radios from Jordan.
In February 2003, Iraq’s Orckid General Trading Company sought details of solid-state gyroscopes available through a Jordanian company. High performance gyroscopes can be used in UAVs, avionics and platform stabilization.
The Iraqi firm Al-Rabaya for Trading in Baghdad contracted with a Jordanian firm, for US manufactured GPS equipment. The parties of the contract were identified as Munir Mamduh Awad alKubaysi, Managing Director or Iraq’s Al-Basha’ir Trading Company, and Dr. Sa’di ‘Abbas Khadir, Director General of the Al-Milad General Company, companies run by the MIC.

¶The Al-Eman Investment Group employed many private subsidiaries to procure goods through Jordan for Iraq. An Iraqi businessman with direct access to the information affirmed that both the UN OFF program and the trade Protocol was used as a mechanism for conducting illicit trade. Al-Eman’s Vice President, Karim Salih, also acquired Al-Samud missile engine parts for the MIC.

Iraqi businessmen stated that the Al-Eman Establishment conducted business with many Iraqi ministries and was a critical component of the Iraqi illicit procurement apparatus.
According to an Iraqi businessman with extensive Regime contacts, a Jordanian company, with offices in Amman and Baghdad, delivered engine spares for turboprop trainer aircraft owned by the Iraqi military. This Middle Eastern firm also dealt with the Iraqi Ministry of Information and the MoT, and had extensive contacts with the Iraqi CA in the Iraqi Embassy to Jordan in Amman. The firm did not manufacture goods; it simply acted as a broker for Iraq.

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The MIC procured banned items with the assistance of the Iraqi CA in Jordan. In 2000, a former high-ranking Iraqi official stated that a payment of $2.275 million was made to a Lebanese company for BMP-2 (armored vehicle) 30-mm cannon barrel-manufacturing technology. This technology originated with an arms firm called Yugoimport-FDSP, a firm based in the former Federal Republic of Yugoslavia known for violating UN sanctions on Iraq.

¶Methods Used To Hide Illicit Procurement via Jordan.** According to a high-level source from the Al-Eman network, the Jordanian Government aided Iraqi efforts to conceal its illicit trade activity through its decision announced in October 2000 to terminate an inspection agreement with Lloyd’s Registry. This agreement, in force since 1993, permitted Lloyd’s to inspect goods coming through the Port of Aqaba. All OFF goods were monitored at all points of entry. Lloyd’s, however, was not required to report illicit cargo (see Ministry of Transport section).

An Iraqi customs official with direct access believed that the IIS operated several front company offices at the Turaybil checkpoint on the Iraq-Jordan border. These included Al-Etimad and Al-Basha’ir. Any goods destined for these companies received special treatment at the border.

¶A Jordanian businessman with extensive business contacts with the former Iraqi Regime asserted that official Jordanian approval was required for all trade with Iraq. Individual shipments had to be approved by the Jordanian security committee; the goods were sometimes photographed. Fawaz Zurequat, a possible Jordanian intelligence officer, who may have been imprisoned after 1999 because of his involvement with trading with Iraq, was a key Jordanian contact in this process.

An Iraqi customs official believed that the trade with Jordan was very useful for acquiring prohibited goods, particularly vehicles and computers. The Iraqi Directorate of General Military Intelligence (DMI) had two shipments per week through Turaybil after 2000—Iraqi customs officials were not permitted to check these goods.

¶Transport Routes for Procurement via Jordan. Iraq had formal agreements with Jordan during the 1990s. Jordan was the primary route through which Iraqi material moved. The IIS had a presence at key Jordanian transport nodes.

Abdul Karim Jasim (Abu Lika) was the IIS representative at Al-Aqaba Port for three years until OIF.
Turaybil on the border of Iraq and Jordan was the main entry point for illicit trade. A former high-ranking government official asserted that the IIS, DGMI, and the Directorate of General Security (DGS) had large offices there and enjoyed close liaison relationships with their Jordanian intelligence counterparts. Maj. Gen. Jihad Bannawi was head of the IIS section at Turaybil.
Al-Eman had its own shipping division to transport goods to Iraq. It shipped goods through the Jordanian, Syrian, and Turkish official border checkpoints according to an Iraqi businessman, the supplier shipped goods through Aqaba Port or Amman airport.

¶Financing Procurement via Jordan.** After 1999, the most important Jordanian contribution in assisting Iraq’s illicit procurement apparatus was access to Jordan’s financial and banking systems. An Iraqi businessman assessed that before 1996, 95 percent of Iraqi trade was conducted through Jordanian Government-run banks. After 1996, Jordanian banks handled only 30 percent of that trade, mostly from Russia. Document exploitation reveals that the Central Bank of Iraq (CBI) and the Iraqi SOMO provided the funds to Jordanian banks, which were spent by MIC, Iraqi front companies, Iraqi intelligence organs, and the commercial and military attachés present in the Iraqi Embassy in Jordan.

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¶The MIC maintained bank accounts in Jordan for the purpose of making foreign purchases. A senior executive in the MIC confirmed that the MIC Director, Abd-al Tawab ‘Abdallah Al Mullah Huwaysh, directed the opening of accounts in Jordan. These accounts were in the name of the Iraqi CA in Jordan, Selman Kadurm Abd Ghidau, and an unidentified accountant. The accounts were at five different Jordanian banks, but most of the money was deposited at the Al-Ahli (or Jordan National Bank) (see the Revenue section and the Banking section).

Procurement Suppliers During the Recovery Phase, 1996 to 1998

¶After the onset of limited trade under the OFF program, during the “recovery” phase, the Regime was better suited to offer either oil or cash for its procurement needs. ISG has identified companies in the following seven additional countries willing to engage in unsanctioned trade with Saddam during this phase: Syria, Turkey, South Korea, China, France, the former Federal Republic of Yugoslavia, and Bulgaria. Syria began to emerge as a primary transshipment and procurement facilitation partner, although Turkey served as a transshipment point, presumably focusing on consumer goods via its trade Protocol with Iraq. South Korean private firms traded in high technology items such as computer and communications equipment. Companies from China and France began negotiating for key equipment sales in this period. The former Federal Republic of Yugoslavia and Bulgarian firms may have been willing to risk international scrutiny from trading with Iraq due to the lure of high profits, lack of effective government oversight, and government corruption in the wake of the collapse of the Warsaw Pact.

Syria

¶Syria was Iraq’s primary conduit for illicit imports from late 2000 until OIF. Under the auspices of the Iraq-Syria Protocol, Iraqi ministries and other entities would sign contracts with Syrian companies for goodsand services prohibited by the UN OFF program. SOMO databases show that Iraq signed contracts worth $1.2 billion, with payment dates from October 2000 through April 2003. These contracts relate to Iraq’s imports financed from SOMO accounts under the Iraq-Syria Trade Protocol. The funds most likely came from the protocol credit account controlled by SOMO.

¶Military and security entities openly contracted with Syrian companies under the auspices of the Iraq-Syria Trade Protocol, according to the SOMO database.

The MIC, MoD, and the Presidential Diwan (the latter acting on behalf of the IIS, RG, and DGMI) contracted for $284 million worth of goods—24 percent of the total procurement noted.
Of this $284 million, 60 percent ($169 million) was signed with one company, SES International. When all Iraqi procurement entities are included, SES signed contracts worth a total of $187 million. Although the SOMO database does not include specific information about the goods contracted for, the beneficiary companies listed include MIC research centers and manufacturing companies.
The MoT and the MoTC imported goods for the MoD and the security forces according to the SOMO database. The MoT imported goods valued at $2.9 million and the MoTC imported goods valued at $8 million for the MoD. The MoT and MoTC contracted for an additional $9.9 million in goods for Iraq’s DGMI, DGS, and General Police Division.
The MoT often acted on behalf of other entities, including security and research entities such as the MIC and the IAEC, according to a former senior Iraqi government official. The MoT accounted for 25 percent of the imports from Syria listed in the SOMO database. It is possible some of the MoT transactions not specifically mentioned as being on behalf of MoD or security forces aforementioned also were destined for Iraqi security, industrial, and research facilities. How much of these other MoT imports may have been destined for these end users is not known. The SOMO database does not mention any MIC transactions that were not explicitly contracted for by MIC (see Figure 57).

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¶Most of Iraq’s military imports transited Syria by several trading companies, including some headed by high-ranking Syrian government officials, who competed for business with Iraq. Syrian traders were often paid under the auspices of the Syrian protocol, a government-to-government agreement, according to multiple sources. According to a captured letter dated 2 March 2002 and written on the letterhead of a MIC front company, Al-Basha’ir, a former MIC Deputy Director stated that the North Korean Tosong Trading Company would “be financed according to the Iraqi-Syrian Protocol…through SES International.”

The Central Bank of Syria was the repository of funds used by Iraq to purchase goods and materials both prohibited and allowed under UN sanctions.
According to the MIC Director ‘Abd al-Tawab ‘Abdallah Al Mullah Huwaysh, Syrian traders who imported weapons and materials for Iraq worked extensively with MIC front companies. The Syrian traders were also required to share their profits with the other traders. The owner of the Syrian trading company SES, for example, frequently complained that he had to give up too much of his profits to the other traders.
Dhu al-Himma Shalish, head of Syrian Presidential Security and a relative of Syrian President Bashar al-Asad, owned the SES International, and was heavily involved in the Iraqi weapons trade, according to a source with direct access.
Dhu al-Himma’s nephew Assif Shalish managed SES and its subordinates.

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¶SES International reportedly was the primary facilitator for the transshipment of weapons and munitions, as well as many other goods purchased outside of UN channels, through Syria to Iraq. ISG judges that this close relationship may have been based, in part, on Dr. Shalish’s personal friendship with the former Presidential secretary, ‘Abd Hamid Mahmud. According to captured SOMO records, half of the goods paid for by the MIC through the goods component of the Syrian protocol between March 2000 and 2003 went through SES.

According to those deals recorded in the SOMO records, SES transactions during this period amounted to $86.4 million.
According to an interviewee, SES officials did not participate in any negotiations between Baghdad and the supplier and were not privy to the details of the contracts signed between these entities.
Dr. Asif Shalish traveled to Baghdad to coordinate shipments of weapons and sometimes received cash payments. At other times, the Iraqis reimbursed Shalish by transferring funds from their overseas accounts to an SES account in Syria.

¶Syrian Government Complicity. Syrian front companies had links to high-ranking Syrian government officials and because of these links Syria became the primary route for Iraq’s illicit imports over the last two years before OIF.

Asif Shawkat, the deputy director of Syrian Military Intelligence, was involved in weapons trade with Iraq, according to a high-level Iraqi official. Shawkat is the brother in law of Syrian President al-Asad. Multiple reports indicate that Shawkat’s brothers, Mufid Makmud and Muhammad Mamhud, managed his smuggling business.
The Al-Mas Group, one of the Syrian companies that worked with the MIC, is owned by Firas Mustafa Talas, son of the former Syrian Defense Minister Mustafa Talas. The Al-Mas Group was composed of six companies that officially handled civilian goods but also dealt in weapons and military technology. In middle to late 2002, Firas Tlas represented his father in a deal to sell weapons to Iraq, possibly including missiles with a range of 270 km, according to Huwaysh.
A Syrian named Ramy Makluf, another relative of Bashar al-Asad, reportedly owned the Nurallah Company, another firm that worked with the MIC. Makluf was involved in an effort to procure IGLA man portable air defense systems, Kornet antitank guided missiles, rocket-propelled grenades (RPGs), heavy machine guns, and 20 million machinegun rounds for delivery to Iraq, according to a high-level Iraqi official. The contract for the delivery of these munitions was signed in 2002 with a six-month delivery deadline, but the war intervened before the delivery.

