FT: US complicit in Iraqi oil smuggling.

FT.com / News in depth / Iraq - US ignored warning on Iraqi oil smuggling, UN says

According to joint investigation of Financial Times and Italian business daily US and UK were informed about the single-largest and boldest smuggling operation in the oil-for-food program.

“Although the financial beneficiaries were Iraqis and Jordanians, the fact remains that the US government participated in a major conspiracy that violated sanctions and enriched Saddam's cronies,” a former UN official said. “That is exactly what many in the US are now accusing other countries of having done. I think it's pretty ironic."

The operation involved 14 tankers and 7m barrels of oil, which brought $150m of illegal profits (including $50m to Hussein's cronies).

Oil traders were told informally that the US let the tankers go because Amman needed oil to build up its strategic reserves in expectation of the Iraq war.

Last week Paul Volcker, head of the independent commission created by the UN to investigate failures in the oil-for-food programme, confirmed that Washington allowed violations of the oil sanctions by Jordan in recognition of its national interests.

However, only a fraction of the oil smuggled out of Iraq reached the Jordanian port of Aqaba. Most was sold to the Middle East Oil Refinery, in Alexandria, Egypt; to a refinery in Aden, Yemen; and to Malaysia and China. “This operation was not permitted under the Security Council resolutions dealing with the oil-for-food programme,” said Michel Tellings, one of the two UN inspectors responsible at the time for the implementation of the programme. “The volume of oil was not inspected and payments were not made to the UN escrow account, as required by the programme.”