Total recall
The Volcker report has led to new questions about the role of one of Canada's richest families in the oil-for-food scandal
Marinka Peschmann - December 12, 2005
Paul Volcker's 18-month probe into the UN's oil-for-food program wrapped up in October, but the corruption exposed has landed businessmen and public officials in courtrooms around the globe. It has also raised new questions about one of Canada's most powerful families and their ties to the man heading up the UN investigation.
When executives working for Europe's Total Group admitted in November that they had paid bribes on Iraqi oil contracts during the program, it raised fresh concerns about Total's largest shareholder, Montreal-based Power Corp.
Power had already faced scrutiny from U.S. investigators who discovered numerous links between its owners, Montreal's Desmarais family, and key players in oil-for-food. In addition to their interest in Total, which was poised to take advantage of Iraqi drilling opportunities once the program ended, the family is partners with the European bank, BNP Paribas, in charge of oil-for-food money transfers. The bank has been under investigation for banking law violations and missing documents related to oil-for-food. The man heading up the UN's probe, meanwhile, Paul Volcker, has worked as an adviser to Power Corp., leading critics to question his objectivity.
Volcker's 623-page fifth and final report, released Oct. 27, exposed several companies that paid kickbacks to Saddam to get contracts to resell Iraqi oil, which Saddam was supposed to use to buy food and medicine while under UN sanctions. The contracts were used instead to reward friends and allies, who returned the favour by kicking back some of their profits to Saddam. Total won 10 contracts between 1996 and 2003, making the firm the fifth-largest recipient of Iraqi oil deals during oil-for-food.
In addition to startling allegations coming from Total executives, Volcker reveals more links between the firm and the kickback scheme. Elias Firzli, a former "consultant" to Total, paid at least three oil surcharges to Iraq, tallying nearly US$1.5 million, violating French law and UN sanctions. Firzli, a Lebanese lawyer and businessman, befriended Saddam's deputy prime minister Tariq Aziz in the 1960s. Firzli allocated oil contracts to at least two companies: the French-based Aredio Petroleum, and Genmar of Switzerland. "Ministry of Oil and bank records show," according to the report, "that a surcharge of US$367,930 was paid" on a Genmar oil contract "through a deposit by Firzli on February 27, 2001" to an Iraqi bank account. Catherine Enck, a Total spokeswoman, says, "Mr. Firzli is not nor has he ever been an employee of Total or any of our affiliated companies. Mr. Firzli is a lawyer and as such we consulted him years ago for his knowledge in regards to the Middle East. We have not worked with him since."
But testimony from Total executives obtained by Fox News Channel, alleges that Genmar was one of two Swiss firms used by Total to buy oil and funnel money back to Saddam. "Through companies like Genmar and others, Total retained the possibility of buying second-hand Iraqi crude," one executive reportedly told the judge.
Volcker's report alleges that Firzli, with his "friend" Bernard Guillet, a diplomatic adviser to France's former interior minister Charles Pasqua, secured two oil contracts for Genmar. Guillet, who was arrested last April for his alleged role in oil-for-food, travelled "extensively" to Baghdad, where he developed a "family-like relationship" with Aziz, according to the UN report. In a written response to the Volcker committee, Guillet denied wrongdoing. Pasqua was also found to have been personally granted rights to 11-million barrels of Iraqi oil, though he has called the allegations "ridiculous," accusing Total of using his name without his knowledge. "Total used Genmar," Pasqua told Fox News. "If Genmar used my name, Total took advantage of it the same way."
The fact that Volcker's final report does not assess the kickbacks allegedly paid by Total and spared Total and Firzli any formal condemnation, has led to questions about Volcker's ability to truly investigate Power's affiliates (Volcker's committee have declined comment). While several countries have begun their own investigations into their role in the world's biggest scandal, Canada has yet to announce any probe. Perhaps the new revelations will change that. Perhaps not.