¶According to captured documents, the Iraqi MIC, and the Ministries of Trade, Defense, Industry, Transportation and Communication, and the Presidential Offices (Diwan) signed contracts with the Syrian front company, SES International Corporation, valued at approximately $186 million starting from December 2000 to March 2003. This figure differs markedly from the amount reflected in the SOMO records mentioned earlier. This particular document also indicates the degree of regularity under which these transactions occurred between Iraq and the Syrian company. SES signed 257 contracts with various Iraqi ministries during the three-year period. The document also reflects how the Iraqi ministries signed the contract with SES for a beneficiary company or other government organization.

For example, the MoD signed one $185,780 contract with SES for the Presidential Office; the MIC signed another $1 million contract with SES for the AlQadisiyah General Company.

Turkey

¶Although not a direct source of illicit military goods, Turkey provided Iraq with significant revenue streams that permitted the Iraqi Regime to fund its illicit procurement activities. In addition to the UN OFF program, Turkey signed a trade protocol that provided substantial monetary and material resources for Iraqi state institutions and procurement authorities.

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¶Since 1991, Iraqi-Turkish trade revolved primarily around the Turkish import of Iraqi oil products outside the UN OFF Program. Iraqi oil sales to Turkey were substantial. For instance, in March 2002, Iraq exported between 40,000 and 80,000 barrels of oil per day (bbl/d) to Turkey using approximately 450 to 500 Turkish trucks to transport the oil and oil products in spare fuel tanks. In February 2003, in the prelude to the war, this trade came to a halt. Illicit trade between Iraq and Turkey was built on the foundations of pre-Operation Desert Storm trade—Turkey had traditionally been one of Iraq’s biggest trading partners. This was formalized by a trade agreement signed by the two governments in 1993 and their other trade agreement, the Iraq-Turkey Trade Protocol, in 2000.

¶Turkey was a secondary conduit for illicit purchases of civilian goods from 2000 until OIF. Under the auspices of the Iraq-Turkey Trade Protocol, Iraqi ministries and other entities would sign contracts with Turkish companies for goods and services prohibited by the UN’s OFF program. Information from a SOMO database shows that Iraq signed contracts worth almost $304 million, with payment dates from April 2000 through April 2003. These contracts reflect Iraq’s imports financed from SOMO accounts under the Iraq-Turkey trade Protocol. The funds most likely came from the protocol credit account controlled by SOMO. The CBI controlled the funds from the protocol cash account. ISG does not know if there were other expenditures for imports through Turkey from other SOMO or non-SOMO accounts (see Figure 58).

¶The MIC was the only military or security entity that openly contracted with Turkish companies under the auspices of the Iraq-Turkey trade Protocol, according to the SOMO database.

The MIC contracted for $28 million worth of goods—9 percent of the total procurement noted.
Of this $28 million, 137 contracts were signed with at least 24 different companies. The single largest Turkish supplier seems to be Ozgin Cinko Bakirve Metal Mamulleri, Imalat Sanayi, although the name was listed in seven different ways. This company accounted for a total of 30 contracts with MIC worth over $10 million—36 percent of MIC’s total contract value. Although the SOMO database does not include specific information about the goods contracted for, the beneficiary companies listed include MIC research centers and manufacturing companies.
In contrast to Iraq’s arrangement with Syria, the MoD did not import goods from Turkey under its own name. It did, however, import goods through the Ministries of Trade and Transport, according to the SOMO database. The MoT imported goods valued at $2.7 million (10 percent of its total contracts) and the MoTC imported goods valued at $48.9 million (59 percent of its total contracts) for MoD. Therefore, MoD’s share of total contracts was $51.6 million or 17 percent of the total contract value.
Because the MoT sometimes acted on behalf of other entities, it is possible some of the MoT transactions not specifically mentioned as being on behalf of the MoD as mentioned above also were destined for Iraqi security, industrial, and research facilities. How much of these other MoT imports may have been destined for these end users is not known.

¶In addition to the Turkish demand for cheap Iraqi oil and oil products, the Turkish government also tolerated, if not welcomed, the flourishing, mainly illicit trade conducted in the northern Iraqi free trade zone. Turkey and Iraq engaged in direct military trade for common military use materials. For example, documentary sources reveal that in 1997 the IIS, the DGMI, and the Iraqi Military Attaché in Ankara dealt with the Turkish firm Sigma Gida IAS SAN VE TIC Ltd for the sale to Iraq of fireproof military clothing; 150,000 meters of material were purchased for $27 per meter. In lieu of cash, Iraq paid in oil.

¶The Iraq-Turkey Trade Protocol also allowed Iraq to procure goods prohibited by the UN sanctions, although most of those goods were for nonmilitary uses. The Iraqi Finance Minister approved cash allocations to ministries from the Turkish trade protocol. According to captured documents, the Iraqi MoT procured 10,000 small generators, Mitsubishi pickup trucks, and assorted construction materials during 2002 through the Syrian SES International Company with money accrued by trade covered from the Turkish trade Protocol.

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¶Methods Iraq and Turkey used to Hide Illicit Procurement. Turkey did not undertake any active measures to hide its illicit trade with Iraq. Indeed, this trade was conducted in a semi-transparent fashion. Multiple open sources frequently reported the illicit trade between Turkey and Iraq. The illicit oil trade and most of the protocol trade was conducted through the Habur bridge (or gate) near Zakho on the Iraq-Turkey border. Both secret and open sources describe this flow of trade.

¶Financial Flows Between Iraq and Turkey. High-level sources affirm that both Iraq and Turkey agreed to open a trade account denominated in US dollars in the name of TPIC (Turkish Petroleum International Company), but run for the benefit of SOMO, at the Turkiye Halk Bankasi A.S. (also known as Halkbank), a Turkish state-owned bank. This indicates a fair degree of complicity in illicit activity between Iraq and Turkish state institutions. According to the 16 January 2000 Protocol, 70 percent of the value of the crude imported by Turkey under the Protocol would be deposited in Halkbank. The remaining 30 percent would be deposited directly by the crude purchaser to accounts at the Saradar Bank in Lebanon or the Ahli Bank in Jordan that were designated by SOMO. Tekfen, a Turkish oil company, was the only company to deposit money into the Ahli Bank. Other Turkish oil companies paid into the Saradar Bank.

¶According to open sources, since 2000 the UN OFF program, the trade protocol and other illicit Turkish oil importation, generated over $1 billion per year for Iraq. This revenue, however, pales in comparison to the $2.5 billion in bilateral trade that took place in 1990. SOMO documents state $710.3 million was collected from the Turkish Protocol from contracts signed between July 2000 and February 2003. According to SOMO documents, it is estimated SOMO collected $538.4 million in barter goods and cash through private sector trade outside the Protocol between November 1997 and March 2003. ISG lacks information about earnings prior to these periods.

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¶Former Regime personnel indicate that the SOMO account at Halkbank was used exclusively for Iraq to pay Turkish companies for the sale of goods and services delivered to Iraq. The goods included oil sector equipment, industrial equipment and raw materials, communications and transport goods, and building materials. The total amount deposited in the account at Halkbank was $499,232,952. The total withdrawn equaled $302,305,033, leaving a balance before OIF of $196,927,919.

South Korea

¶Illicit trade between South Korean companies and Iraq was largely limited to contracts signed for high technologies, such as military computer equipment, sophisticated communications and radar systems. Although the South Korean Government was keen to promote South Korean companies to gain advantage in the international marketplace, there is no evidence to suggest that the South Korean Government was complicit in the transfer of prohibited goods.

The earliest evidence detailing a military procurement deal with a South Korean firm was a 1998 negotiation between a Korean company and the Al-Basha’ir Company, trading petroleum products for six patrol boats.
The evidence shows that from 2000 to 2001, South Korean companies provided technical components, software and expertise in the field of computerization and communications—assisting Iraq in its indigenous production of military computers and, thus, overall improvement of its conventional military power.
As early as December 2002, delegates from the Iraqi Salah Al Din General Company met with representatives of South Korean defense companies to finalize issues surrounding several contracts which had already been signed by both sides.

¶As with other suppliers, Iraq used a network of front companies and intermediaries to conceal its activity with South Korean companies. These companies refused to directly supply Iraq resulting in their use of third party intermediaries from India, Jordan, and Syria to facilitate trade.

In 2000, the MIC signed a contract with a South Korean company for technical expertise in establishing an indigenous computer design and production facility in Iraq. The contract included South Korean technical assistance for the production of computers for military purposes and the manufacture of circuit boards. The contract for South Korean technical expertise was signed for $14.4 million.
In 2000, the IIS technology transfer division used two front companies (the Iraqi company Galala and an Indian front company, United Commodities) to procure computers, technical expertise, and training on computer design and production. Upon completion of this training, the MIC established an indigenous computer design and production line. This example illustrates the use of multiple front companies to hide the IIS role in the transaction.
Exploited documentation illustrated that the MIC Commercial Department, through Dr. Hadi Tarish Zabun, Director General of Scientific Research facilitated “special contracts” for computers for a radar system and fiber optics for the communications system in 2001.
In 2000, the Iraqi company Al ‘Izz (Al-Ezz represented MIC in negotiations with a South Korean company named LG Innotech, which specialized in optical fiber and digital exchanges. According to captured documents, LG Innotech agreed to provide the MIC a total of 530 notebook-type hardened CPU systems specially designed for military use. The Iraqi Regime planned to integrate the $11.35 million of CPUs into its air defense systems and artillery fire control mechanisms. According to the same document, LG Innotech ultimately fulfilled more than 80 percent of the contract. This contract also used a third party and negotiated in parallel with the LG Innotech military CPU contract.

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¶Most of the transactions involving prohibited goods between companies from South Korea and Iraq began in the summer of 2001, following a MIC visit to Seoul. The May to June 2001 visit was designed to develop contacts with South Korean firms for Iraqi companies. Subsequent meetings, reflected in recovered Salah Al-Din General Company documentation, reveal the following agreements:

An agreement with the Shinsung Company to acquire production plans and technology transfers of crystal units, filters, and oscillators.
An agreement with Salah Al-Din and the Korean company UNIMO Technology Co. Limited to acquire portables and mobile radio technology transfers and to upgrade the existing production facilities in Salah Al-Din Company for hybrid circuits.
An agreement between Salah Al-Din and Techmate Corporation of Korea for production and technology transfer of hand generators, coils and transformers, hand crank generator (GN-720) cable tester, image still picture transmission equipment, and coastal radar.
An agreement with Armitel in South Korea for the technology transfer for the local manufacturing (assembly & test) of STM -1 optical transmission system (AOM-1155) with Salah Al-Din.

¶Another element of illicit trade with South Korean companies focused on procuring fiber optics telecommunication technology with potential military applications.

