Fortum Oil and Gas followed UN rules in dealings with Iraq

Helsingin Sanomat shown documentation of oil-for-food programme

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The dealings between the Finnish oil company Fortum Oil and Gas and the Iraqi oil ministry in connection with the oil-for-food programme in the early part of 2000 had the blessing of the United Nations.
     There is also no indication that the state-owned Fortum had any knowledge of suspicious actions of members of the Mariam appeal, which delivered humanitarian aid to Iraq.
     A report on the matter was submitted by Neste Oil, the corporate successor of Fortum Oil and Gas, to the UN inquiry led by former US Federal Reserve Chairman Paul Volcker. The committee was set up to investigate allegations of corruption linked with the oil-for-food programme. The committee issued its final report on Thursday.
     The oil-for-food programme allowed Iraq, which was under a UN trade embargo, to sell limited amounts of oil to pay for food and other humanitarian supplies before the overthrow of Saddam Hussein.
      Helsingin Sanomat was given access to the documents on the condition that no copies would be made, and that no employees of Fortum Oil and Gas would be named.
     
According to the papers sent to the Volcker inquiry, representatives of Fortum first met with Iraqi businessman Burhan Al-Chalabi in London in March 1998. At the time, Al-Chalabi served as a mediator in talks which concluded in an agreement between Fortum and the Iraqi Oil Ministry on the sale of 3.5 million barrels of oil in December 1999. The amount was increased by a million barrels in April 2000.
     The price was set at 107 million dollars (on Friday, Helsingin Sanomat erroneously wrote that the price was 107,000 dollars).
     The UN gave its authorisation for both the deal and its extension.
     The documents confirm that the figures in the contract are the same as the amounts specified in the UN authorisations. The documents also detail the monetary traffic between Fortum and Al-Chalabi. Fortum paid Al-Chalabi a total of 531,228 dollars, as the oil deliveries came. The amounts paid to Al-Chalabi are consistent with what the commission agreed upon, and with the amount of Iraqi oil that was delivered.
     The money transfers between Fortum and Al-Chalabi concluded in June 2000, and collaboration between the two sides ended in November 2000.
     
The documentation supplied by Neste Oil to the Volcker inquiry, and the conclusions drawn by the inquiry independent of Neste Oil indicate that Fortum did not pay extra for the oil it bought from Iraq.
     Extra payments for the oil were one way that Iraqi officials were able to enrich themselves through the oil-for-food programme.
     In an e-mail sent to Neste Oil, Volcker inquiry representative Philip Trewhitt describes the Fortum deals as a "legitimate purchase". Trewhitt did not return a call from Helsingin Sanomat.
     
The documents supplied by Neste Oil also specify Fortum's role in the so-called Mariam Appeal. The appeal was launched by British MP George Galloway, and is named after a four-year-old Iraqi girl, Mariam Hamzan, who suffered from leukemia, and who was brought to Britain for treatment in 1998.
     Galloway, an outspoken critic of the embargo against Iraq, has later been accused of using the appeal as a means of laundering illegal oil revenue.
     Fortum donated GBP 6,750 to the appeal. The Mariam Appeal sent Fortum documents indicating that both the UN and British officials approved of the delivery of medicines to Iraq, and that the money donated by Fortum was used to buy pain medicine.
     
The Volcker inquiry also alleges that the Finnish pharmaceutical company Orion paid nearly 22,000 dollars in kickbacks to Iraqi officials during its dealings in 2001-2004.
     Orion CEO Jukka Viinanen denies any wrongdoings and says that it acted in good faith.
     The Finnish elevator company Kone was claimed to have paid about 190,000 dollars in bribes during the oil-for-food programme. Kone also denies any wrongdoing.


Previously in HS International Edition:
  Several Finnish companies mentioned in report on Iraq oil-for-food abuses (28.10.2005)

Helsingin Sanomat