In 2001, the MIC’s Commercial Department signed a contract for fiber optics with the South Korean company Armitel. Payment, however, was not made because the equipment provided did not meet Iraqi specifications.
The IIS coordinated with one of its agents to bring a delegation of experts from a South Korean company called Armitel. Their senior expert, Dr. Lee, visited Baghdad and as a result, signed many contracts with the Iraqi MoTC, specifically in the field of fiber-optic communications and military communications. These contracts were valued at $75 million.
The MoTC and Armitel executed a portion of these contracts, delivering two shipments of more than 30 containers. Delivery was conducted through Lebanon using Syrian and UAE trade intermediaries. The first contract was delivered through Syria and the second through Lebanon. These contracts were covered through Syrian and UAE middle companies.

People’s Republic of China

¶Although China stated publicly on multiple occasions its position that Iraq should fully comply with all UN Security Council resolutions and cooperate with the Security Council and the Secretary General, firms in China supplied the former Iraqi Regime with limited but critical items, including gyroscopes, accelerometers, graphite, and telecommunications through connections established by MIC, its front companies, and the IIS. However, There is no evidence to suggest the Chinese Government complicity in supplying prohibited goods to Iraq. It is likely that newly privatized state-owned companies were willing to circumvent export controls and official UN monitoring to supply prohibited goods.*** In supplying prohibited goods, Chinese companies would frequently employ third countries and intermediaries to transship commodities into Iraq. The Chinese-Iraqi procurement relationship was both politically problematic and economically pragmatic in nature, but it ultimately provided Iraq with prohibited items, mainly telecommunication equipments, and items with ballistic missile applications. This relationship allowed Iraq to improve its indigenous missile capabilities.

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¶Chinese Assistance in Iraqi Telecommunications

¶One area of robust cooperation between Chinese firms and Iraq was telecommunications. These technologies had both military and civilian uses. Saddam's Regime used Chinese circuits and fiber optics to connect static command, control, and communication (C3) bases. UN sanctions impeded rehabilitation of the telecommunications sector. This equipment was sanctioned because of the nature of modern communications systems, which could be used both for civil or military purposes. These obstacles were overcome by the Iraqi Regime by acquiring materials for cash and procuring materials illicitly, outside the purview of the UN.

¶One Chinese company, illicitly provided transmission equipment and switches to Iraq from 1999 to 2002 for projects that were not approved under the UN OFF Program. Reporting indicates that throughout 2000, along with two other Chinese companies, participated in extensive work in and around Baghdad that included the provision and installation of telecommunication switches, more than 100,000 lines, and the installation of fiber-optic cable.

¶In early January 2001, the Chinese company pulled out of a $35 million mobile phone contract in Iraq, citing difficulty it would face sourcing key components from a US firm. The company, which had been negotiating for two years on a Baghdad ground station module network, cited US Government pressure as the reason for its decision. Iraqi telecom official retaliated by putting all other contracts with this company on hold and cutting off contact with the firm. The company, however, in 2002 used Indian firms as intermediaries to illicitly supply fiber-optic transmission equipment for Iraqi telecommunications projects.

¶Other companies were also present in Iraq. A summary of their activity is given below:

A Chinese company was one of the more aggressive firms selling equipment to Iraq outside the UN OFF Program, including major fiber-optic transmission projects.
Another company agreed to provide switches to Iraq as part of a large switching project for Baghdad prior to Operation Iraqi Freedom. Working with a second Chinese firm, this company participated in a bid for a project in Iraq not sanctioned by the UN. In late 2002 this company submitted a bid for a large switching system for Iraq.
Reporting indicated that another Chinese company, working through a second Chinese company, had supplied switches to Iraq. This company's switches were used for both unsanctioned and sanctioned projects in Iraq. This company illicitly supplied the switches for the Jordan Project, a fiber-optic network in Baghdad that was completed in late 2000. This company might have been involved in supplying switches with more capabilities than specified in an UN approved project.

¶Multiple sources clearly demonstrate that Iraq’s procurement- curement goal with Chinese firms was to overcome weakness in missile inertial guidance capabilities caused by a lack of technical expertise and components- nents. Iraq had limited capabilities in indigenously manufacturing gyroscopes and accurate accelerometers- eters, compounded by the inability to purchase high precision machinery and equipment. Chinese companies willingly supplied these types of items to the Iraqi Regime.

In the fall of 2000, Iraq sought 200 gyros, suitable for use in Russian and Chinese cruise missiles, and machine tools with missile applications from NORINCO, a Chinese military supplier that has been sanctioned many times by the United States, twice in 2004. (No delivery established.)
Contracts were initiated in 2000 between Al-Rawa and a Chinese firm, for test equipment associated with inertial guidance systems, including a one-axis turntable for testing gyroscopes. (No delivery established.)
In mid-2001, ‘Abd al-Wahab, an IIS officer stationed at the Iraqi Embassy in China, procured 10 to 20 gyroscopes and 10 to 20 accelerometers from an unknown Chinese company for approximately $180,000. The gyroscopes and accelerometers were intended for the guidance and control system of the al Samud II and Al-Fat’h missiles.

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¶Iraq also sought dual-use items with potential ballistic missile applications from Chinese firms. Iraq sought items such as fuel for propellants and graphite, a key component in reentry vehicle nose tips, directional vanes, and engine nozzle throats. Iraq’s need for graphite-related products was heightened following severe damage inflicted during Operation Desert Fox to the Shahiyat Missile Facility, a known graphite production facility. Although this site was reconstructed, Western intelligence assessed that Iraq could not indigenously produce the quality of graphite necessary for ballistic missile components making it dependent on imports. Recovered documents from 2001 indicated a drive to acquire Chinese graphite-related products such as electrodes, powder, and missile-related fuel:

Al-Najah Company, working through an Indian intermediary, purchased supplies of Chinese missile-grade graphite during August and September 2001.
In January 2003, Al-Merbab General Trading Company and Al-Ramig sought a supply of chemicals, both of which have applications in liquid rocket propellants, from Chinese companies. The Chinese companies, however, refused to sell chemicals to the Middle East because of its potential weapons application.

¶From the Iraqi perspective, MIC and IIS attempts to illicitly acquire goods from Chinese firms were problematic. MIC and Chinese suppliers conducted many committee meetings and had other contracts, but most meetings never ended in any signed contracts. According to a high-ranking official in the MIC of unknown reliability, Chinese firms used its military and dual-use contracts with the MIC as leverage in its attempts to obtain discount-priced Iraqi oil.

Documents recovered indicate that an Iraqi delegation was sent to China to reestablish a partnership with NORINCO, a Chinese arms manufacturer. NORINCO agreed to continue dealing with Iraq despite a debit of $3,067,951,841.47 but NORINCO specified that Beijing would not be informed of the deal. Iraq promised to repay NORINCO with crude oil and petroleum products, using the Iraqi front company Al-Basha’ir.
These strained negotiations sometimes resulted in the use of alternative foreign suppliers. This was evident in procurement attempts to acquire gyroscopes from Chinese firms where MIC companies sought alternative suppliers in Belarus.

¶Although the Chinese Government promoted Chinese companies in commercial activity following defense reforms in 1998, ISG has found no evidence to suggest Beijing’s direct involvement in illicit trade with Iraq. Indeed, ISG suspects that some contracts that were abruptly stopped may have been a result of Beijing’s direct intervention. A delegation from a Chinese firm to Iraq in December 2000, suspended contract talks possibly according to Beijing’s questioning of its activities with Iraq. Most transactions, however, were orchestrated through newly privatized state-owned companies competing in a bloated and highly competitive, newly founded commercial system where they were able to participate in illegal trade with little oversight.

¶As with other suppliers, Iraq procured illicit goods from Chinese companies behind a network of front companies and trade intermediaries. Turkish, Syrian, Indian, and Jordanian intermediaries were used in the procurement process for both seeking quotations of goods and in assisting delivery of prohibited goods. In all likelihood, the various trade protocols provided a legitimate trade cover under which these illicit transactions took place.

As in many other cases, the Syrian-based SES International Corporation was used as an intermediary between Chinese companies and Iraq. In October 2001, Syrian technicians were dispatched to China on Iraq’s behalf to contact influential Chinese air defense companies. Follow-on meetings were to be held in Beijing and Damascus. An Indian affiliated, UAE-based firm was also used as an intermediary to facilitate trade in graphite and ballistic missile-related goods from Chinese firms.
In conjunction with the use of brokers and intermediaries, the IIS employed Chinese personnel as IIS agents to obtain prohibited goods and build relations between entities. In one case, the IIS tasked Professor Xu Guan, a member of the Chinese high committee for electronic warfare to collect information on laser-tracking systems, laser guidance systems and information on cooperation between Iran and China. The IIS also stationed its own officers at the Iraqi Embassy in China to manage the Iraqi-Chinese relationship and facilitate trade.

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France

¶The French-Iraqi procurement relationship existed within a larger bi-lateral political relationship, which was turbulent and problematic throughout the 1990s up until OIF. From Saddam Husayn’s perspective, the relationship was built on Iraq’s hopes to influence a permanent membership on the UN Security Council against the United States and UK (see the Ministry of Foreign Affairs section).

Illustrating Iraq’s persistent efforts to curry favor in Paris, France was one of the top three countries with companies or individuals receiving secret oil vouchers (see the Oil Voucher section). Iraq also submitted numerous contracts under the UN OFF program to companies in France totaling $1.78 million, approximately 14 percent of the oil allocated under the UN OFF Program.
In 2001, Tariq Aziz characterized the French approach to UN sanctions as adhering to the letter of sanctions but not the spirit. This was demonstrated by the presence of French CAs in Baghdad, working to promote the interests of French companies while assisting them in avoiding UN sanctions.

¶Behind this political maneuvering, ISG has found evidence that French companies, after 1998, sought and formed procurement relationships with Saddam’s Regime. These relationships could have been renewed partnerships developed before 1991 when France was a major conventional arms supplier for the Iraqi Regime. These procurement transactions included offers and contracts for conventional weapons systems and negotiations for possible WMD-related mobile laboratories.

¶Recovered documents dated December 1998 and September 1999 indicate that the French company Lura supplied a tank carrier to the Iraqi MoD. A French expert, “Mr. Claude,” arrived in Iraq in September 1999 to provide training and offer technical expertise on the carrier.

¶By 1999, recovered documents show that multiple French firms displayed a willingness to supply parts for Iraqi conventional military items, mainly related to aircraft.

Documents from the Al-Hadhar Trade Company, dated November 1999, describe a delegation of French companies that had participated in an International Exhibition in Baghdad. One of the companies was willing to collaborate and supply spare parts for the French Mirage aircraft.
IIS documents dated from December 1999 to January 2000 show that the Deputy General Manager of a French company called SOFEMA planned to visit Iraq on 15 January 2000 on behalf of a number of French military companies to “seek possible trading between the two countries.” An accompanying top secret document from the DGMI, M6 Section, corroborates this meeting and further ties the purpose to Iraqi air defense capabilities.
Another recovered letter, dated September 1999, illustrated the approval of a meeting by the DGMI M6 Section with the Head of the Iraqi-French Friendship Society, Mr. William Libras. Libras offered to supply Iraq with western manufactured helicopters. This was followed with a letter indicating contact between Al-Hadhar Trade and the French suppliers stating that the French companies “have the ability to update the aircraft and add any system you request.”

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¶ISG uncovered further conventional military trade in November 2002 when a French electronic warfare/ radar expert named “Mr. Cloud” (possibly Mr. Claude from the section above) met with representatives of the Al Kindi Research Facility. According to captured documents, the purpose of the visit was to facilitate military-related microwave, direction finding, and passive radar technology transfer. The recovered documents include military-related technology transfers and Iraqi contractual agreements with foreign manufacturers.

¶Beginning in late December 2002, the MIC initiated efforts to acquire replacement parts for the Roland II Surface to air missile system, valves for Iraq’s air defense system, and various other high technology items with military and battlefield applications. These efforts were underway with Majda Khasim Al-Khalil (a Lebanese female) who in turn met with the French Thompson Company representatives. ISG found evidence of coordination on this procurement up until 23 days before OIF.

Former Federal Republic of Yugoslavia

¶According to captured documents, Iraq and FRY cooperated extensively both militarily and economically when the Milosevic Regime was in power. This cooperation ceased when a democratic government took power. For example, talks were held between Iraq and the former Yugoslavia on military and economic cooperation from 25 February to 2 March 1999. The Iraqi side was represented by the Minister of Defense, Sultan Hashim Ahmad al-Tai. Maj. Gen. Jovan Cekovic, the Director General of the Yugoslav company, Yugoimport, headed the Yugoslav side. The documents detail the Protocol resulting from the meetings.

The two countries expressed their readiness to re-establish and continue the military-economic cooperation, which they considered one of the most co-operative bilateral endeavors.
According to the documents, the two sides agreed to foster greater cooperation among all services of each country’s military forces.
During the meetings, Iraq informed the Yugoslavs that because of the current economic situation in the country, it is not able to provide funds for the future cooperation. To remedy this problem, the Iraqi side proposed the supply of crude oil and its product instead of currency as a viable solution.
The two sides then agreed that the next session of the Joint Committee for Military and Technical Cooperation was to be held in Belgrade in April 1999.

¶A source that was a senior executive in the MIC stated that the former Federal Republic of Yugoslavia cooperated closely and extensively with the IAEC, the MIC, and the MoD. Representatives from Yugoimport Federal Directorate for Supply and Procurement (FDSP), a Yugoslav company, signed numerous business contracts with Iraq. Their Baghdad representative was Colonel Krista Grujovic. During the start of business with Iraq, which was sometime around early 1998, Yugoimport opened accounts in Amman, Jordan, for Yugoslav Federal under the trade name Yugoimport FDSP. However, after a period of time their name was changed to MIKA (also known as MEGA), a Lebanese company. Yugoimport FDSP was then effectively eliminated from all bank records and other documents.

Reportedly, Mahmud Muhammad Muzaffar was in charge of the Yugoslav procurement connection and was universally liked within the MIC. The Iraqi Government sent him under diplomatic cover to work as a scientific advisor at the Iraqi embassy in Belgrade. When Yugoslav companies spoke to Muzaffar about doing business with Iraq, he would connect their company contacts to MIC representatives.
Yugoslav Federal was a military institution under the management of the Yugoslav Ministry of Defense. It was responsible for overseeing several Yugoslav military production companies.
Yugoslav Federal signed the foreign trade contracts on behalf of these military production companies in exchange for a certain percentage of the profits.
Yugoslav Federal also supplied materials and expertise directly to Iraq from the Yugoslav production companies.

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¶A senior executive at the MIC stated that the financial transfers between Yugoslavia and Iraq were under the supervision of the Belarusian Infobank. Infobank also issued security bonds for the advance payment portions of the contracts.

The contracts were signed pursuant to the Iraqi-Syrian Protocol where the payments were made through a third party, usually a Syrian-based company.
This Syrian company would pay the contract amount to the Belarusian bank in exchange for a 10- to 12-percent cut of the value of the contract.

¶According to the senior executive of the MIC mentioned above, the former Yugoslavian Government was represented commercially through the use of experts and ex-military personnel to assist in the transfer of technology and technical expertise for new military projects. The coordination was under the direct supervision of the MIC Director, ‘Abd al-Tawab ‘Abdallah Al Mullah Huwaysh, Dr. Hadi Tarish Zabun, head of special procurement at the MIC, and the Iraqi Deputy Minister of Defense. This source also stated that the President of Yugoslavia opened accounts in Amman, Jordan. under the Lebanese cover company MEGA.

¶In October 2002, Stabilization Forces (SFOR), Bosnia and Herzegovina, conducted an inspection of the ORAO Aviation Company, in Bijeljin, Bosnia and Herzegovina. Over 60 computer hard drives and a large number of documents were seized. Among the captured documents was a five-page memorandum that documents the discussions and agreements between ORAO, Al-Salafa, and the Iraqi Ministry of Defense concerning the illegal shipment of R13-300 and R25-300 jet engines for the MiG-21.

Included in the memorandum is an agenda for the enlargement of existing capacities for overhaul of R13-300 and R25-300 jet engines.
The agenda also included a realization of an old agreement for overhaul of the engines in the former Federal Republic of Yugoslavia. The time limit for the delivery and assembly of equipment was to be up to nine months.
Other documents captured indicated that the MIC front company Al-Basha’ir was also involved in the deal, as well as Yugoimport. According to a contract between the two companies, the total amount of the deal was worth $8.5 million.

¶Al-Basha’ir was to be responsible for transporting the equipment from Syria to Baghdad for a total price of $300,000.

¶As of May 2000, 45 overhauled engines had been delivered; however, captured documents detail a dispute between ORAO and Iraq’s Ministry of Defense over the price and delivery of 19 remaining engines.

¶Al-Salafa is an Iraqi company that is a part of the Al-Eman network of front companies.

Bulgaria

¶Although the procurement relationship began in 1998, from 2000 until the start of OIF, the MIC conducted business with the Bulgarian JEFF Company, a company that the IIS recommended the MIC use. The JEFF Company’s headquarters was located in Sofia, Bulgaria. According to a senior executive in the MIC, the Bulgarian government was aware of the dealings between the JEFF Company and Iraq. ISG cannot confirm this claim. The MIC used the Al-Basha’ir Company to coordinate contracts with JEFF. To establish a contract, JEFF personnel would travel to Iraq to meet with the Al-Basha’ir Company or vice versa. Al-Basha’ir would then deliver the contract to the Commercial Department of the MIC where an arrangement for the contractual payment would be made.

¶Reportedly, Bulgarian companies exported numerous military items to Iraq after 2000 in violation of UN sanctions (see figure 59).

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The MIC had contracts with the JEFF Company for engines and maintenance parts for the T-72 tank and Igla manportable air defense systems (MANPADS).
The Bulgarian company ELMET provided components for Iraq’s UAV programs.
Captured documents detail the illegal procurement of missiles with tandem warheads, launcher units, thermal imagers, test units, and simulators. The deal was brokered between Al-Basha’ir, SES International in Syria, and the JEFF Corporation in Bulgaria for 175 Kornet antitank guided missiles (ATGMs). The contract specified that Al-Basha’ir was acting on behalf of the MIC of Iraq. Delivery of the ATGMs was to take place in March of 2003, but it is unclear whether the delivery actually took place.

¶In 1998, Bulgarian companies contracted with Iraq to provide numerous dual-use items such as ammonium perchlorate, aluminum powder, phenolic resin, carbon fiber, and machine tools. Recovered Iraqi documentation stated that the end use for these goods was for the Al Fat’h missile.

Ammonium perchlorate is an oxidizer that makes up over 50 percent of the propellant weight of a modern solid propellant. Aluminum powder is mixed with the ammonium perchlorate and it acts as a fuel in the solid propellant. These two chemicals make up the bulk of the propellant mass. These basic items were used in the Iraqi Badr 2000 missile system, which was destroyed by UNSCOM. But the Ababil and the Al ‘Ubur missile system used these items in their propellant.
Phenolic resin is a very special high-temperature resin used by Iraq to bind and hold in place the carbon fibers.
The carbon fiber with the phenolic resin could be used in making lighter weight motor cases, nose tips, or nozzle throats. These areas experience high heat and using a light material lessens the overall weight of the missile, extending its range.
Prior to 1991, the Iraqis had made missile parts from carbon fiber and had expressed a desire to UNMOVIC to again use carbon fibers. Carbon fibers could also be used in the fabrication of high-strength centrifuges for the enrichment of uranium. For these reasons both UNMOVIC and IAEA placed carbon fiber on their watch lists as a controlled material.

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¶In 2001 Iraq used the Syrian Protocol to purchase numerous machine tools from Bulgaria. Some of these machines are numerically controlled (CNC) or are capable of being adapted for CNC. Such equipment was controlled under the Goods Review List (GRL) and would have needed to be approved by the UN before being exported to Iraq.

¶All of these dual-use machines could be used for the production of civilian goods. However, many of these machine tools can be used in producing conventional military items, CW, or nuclear programs, particularly the shaping of materials such as polytetrafluorethylene (PTFE) or metals.

For example, rocket motor cases or propellant tanks start as a large sheet of metal that needs to be cut, shaped, rolled, drilled, milled, and welded to form the correct shape.
CNC machines allow the operator to program exact instructions into the computer so it can precisely reproduce a pattern a thousand times over to the same specifications. This is critical for both missile and nuclear components. Figure 60 details these transactions.

Procurement Suppliers in the Transition and Miscalculation Phases, 1998 to 2003

¶For the final two phases in Saddam’s Regime, “Transition” and “Miscalculation,” ISG has identified eight new procurement partners. From the supply side, companies from Russia, North Korea, Poland, India, Belarus, Taiwan, and Egypt have become key trading partners in military or dual-use goods. Like Syria and Turkey in earlier phases, Yemen became a transshipment facilitator for Saddam’s procurement programs.

This increase continues the trend observed in the previous phase. This increasing trend most likely occurred because of a lack of international condemnation, poor oversight of supplying companies by their governments, poor export controls, and the high profits to be had from Saddam’s illicit revenue.
ISG also observes an interesting trend over time as Saddam’s international supporters shifted in the 1998 time-period from former-Soviet and Arab states to some of the world’s leading powers, including members of the UNSC.

Russia

¶Although the Russian Government has denied being involved in supplying weapons to Iraq, there is a significant amount of captured documentation showing contracts between Iraq and Russian companies. In fact, because Russian companies offered so many military items, the MIC and a Russian general named Anatoliy Ivanovich Makros established a joint front company called ARMOS in 1998 just to handle the large volume of Russian business (see also the ARMOS section). The Russian-Iraqi trade was also assisted through bribes to Russian customs officials, according to a former Iraqi diplomat.

¶This former Iraqi diplomat further described how Iraq’s embassy personnel smuggled illicit goods on weekly charter flights from Moscow, through Damascus, to Baghdad from 2001 until OIF. These prohibited goods included high-technology military items such as radar jammers, global positioning system jammers, night-vision devices, and small missile components. Some flights were not inspected, even though they were reported to the UN. Cash and equipment were reportedly also smuggled into or out of Iraq in bimonthly diplomatic courier runs to Moscow.

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¶In early 2003, the Russian company, Rosoboronexport, offered to sell and deliver several weapons systems to Iraq. Rosoboronexport had Igla-S shoulder-fired SAMs and Kornet anti-tank missiles available for immediate sale to Iraq, and was prepared to sell larger medium-to-long range advanced (SA-11 and SA-15) air defense systems and T-90 tanks, according to the trip report and a high-level source in the former Iraqi Government.

ISG has recovered documents detailing two trips related to these sales. The first round of negotiations with Rosoboronexport and other Russian companies occurred from 27 January 2003 to 6 February 2003, while the second trip took place from 12 February 2003 until 21 February 2003.
The Iraqi delegation requested air defense equipment, antitank weapons, and night vision devices. Iraq also desired to upgrade existing air defense equipment (SA-6 and SA-8) and radars.
According to the trip report, four contracts were signed between Rosoboronexport and four Iraqi companies: Hittin, Al-Karamah, Al-Milad, and Al ‘Ubur.

¶According to Iraqi documents, Rosoboronexport executives demanded that they be permitted to ship the weapons through a third country with false end-user certificates. The Russian side emphasized that Rosoboronexport is a government agency and it cannot be involved with directly supplying Iraq with weapons. Other Russian officials offered to send equipment and technical experts to Iraq under the cover of OFF contracts. Before returning to Baghdad, the Iraqi delegation stopped in Damascus to obtain false end-user certificates from the Syrian Ministry of Defense for the first items to be shipped, the MANPADS and antitank missiles.

Although some of the equipment was shipped, ISG does not know how much of the equipment was actually received in Iraq before Operation Iraqi Freedom.
ISG has recovered documents detailing two trips related to these sales. The first round of negotiations with Rosoboronexport and other Russian companies occurred from 27 January 2003 to 6 February 2003, while the second trip took place from 12 February 2003 until 21 February 2003.
The Iraqi delegation requested air defense equipment, anti-tank weapons, and night-vision devices. Iraq also desired to upgrade existing air defense equipment (SA-6 and SA-8) and radars.
According to the trip report, four contracts were signed between Rosoboronexport and four Iraqi companies: Hutteen, Al-Karamah, Al-Milad, and Al-‘Abur.

¶Many of the contracts signed with Russian companies, were for technical assistance, according to an Iraqi official with direct access to the information. These offers included contracts with TECHNOMASH employees for technical assistance in developing guidance and control systems, aerodynamic structures, and a test bench for missile engines. Iraq also signed a contract for the transfer of technology for the manufacture of laser rods to be used in laser range finders. The Mansur Factory in Iraq was to be the main recipient of this technology. Other contracts with Russian companies are detailed in the following:

The Russian Company, Systemtech was run by a Russian missile scientist named Alexander Degtyarev. Most of the dealings with this company were connected with missile guidance and control, and contracts were valued at around $20 million.
According to captured documents, in November 2002, the Umm Al-Ma’arik General Company negotiated two draft contracts with the Russian company Uliss, in support of the “Saddam The Lion” Tank Project. They notified the Commercial Directorate of the MIC that contract number 2002/AM/8 had been concluded. On 10 February 2003, MIC Deputy Director Daghir Muhammad Mahmud approved the contract.
According to captured documents, four contracts with Russian firms were signed in December 2001. These are detailed in figure 61. A 25 January 2003 letter from the MIC front company Al-Basha’ir complained to the Minister of the MIC that these deliveries had not been completed as of January 2003.

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North Korea

¶From 1999 through 2002, Iraq pursued an illicit procurement relationship with North Korea for military equipment and long-range missile technology. The quantity and type of contracts entered between North Korea and Iraq clearly demonstrates Saddam’s intent to rebuild his conventional military force, missile-delivery system capabilities, and indigenous missile production capacity. There is no evidence, however, to confirm that North Korea delivered longer-range missiles, such as Scud or Scud-variants.

¶North Korean and Iraqi procurement relations began in 1999 when the MIC requested permission from the Presidential Secretary to initiate negotiations with North Korea. In a recovered memo the Secretary approved the plan and directed the MIC to coordinate negotiations with both the IIS and MoD. Recovered documents further suggest that orders for negotiations were also passed from Saddam directly to the Technology Transfer Office at the IIS. Related documents from this time period reveal that the North Koreans understood the limitations imposed by the UN but were willing “to cooperate with Iraq on the items it specified.”

¶The Director of the MIC formally invited a North Korean delegation to visit Iraq in late 1999. The Director of North Korea’s Defense Industry Department of the Korean Worker’s Party eventually visited Baghdad in October 2000, working through a Jordanian intermediary. Multiple sources suggest Iraq’s initial procurement goal with North Korea was to obtain long-range missile technology.

August 1999 correspondence between the IIS Director and a North Korean company called the Changwang Group (variant Chang Kwang or Chang Gwang), a known company associated with weapons-related sales, discussed the supply of “technology for SSMs with a range of 1,300 km and land-to-sea missiles with a range of 300 km.” The Changwang Group proposed a multitiered sale of weapons and equipment and “special technology” for the manufacture and upgrade of jamming systems, air defense radar, early warning radars, and the Volga and SAM-2 missiles.
In a recovered transcript of a telephone conversation prior to the October 2000 meeting, senior officials at the MIC and the IIS noted topics for discussion with the North Korean delegation would be the development of SSMs. The Iraqi delegation at the meeting included SSM Commander Najam Abd’Allah Mohammad. Ensuing discussions during the meeting focused on the transfer of military equipment including a short-range “Tochka-like” ballistic missile that the North Korean firm said could be purchased from Russia.
A captured MoD memo dated 12 October 2000 summarized the October 2000 meetings, stating that SSM Commander Najim had discussed Tochka, Scud, and No Dong missiles with a range of 1,500 km.
Muzahim Sa’b Hasan Muhammad Al Nasiri, a Senior MIC Deputy and a main player in procurement negotiations with North Korea, in interviews has adamantly denied the discussion of longer-range missiles with the North Koreans.

¶Documentary evidence shows that, by mid-2001, Iraq had signed $10 million of military- related procurement contracts with North Korean companies.

The contracts from late 2000 included a deal with the Al-Harith Company, believed to be associated with Iraqi air defense development, and the Al-Karamah State Establishment, known to procure technology for missile guidance development, to improve Iraqi SSM guidance and control technology, and to upgrade the Iraqi Volga missile homing head by adding infrared sensors.
The missile contracts in 2001 were designed to improve Iraqi missile systems using North Korean parts. These contracts were signed with the Al-Kamarah State Establishment, the Al-Harith Company, and the Hittin General Company, which is associated with the development of Iraqi heavy weaponry. Fifteen percent of this contract was reportedly completed and was paid for through a Syrian company to the North Korean Embassy in Damascus.
According to documentary evidence, Muzahim Sa’b Hasan visited North Korea in September 2001 to discuss procurement projects for the Al-Samud missile control system, radio relays for communications, and improvements to Iraqi antiaircraft systems. The trip resulted in four signed contracts with the Al-Karamah State Establishment for potentiometers (missile guidance and control-related technology), missile prelaunch alignment equipment, batteries, and test stands for servos and jet vanes. Ultimately, North Korea backed away from these agreements, informing the Iraqis that they would study the issue. ISG judges that this equipment was intended for use in the al SamudII ballistic missile program.

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¶As the Iraqi-North Korean procurement relationship matured, it broadened from missile–related projects to a range of other prohibited military equipment and manufacturing technologies. Recovered documents from November 2001 describe numerous contracts between Hesong Trading Corporation, based in Pyongyang, and the Al-Karamah, Al-Harith, and Hittin Companies. These contracts included deals for:

Ammunition, communications, potentiometers for short-range surface-to-surface missiles, powder for ammunition, and light naval boats.
Laser range finders and fire-control systems for artillery, tank laser range finders, and thermal image survey systems.

¶This series of contracts also specified numerous technology transfers from North Korea to Iraq to allow Saddam to design and implement laser head riding for anti-tank missile applications and to manufacture:

PG-7 rockets (an Egyptian variant of the Russian RPG-7).
Night-vision devices.
Six-barrel 30-mm guns.
Laser rangefinders for guns.
Thermo image survey systems and rifling tools for 122-mm and 155-mm barrels.
Ammunition, jigs, fixtures, dies, parts, liquid-propellant rocket structures, liquid propellant rocket aerodynamics computations, guidance, and control systems.

¶As with its other suppliers, Iraq used its accustomed methods to obtain illicit goods from North Korea. In short, North Korea’s illicit procurement relationship with Iraq was concealed behind a network of front companies, trade intermediaries, and diplomatic communications.

The North Korean side of the relationship was represented by the Defense Industry Department of the Korean Worker’s Party through the Changwang Trading Company. The Tosong Technology Trading Corporation and Hesong Company were also used to broker the negotiations.
The Syrian-based SES International was used as an intermediary in this trading process. Many transactions from North Korea would be orchestrated by the North Korean embassy in Damascus, which would then endorse the shipment to an Iraqi agent in Syria for transshipment to Iraq.
These intermediaries worked on a commission basis and assisted in facilitating delivery into Iraq for profit.
Recovered documentation concerning the North Korean negotiations stated that all communications should be sent via the Iraqi embassy in Damascus. Secure communications also took place through the Economic Section of the North Korean Embassy in Damascus.

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Transportation Routes From North Korea to Iraq

¶ISG has found evidence suggesting that North Korea planned to pass goods through Syria to Iraq. Captured documents reveal North Korean ships planned to use Syrian ports to deliver goods destined for Iraq. Occasionally, North Korea would insist on the use of aircraft to Syria to expedite delivery and reduce the risk of discovery of the illicit goods.

Payment Methods for North Korean Contracts

¶Recovered contracts and records of negotiations identify the use of financial routing via Beirut, Lebanon and Damascus, Syria to conceal Iraq as the end user of the goods. A recovered letter from the Al-Basha’ir to the Tosong Technology Trading Corporation, dated 2 March 2002 dictated that ‘contracts’ would be financed according to the Iraqi-Syrian Protocol. This bilateral trade Protocol used both cash and - credit to pay for commodities via Syria.

Poland

¶A Polish based front company engaged in illicit trade with Iraq played a limited, but important role in Saddam’s efforts to develop Iraq’s missile programs*.* Equipment supplied by this Polish based front company between 2001 and 2003, such as SA-2 (surface-to-air) Volga missile engines and guidance systems, were necessary for the al SamudII missile program.

¶Iraq acquired Polish SA-2 Volga missile engines for their al Samud II missiles. The Volga engines were the main propulsion system used in the liquid-propellant al Samud II missile, a weapon that exceeded the 150-km-range limit established by UNSCR 687 (1991). While there is some confusion regarding the exact number of Volga missile engines procured by Iraq, ISG estimates that Iraq obtained about 280 missile engines from Poland during this period. ISG has found no evidence that the engines were ever fitted to active missile systems.

Iraq signed four contracts to acquire Volga SA-2 engines between January 2001 and August 2002.
These engines were to be procured for the Al-Karamah State Establishment, through the ARMOS Trading Company (an Iraqi-Russian procurement organ) and a company located in Poland called Ewex, a front company supported by the IIS.
Iraq paid approximately $1.3 million for 96 engines.
Ewex used Polish scrap dealers and middlemen to gather Volga rocket components from scrap yards in Poland operated by the Polish military property agency.

¶Former Regime officials corroborate that ARMOS also signed a contract or contracts with the Iraqis to obtain Volga engines from individuals in Poland. The Volga engines were removed from missiles that had been decommissioned. The Volga missile engine procurement was entirely controlled by the IIS, according to debriefs of high-level former Regime officials.

The MIC was also involved in contracting with Ewex for Volga engines. A high-level official stated that Iraq purchased approximately 200 Volga engines. Many of the Volga engines acquired in this way arrived damaged.

¶As mentioned in the Higher Education section, Amir Ibrahim Jasim al-Tikriti, a doctorate student in Poland linked to the IIS and SSO, facilitated the procurement of at least 50 more SA-2 engines and as many gyroscopes, missile sensors and acid batteries for missiles from a Polish front company called Ewex in early 2003. Al-Tikriti was the cofounder of Ewex and was supervised by Husan ‘Abd al-Latif, an IIS officer working with the Energy Department of the IIS Scientific and Technical Information Office in Baghdad**.**

Methods Used To Hide Transshipment to Iraq

¶According to documentary evidence, dated June 2001, the Iraqi Government and the Ewex Company attempted to conceal the illicit procurement of missile engines from the international community. According to open sources, Polish authorities arrested Ewex company officials in 2003 on suspicion of illegal arms deliveries to Baghdad. Documents recovered by Polish police included Ewex contracts with the well-known Iraqi front company called Al-Basha’ir, shipping documents, extracts from the Polish trade register, payment orders, and letters from Ewex directly to its Iraqi business partners.

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¶A high-level former Regime official stated that MIC Special Office Director Hadi Tarish Zabun, IIS Scientific and Technical Information Branch Officer Hadi ‘Awda Sabhan, and Al-Karamah State Establishment Director General Dr. Muzhir (Modher) Sadiq Saba’ al-Tamimi met to discuss how to conceal this particular illicit transaction from the UN. Dr. Muzhir had previously led the Iraqi long-range missile program. The documents regarding the deal were eventually transferred for safekeeping to Ayyab Qattan Talib, an officer from the IIS M23 directorate that oversees military industry security.

¶The parties to the transshipment of Volga missiles included personnel from the Iraqi embassy in Warsaw, Iraqi intelligence officers, and Iraqi businessmen. These parties clandestinely transported Volga missile engines through Syria, according to a high-level official in the former Regime. Ewex representative, Amir Ibrahim Jasim al-Tikriti during April 2002, requested an extension of the shipping time for illicit transfers because shipments would have had to proceed via many channels, particularly by circuitous transport routes, in order to conceal the contents from prying UN inspectors or foreign intelligence agencies. In 2002, three shipments of engines and spare parts were transferred; the third shipment arrived in Tartus, Syria, and was moved to Baghdad by the Al-Karamah State Establishment. The third shipment contained 32 Volga engines and 750 related materials. In addition, the MIC contracted to deliver Volga engines to Iraq, from Poland, via Jordan as insurance against the interdiction of Syria-bound shipments. According to multiple sources, Polish missile parts also entered Iraq at the Al-Walid border crossing (see also the border crossings map).

Polish-Iraqi Procurement Financial Flows

¶Numerous contracts, memoranda, and references detail the transfer of payments for the Volga missiles. In one contract, original date unknown, Ewex transferred $500,080 for the purchase of an unspecified number of Volga missile engines, which were delivered in June 2001. Raja Hasan Al-Khazraji, General Manager of the Commercial Affairs Department, wrote requesting the release of funds for final contractual payments. There are also letters written by Dr. Zabun to settle payment without deductions for damaged materials on condition that compensation will be included in future contracts. A contract also stipulates that ARMOS Trading Company received a commission of $3,750.

¶Dr. Muzhir, wrote a memorandum concerning contract number 2/2001, in which he requests that the MIC transfer $315, 840, equaling 25 percent of the total contract price for 96 engines to account number 500090, National Bank of Jordan, Special Banking Section. The authorized person in control of the account was ‘Abd al-Jabbar Jadi ‘Umar. There is also a MIC memorandum authorizing the payment of $200,690 to Ewex via account number 501133/12, which equals 25 percent of the total contract price for the 61 engines received at Syrian ports. Dr. Zabun approved a contract dated July 2001 with Ewex for 96 engines with the same value and terms as a previous contract for 38 engines.

¶Other correspondence exists between the Commercial Affairs Department General Manager, Raja Hasan Ali, the MIC and Al-Karamah discussing charging late penalties and compensation for damaged items. Further correspondence rejects the charges and authorizes full payment of the contracted amount of $1,263,360 million to Ewex for Volga engines shipped through Syria. Bank accounts used at the Jordan National Bank (Special Banking) to pay for SA-2 Volga missile imports up until at least June 2001, include 501083/14 and 12429.

India

¶ISG judges that the Government of India was not directly involved in supplying Iraq with military or dual-use items, but several Indian companies were active in illicit trade, particularly, NEC Engineering Pvt. Ltd. When Indian authorities discovered the company’s activities in 2001, New Delhi launched an investigation to stop the NEC’s trade with the Iraqi Regime. Despite the investigation, NEC continued to sell prohibited materials to Iraq and looked for ways to conceal its activities.

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¶NEC was involved in numerous business agreements with Iraq that were contracted outside the UN OFF program. Several of these contracts with Iraq violated UN sanctions because the material or technology was in direct support of a military system, such as the Iraqi missile program.

¶Al-Najah was the primary front company in Iraq used by the MIC manufacturing company, Al-Rashid, to import from NEC. In March 2002, Muntasir ‘Awni, Managing Director of Al-Najah Company, submitted several inquiries to Siddharth Hans. Hans has been identified as holding positions with companies in India, including director of NEC Chemicals and, at other times, several positions with NEC Engineers Pvt, Ltd. In each position, Hans has supported only Iraqi projects and inquiries for clients under Al-Najah. Among other things, the inquiries covered:

A Teflon coating machine.
Laser range-finding equipment.
Precision machinery.
Block and cylinder material.

¶Prior to the 1991 Gulf war, Iraq had experimented with the use of carbon fibers to provide high strength and light weight for some of its missile components. Al-Rashid was instrumental in missile development prior to the Gulf war and in the years that followed. In May of 2000 NEC contracted with the Al-Rashid General, Co., to provide 40 kg of “Grade A” carbon fibers. Carbon fibers, while dual-use material, have extensive use in missiles and nuclear equipment. Figure 62 is an excerpt from captured documents regarding this contract.

¶NEC engineers provided Iraq with crucial infrastructure development for its missile program and other programs. For example, NEC designed and built an ammonium perchlorate (AP) production plant for Iraq. AP is an essential ingredient for modern solid propellant production. It is the oxidizer for a solid propellant and constitutes over half of the propellant’s weight.

NEC imported solid-propellant ingredients for Iraqi surface-to-surface missiles, in addition to other materials.

¶The excerpt from captured documents in figure 63 details some of the contracts undertaken between the Iraqi front company, Al-Basha’ir, with India’s NEC, on behalf of MIC companies Al-Rashid and 7 Nissan General Company.

¶When the Indian Government became aware of NEC’s activities in 2001, New Delhi launched an investigation regarding the company’s illicit business with Iraq. Both Hans Raj Shiv and his son Siddharth Hans were implicated in the investigation, which expanded overseas by September 2002. The Indian Government impounded the passports of NEC representatives. Siddharth Hans was taken into Indian custody when he returned to India in mid-June 2003. Pending further court hearings, Siddharth was released from custody in early July 2003.

In August 2002, NEC was considering changing the name on Iraqi contracts from NEC to Nippon Industrial Equipment or Euro Projects International Limited. These changes were probably in reaction to the Indian Government’s ongoing investigation of NEC.

¶Other Indian companies involved in supplying Iraq with prohibited items include the Arab Scientific Bureau (ASB) and Inaya Trading. ASB and Inaya Trading were involved in the procurement of chemicals associated with liquid-propellant missile systems and with chemical production and handling equipment. According to documents recovered during an ISG investigation of the ASB, there were numerous inquiries from Iraq and corresponding offers to supply liquid-propellant missile-associated components. Solicited or offered items included:

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Some 50 to 100 tons of 98 to 99 percent nitric acid.
Hydrofluoric acid.
One hundred nitric acid pumps for 99.99 percent nitric acid.
Unsymmetric dimethylhydrazine (UDMH), a liquid fuel use for improved performance in liquid rocket propellants.
Diethylene triamine (DETA), a liquid fuel used in liquid propellant missiles.
Other chemicals sought by Iraq included hydrazine, hydrogen peroxide, xylidene, and triethylamine, which are chemicals commonly used for fuels and oxidizers by liquid-propellant missiles.

Belarus

¶Belarus was the largest supplier of sophisticated high-technology conventional weapons to Iraq from 2001 until the fall of the Regime. Complicity in this illicit trade was exhibited at the highest levels of the Belarusian Government. Belarusian state establishments and companies implemented cooperation agreements with Iraq to transfer technology, equipment, and expertise to the embargoed Regime.

The Iraqis constantly worked to improve the illicit trade relationship with Belarus despite the absence of a formal trade agreement between the two countries. The illicit trade relationship allowed Iraq to obtain high-technology military equipment. Belarus was relatively advanced in military research and development including air defense and electronic warfare.
Belarus acquired hard currency and a market for its post-Soviet defense industry, according to a detainee.
The intelligence services of both countries helped to facilitate this trade, according to a cooperative source with good access. A detainee debrief affirms that Belarusian aid in radars, laser technology, metallurgy, and electronic warfare systems were the key areas of cooperation.

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¶In 2001 and 2002, two MIC delegations visited Belarus to discuss Belarusian assistance in upgrading Iraqi defense capabilities, particularly air defense and electronic warfare systems. Former MIC Director, Huwaysh, led the Iraqi delegations. The Iraqi delegations also included the former Director of Al-Kindi Dr Sa’ad Da’ud Shamma’, the former Director of the Al-Milad air defense company, Brigadier General Husayn, and several high-ranking Iraqi air defense officials. Huwaysh, however, was the overall manager of the relationship between Iraq (especially MIC) and Belarus according to a detainee debrief.

¶A former high-ranking Iraqi government official says that diplomatic relations between Belarus and Iraq were so strong that an Iraqi-Belarusian Joint Committee was formed to promote illicit trade. The committee was cochaired by the Iraqi Minister of Finance, Hikmat Mizban Ibrahim al-Azzawi, and Vladimir Zamitalin of the Belarusian Presidential Office. Indeed, the President of Belarus, Aleksandr Lukashenko, consistently supported the political positions and defense needs of Iraq. In a September 2002 meeting, President Lukashenko met MIC and MFA officials to discuss military cooperation. During the meeting, President Lukashenko expressed his willingness to support Iraq and to send air defense experts to help Iraq fight the United States.

Key Belarusian Individuals Linked to Illicit Trade With Iraq

¶The following Belarusian individuals were instrumental in driving forward the illicit trade with Iraq:

Vladimir Zamitalin. Ex-deputy to the head of the Presidential Bureau and former head of the Belarusian side of the combined Iraqi-Belarusian Committee for Commercial and Economic Cooperation. He was in charge of the special military cooperation with Iraq and functioned as a secret envoy between President Lukashenko and Saddam.
Leonid Kozek. Ex-deputy to the head of the Presidential Bureau and member of the Iraqi-Belarusian cooperation committee.
Nikolai Ivanenko. Current deputy to the head of the Presidential Bureau and last head of the Belarusian side of the combined Iraqi-Belarusian committee for economic cooperation. He had a role in the special military cooperation with Iraq, and is a relative of President Lukashenko. He visited Iraq twice and met with Saddam, carrying a written letter to Saddam from President Lukashenko.
Vitali Kharlap. Belarusian Minister of Industry.
Professor Kandrinko. Director of the communications department at a Belarusian concern called AGAT. He played a successful role in negotiations with Salah Al-Din state company and concluded many contracts concerning the manufacture of communication sets.
Professor Kloshko. A scientist who led the department of telemetric systems for surface-to-surface missiles and had many contracts with the MIC.
General Petr Rokoshevskiy. Deputy for arming and training in the Belarusian MoD. Rokoshevskiy had a role in activating military cooperation with Iraq. This involved working with the Iraqi MoD, SRG, and the MIC for supplying rocket propelled grenades (RPG-7), munitions, and laser-directed Konkurs antitank rounds. He played a major role in signing a contract with the Iraqi MoD and the MIC for training 20 officer engineers of the SRG in using the S-300 PMU-1 (SA-20) air defense system at the Belarusian military academy. Rokoshevskiy was also involved in signing contracts for supplying engines for T-72 and T-55 tanks, MiG-29 fighter jets, and BMP-1 mechanized infantry fighting vehicles.

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Materials, Equipment and Services Provided by Belarus

¶Belarus exported a range of military goods to Iraq. This illicit trade was organized and executed by a number of Belarusian companies. Captured documents reveal that in December 2002, Balmorals Ventures Ltd. implemented contract 148/2002 with the Al-Kindi General Company to deliver electronic components to the value of $70,367. This price included the cost of delivery to Syria and onward shipment to Baghdad. The goods could have been components for a radar jamming system.

¶Viktor Shevtsov was the director of Infobank and of another Belarusian company involved in illicit trade with Iraq named BelarusianMetalEnergo (BME). Infobank helped finance deals with Iraq and, according to Huwaysh, may have been run by Belarusian intelligence. BME was involved in supplying castings and machinery for T-72 tanks, and modernizing SA-2 air defense missiles and associated radar systems. BME had many multimillion dollar contracts with Iraq and worked closely with Infobank to finance illicit trade. Shevtsov organized, at his own personal expense, trips on-board Belarusian airlines from Minsk to Baghdad. These flights transported experts and directors of Belarusian companies connected to Iraq as well as technical and military equipment destined for Iraqi ministries.

¶Alexander Degtyarev was also a major player in the illicit trade business with Iraq. Degtyarev was a Russian scientist whose specialty was missile guidance and control. Shevtsov introduced Degtyarev to the Iraqi MIC. Degtyarev owned the Belarusian companies named Systemtech and ElectricGazCom (EGC), which had contracts with Infobank and Iraq to supply radars plus control and guidance systems for SA-2 missiles. The latter equipment was transported through Syria and paid for through Syrian banking institutions. Degtyarev was a regular visitor to Iraq, traveling there every two weeks according to a high-level MIC official and a mid-level former Iraqi civil servant with direct access to the information.

¶A high-level MIC official stated that EGC signed contracts with the Iraqi Al-Karamah State Establishment to build a facility for the manufacturing and testing of control and guidance systems for surface-to-surface missiles such as al-Samud. This trade also included the sale of gyroscopes and accelerometer testing stages. In addition, ECG signed contracts with the Al-Batani State Company for the technology transfer of manufacturing systems for an Iraqi satellite research project.

¶A former Iraqi official revealed that President Aleksandr Lukashenko as a vehicle for illicit trade with Iraq promoted a joint Belarusian-Iraqi company. Lukashenko was anxious that illicit trade should continue on a regular basis and requested that a firm called Belarus Afta be established in Baghdad as a clearinghouse for illicit military trade**.**

Radar technology and air defense were the most crucial export commodities to Iraq from Belarus. Captured documents and a mid-level Iraqi military officer with direct access to the information affirm that there was joint Belarus-Iraqi development of an improved P-18 (Mod Spoon Rest) early warning radar between November 2000 and March 2003. This radar was employed at Al-Habbaniyah Air Defense Center against Coalition aircraft during OIF.
Systemtech provided assistance in the fields of research, testing, and project implementation. Dr Raskovka was the senior Systemtech official helping the Iraqis, visiting Iraq every 3 to 4 months for 3 years. The Iraqis wanted to purchase an S-300 air defense system. Contracts were signed and training undertaken, but the pure logistic problems of supplying the system without alerting the international community were insurmountable.

¶Other interviewees revealed that Belarus provided numerous supplies of illicit goods to Iraq. These included equipment for T-72 and T-55 tanks; Volga, Pechora (SA-3) and other air defense missile systems; Mi-17 helicopters; spares and repairs for MiG-23, -25 and -29 plus Sukhoi 25 jets; laser guidance systems; fiber optics; infrared spare parts; GPS jammers; and radios.

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¶IAEC—MIC Cooperation for the Procurement of CNC Machines

¶Based on interviews with Fadil Al Janabi, former head of the IAEC, and 'Abd-al-Tawab ‘Abdallah Al Mullah Huwaysh, former Minister of Military Industrialization, it is evident that the MIC procured CNC machines for the IAEC as part of a "special project" for modernizing Iraq's scientific infrastructure in 2001.

According to interviews with Fadil Al Janabi, presidential secretary 'Abd Hamid Mahmud Al Khatab Al Nasiri was approached in 2001 with a proposal for a modernization program that included procurement of new machinery and equipment, enabling the IAEC to create molds and manufacture specialty parts in-house. Al Janabi wanted to procure these CNC machines through the MIC to bypass foreign supplier's reluctance to sell manufacturing equipment to the IAEC.
Huwaysh recalled that in 2001, Al Janabi and Khalid Ibrahim Sa'aid contacted him with a presidential order to assist the IAEC with a "special project." The MIC was not to be involved with establishing technical specifications or providing funding, but was to serve as a functional link.
During this initial meeting, which was also attended by Munir Mamduh ‘Awad Al Kubaysi, Director General of MIC's Al-Basha'ir Company, Huwaysh claimed he was informed that he did not need to know what was being procured. He further remembered the relative high cost of the machines, costing approximately half the budget of the entire special IAEC modernization project.

¶IAEC scientists and employees, in contrast, have claimed that CNC machines procured from Taiwan were not high precision and were the same as those used at the Al Badr General Company.

A source with access stated that the most precise machines were capable of 5-micron accuracy, but none of the machines were five to six axes because this would have "broken sanctions and all of the machines were declared to inspectors." The IAEC employee stated that these high-precision machines were installed at Tuwaitha and information regarding these machines was provided to the UN and IAEA in the declaration given in December 2002.
ISG has found Iraqi documents that corroborate this assertion, showing that the IAEC had prepared UN forms (OMV Form 22.5/ MOD.2) for eight CNC machines, all of which were identified as three-axes machines. The descriptions in the declarations are consistent with the statements of the mid-level managers.

¶It is important to note, however, that these IAEC sources referred to the MIC manufacturing company Al Badr and not Al-Basha'ir, the MIC front company involved in negotiations with Huwaysh. In the interchange between the IAEC and the MIC, Al Janabi was explicitly ordered that all transactions and communications on this procurement project were to go through Munir Al Kubaysi and Al-Basha'ir. ISG judges it is probable that this "special project" procurement was carried out by Al-Basha'ir as a separate classified channel for IAEC precision machinery*. This assessment supports Huwaysh's claim of the sensitivity surrounding the "classified" nature of the IAEC modernization project in 2001.*

¶Even during the prelude to OIF, the illicit Belarusian military trade with Iraq did not stop as shown by captured documents. Belarus provided PN-5 and PN-7 night-vision devices for Iraq through the Al-Basha’ir front company. Three months before the onset of the conflict, President Lukashenko instructed the Belarusian Ministry of Defense to allow Iraq to purchase any goods from Belarusian military supplies.

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Payments From Iraq to Belarus

¶The main revenue stream for funding illicit trade with Iraq came from the Iraq-Syria Trade Protocol. The amount of illicit military trade between Belarus and Iraq was significant according to captured documents, with Belarusian Governments receiving nearly $114 million in payments from Iraq.

¶According to a detainee, the critical financial element in the illicit trade process between Belarus and Iraq was Infobank. Belarus demanded to be paid 75 percent of the contract price in hard currency before delivery of any goods. Iraq did not agree to this. Therefore, Infobank agreed to provide bridging funds, including the 75 percent up-front fee, to finance illicit deals between Belarus and Iraq for a fee of 15 percent of any contract. According to a high-level Regime source with direct access, kickbacks paid to Iraq by Belarusian companies for exports to Iraq under the UN OFF Program were kept at the Infobank to fund future illicit Iraqi imports from Belarus. A senior former executive in the Iraqi MIC believes that Infobank had a total of $7 million of Iraqi money in its accounts before OIF. Infobank also financed illicit military trade between Iraq and Yugoimport-FDSP of Serbia, paying equivalent up-front fees, according to a former senior executive in the MIC.

Taiwan

¶Although a limited supplier of prohibited goods to Iraq, companies from Taiwan negotiated for conventionally military goods and provided critical CNC machines to the Regime from 2001 to 2003. These machines provided Iraq with a means to improve its military-related production.

¶The earliest evidence of Iraq’s procurement relationship with Taiwan dates back to January 2001, when Iraq sought military equipment and dual-use goods from companies in Taiwan. In an apparent attempt to circumvent UN sanctions, Dr. Khalid Sulayman of the Iraq-based company ETIK for General Trading Limited approached the Taiwanese arms brokerage firm, Epnon International Limited, seeking 150 engines for T-72 and T-55 tanks, 200 engines for the T-62 tank, and 100 engines for the BMP-1 and BMP 2 armored personnel carriers. The engines were to be in complete and new condition.

¶Although Epnon’s prices were higher than other sources, ETIK learned that it did business without the need for official papers. The deal was originally structured as cash only; however, under-the-table transaction with the payments made in advance occurred, and an agreement was eventually reached for half the payment for the engines to be in cash, and the other half in oil.

ISG has found no evidence that these engines were delivered to Iraq.

¶There is limited information on the supply of CNC machines to Iraq, but during UNSCOM’s tenure, UN inspectors confirmed Iraq had obtained CNC machines manufactured by companies in Taiwan.

During an inspection in 1998 of the Al Rashid General Company’s Dhu-al-Fiqar (Tho Al Fekar Plant at the Taji Metals Complex, UNSCOM inspectors found four new Hartford vertical machining centers, with one machine installed and being used on Ababil-50 motor bulkheads. The four machines, made by the She Hong Machinery Company Limited, were three-axis vertical machining center with an indexing fourth axis and a 20-tool carousel.
The inspectors considered these modern, standard quality CNC machines suitable for good quality aerospace and missile-related applications. Later in 1998, another inspection at the Dhu-al-Fiqar (Tho Al Fekar) Mechanical Plant reported another four Hartford CNC machines milling Ababil-50 rocket nozzles. The team identified that three of these machines possessed a computer-controlled turntable.
ISG cannot confirm that these CNC machines were purchased directly from sources in Taiwan. It is equally likely that these machines were obtained from unknown third parties.

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¶In 2001, the IAEC and MIC were working to obtain CNC machines to modernize Iraq’s scientific infrastructure. By 2002, documentary evidence shows Iraqi front companies soliciting bids and contracting for CNC machines from companies in Tawian. The CNC machines procured from Taiwan by Iraq consisted of three or more axes, suggesting potential use in weapons production.

In early May 2002, the Baghdad-based Iraqi firm, Aldarf Company, represented by ‘Ali Al bakri, sought tilting rotary tables for two machining centers. She Hong Industrial Company, one of Taiwan’s largest manufacturers of machine tools, acknowledged the Iraqi company’s need for accessories and stated that rotary tables manufactured by Taiwan’s Golden Sun industrial Company Limited, Taichung could be added to both machines that Iraq already possessed.
Recovered correspondence from the Al-Basha’ir Company revealed a deposit of $900,000 into the account of Mr. ‘Abd al Razzaq Al Falahi and Brothers to execute a contract for importing machine tools from Taiwan. This money was then transferred into the account of She Hong Industrial Company.
In July 2002, Iraq asked a Jordanian company to seek a new quote from a company in Taiwan for a gun-drilling machine, earlier quoted at a price of $146,000.
January 2003 bids for CNC wire-cutting machines from Taiwan were also revealed in documentation from the Al Badr State Company, a subsidiary of the MIC.

¶Iraq took active measures to ensure that illicit trade for machine tools from Taiwan was concealed. Recovered correspondence from Al-Basha’ir expressed that the wording of the contract conducted by Mr. ‘Abd al Razzaq Al Falahi should not make reference to Al-Basha’ir and that monies should be deposited in a static account for all transactions. Correspondence from a MIC-run company also indicated that bids from companies in Taiwan were under the auspices of the Iraqi and Syrian agreements, implying that goods obtained from Taiwan would be transshipped through front companies operating out of Syria or that Syrian front companies would act as intermediaries and facilitate delivery of the procured equipment.

Egypt

¶Since 1990, illicit procurement activity between Iraq and Egypt provided Baghdad with a limited amount of materials that the Regime found difficult to acquire outside UN sanctions. Materials that Iraq acquired through its relations with Egypt, outside UN sanctions and resolutions, included nitric acid, stainless steel and aluminum alloys.

¶Egyptian and Iraqi procurement relations began in the early 1980s when Baghdad provided Cairo with $12 million in 1981 in return for assistance with production and storage of chemical weapons agents. At this time Baghdad also entered into a series of contracts with the Government of Egypt to procure the two-stage Badr-2000 missile and to provide the technological infrastructure to build the missile indigenously, before it attempted to extend the range of its Scud-B/8K-14 missiles.

¶Following Operation Desert Storm and UN sanctions, procurement from Egypt was limited. Nevertheless, Iraq used its ties with Egypt to procure key items that were difficult to procure elsewhere.

The MIC, through its front company Al-Husan, had a $5 million contract with an Egyptian firm for stainless steel, forged steel, and aluminum in 2003.

¶Trade in nitric acid, a precursor in the manufacture of solid propellant also flourished following the destruction of the Al Qa’Qa State Company Nitric Plant in December 1998, during Operation Desert Fox.

A senior official from the MIC stated that Iraq had a secret agreement with Egypt during 2001 to 2002 to have nitric acid shipped from Egypt through Syria to Iraq. It is unclear how many tons of nitric acid Iraq received from this secret agreement.

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¶Many transactions for prohibited goods were orchestrated through a trade protocol sponsored by the Iraqi MoO. The second Deputy Director for the MIC, Dagher Mahmoud, was responsible for monitoring these transactions.

A source with direct access estimated that there was approximately $50 million in the trade protocol account. Goods and materials were occasionally procured on a cash basis from Egypt, but the majority of the protocol was based on oil transshipped through Jordan.
M-23 officers from Balad, Iraq often accompanied MIC personnel to Egypt and between 2000 and 2003. M-23 was responsible for the physical security of MIC facilities and personnel. ‘Abd al-Hamid Sulayman Al Nasiri, the Director of M-23, personally went to Egypt under the auspices of the IAEC about six months before OIF.

¶According to a senior Iraqi official from the MIC, the Egyptian state was involved in illicit trade with Iraq. Known Syrian procurement agents for Iraqi front companies also assisted in some of these transactions. It is also apparent that the Syria-Iraq Trade Protocol facilitated illicit trade from Egypt. Individual brokers and Iraqi foreign nationals in Egypt may have also initiated illicit trade, motivated by the lure of corporate and individual profits.

Nitric acid supplies were reportedly the responsibility of the Dr. Asif Shalish, Director of the Syrian SES International, who dealt regularly with Iraqi procurement companies. All payments of the nitric acid were handled under the Syrian protocol and the head of Al-Basha’ir, Munir Mamduh Awad al-Qubaysi.

¶ISG, however, judges that the most likely transshipment routes through Jordan and Syria were based on the ties to the trade protocols.

Yemen

¶Improving bilateral relations between Sana’a and Baghdad in the late 1990s resulted in direct Yemeni participation in Iraq’s illicit procurement schemes.

¶After 2000, Yemen became a state trade intermediary for Iraq, providing Baghdad with “end-user” cover for military goods prohibited by UN sanctions and resolutions. There is no evidence, however, that Yemen was complicit in the procurement of WMD-related commodities.

¶Throughout the 1990s, Yemeni President Ali ‘Abdallah Salih publicly supported UN sanctions against Iraq, but he remained concerned about the humanitarian impact on Iraq’s citizens. Starting in February 1997, senior members of the Yemeni Government privately argued that Yemen should unilaterally abrogate the UN sanctions on Iraq. They contended that lifting the embargo would help to provide the Iraqi people with much-needed humanitarian assistance and enhance regional stability. By 1999, President Salih was beginning to publicly criticize the United States and the UK for the imposition of no fly zones over Iraqi airspace and the UN embargo.

Opening Conventional Trade With Yemen for Oil and Cash

¶In addition to increasingly pro-Iraqi rhetoric, Yemen and Iraq also built closer trade ties in 1999. Through regularly scheduled Iraqi-Yemeni Joint Committee meetings, Iraq and Yemen had signed trade agreements and Memoranda of Understanding aimed at strengthening bilateral ties, sparking economic growth, and exchanging energy experts in the field of natural gas and petroleum exploration. The two countries also signed a customs treaty, whereby no duties would be paid on the transfer of goods between Iraq and Yemen. Although these agreements were within the guidelines set forth by UNSCR 986, they provided an avenue for increasing trade coordination and eventually led to sanctions violations.

The Iraq Government signed a $9 million deal in November 2000 with the Yemeni Hayal Sa’id group of companies to provide Iraq with food and medical- related goods in exchange for hard currency derived from Iraqi oil sales.
On 29 September 2000, President Salih authorized one of the first commercial airline flights to Baghdad. Salih had rejected earlier calls by Yemeni opposition parties for this action out of fear of a US government reaction. After a Royal Jordanian Airlines flight landed in Baghdad on 27 September, however, Salih decided he could deflect Western criticism by claiming the flight was on a humanitarian mission. It was expected that Yemen would allow additional flights to Baghdad in the future.

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¶By November 2000, another session of the Yemeni Iraqi Joint Committee, led by ‘Abd-Al-‘Aziz Al-Kumaym, was held in Baghdad. The meetings again centered on improving bilateral relations, but mainly dealt with increasing economic activity between the two countries. The joint committee reached agreement in a number of areas, including the purchase of Iraqi oil at below market prices for cash using unnamed Yemeni businessmen instead of the Yemeni Government. This kind of transaction was very profitable for Yemen, but violated UN sanctions. In addition to the profits earned by this trade, Saddam’s Regime also agreed:

To provide 60 scholarships for Yemeni students to study at Baghdad University.
To the exchange of experts to take place in the fields of agriculture and telecommunications.

Yemen Emerges as an Intermediary for Iraqi Illicit Imports

¶Several high-ranking Iraqi, Yemeni, and Syrian Government officials met to discuss the establishment of an illicit trade protocol between February and July 2001. The purpose of these particular meetings centered on formulating and implementing a plan that would allow Iraq to acquire Russian-manufactured military spares through a complicated supply chain and front company network. The main participants in the meetings were the Iraqi Ministry of Defense General Secretary, the Yemeni Ambassador, and Firas Talas, the son of the former Syrian Defense Minister Lt. Gen. Mustafa Talas. A Yemeni businessman named Sharar ‘Abd- Al-Haq brokered the illicit Yemeni business transactions.

Lt. Gen. Mustafa Talas, while absent from the meeting, provided a letter, which stated that he recently met Dimitrof Mikhail, president of Russian Company of Iron Export. Dimitrof, a former senior Russian intelligence official, had agreed to supply spare parts without requesting the identity of the end user.
Al-Haq agreed to transport military supplies from Yemen to Iraq using the illicit trade networks.
According to the letters, Iraq provided ‘Abd-Al-Haq a list of requirements, signed by the Iraq Defense General Secretary. This list included spares for the following: MiG-17, MiG-21, MiG-23, MiG-25, MiG-29, Su-22, Iskandri missiles with a range of 290 kilometers, updated parachutes, L-39 combat capable trainers, Bell 214st helicopters, T-55 and T-72 tanks, armored cars, BMP-1 and BMP-2 armored personnel carriers, and other cars and trucks. The value of the contract was $7,287,213. The contract outlined the transportation scheme to take the prohibted items from Singapore to Sana’a, Yemen to Damascus, Syria to Baghdad with payment to be made through the International Bank of Yemen.

¶According to recovered documents, President Salih called his brother, the Yemeni Air Force Commander, after this meeting and told him to provide Iraq with spare parts even if they needed to take them from Yemeni stocks. He also ordered his brother to acquire more materials from Russia.

Reportedly, in early December 2001, the Iraqi Air Force had received spare parts for MiG-29 fighter aircraft, mainly through Tartus, Syria. No further information is available as to the origin of the aircraft parts. It is likely that these items were purchased via the Russian/Yemen/Syria supply chain.

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Importing Prohibited Commodities

Overview

¶Iraq under Saddam Husayn used various methods to acquire and import items prohibited under UN sanctions. Numerous Iraqi and foreign trade intermediaries disguised illicit items, hid the identity of the end user, obtained false end-user certificates, and/or changed the final destination of the commodity to get it to the region. For a cut of the profits, these trade intermediaries moved, and in many cases smuggled, the prohibited items to land, sea, and air border entry points along the Iraqi border.

Companies in Syria, Jordan, Lebanon, Turkey, UAE, and Yemen assisted Saddam with the acquisition of prohibited items through deceptive trade practices. In the case of Syria and Yemen, this included support from agencies or personnel within the government itself.
Numerous ministries in Saddam’s Regime facilitated the smuggling of illicit goods through Iraq’s borders, ports, and airports. The IIS and MIC, however, were directly responsible for skirting UN monitoring and importing prohibited items for Saddam.