14 March 2008

Connecting some dots between the candidates


This article has received the attention of the subject of the article and his solicitors in the UK. As they have asked for the email to be kept private, and very strange that I get a pdf and not even a polite asking to speak with me, I will address some of the generalities they bring up. That is to keep in the spirit of the correspondence and yet address their concerns as much as possible.

First off, let me say that I am a United States citizen, born in the US, lived and worked in the US, now disabled in the US, writing in the US, and have this lovely low-traffic blog in the US that gets the ability to be read worldwide. If having readers in the UK makes me published in the UK, then that is true of Iran, Kenya, Israel, Russia, Ukraine, Spain, and quite a few other places. I really don't keep track of who reads me or from where. Indeed, given such things as the TOR network, any attempt to filter traffic would, as the Chinese are finding out, prove well neigh impossible.

I will point out that when I utilize a blockquote or indent, I am utilizing a quotation from another source, that I link to. I also try to do that thematically, so that the same color holds to a source, but there are only a limited number of colors that I find pleasing to read, so a careful reader needs to pay attention to source citation and linkage.

From there I will say that I found The Observer article referenced to be very fascinating including the give and take between the subject of the article and The Observer, as the subject had specific points of contention that he brought up. And The Observer was addressing those. There was some problem between their original publication date, in 2001 and the subject bringing up his problems with the article. At the time, unaware that there was a lawsuit ongoing, I linked to the information brought up by the subject with The Observer. In my two extracts, I utilized 176 words and 165 words from the article for a total of 340 words, which I considered to be 'fair use' under US standards. The electronic media, being unlike print media in which linked material can be brought up to examine a discussion, video or other interplay by the reader allows for such linking to put the reader into the position of determining if I am giving a fair analysis of the material.

That fair analysis included reading the original, the subject's response and the response to that.

Part of that give and take is allowing there to be a record of what was inaccurate and how such things get published. At the time, being unaware of legal proceedings and taking what was happening as an interplay between the subject and The Observer I utilized a web cache for the historical document being referenced as many of the larger media systems tend to age or pull down articles on a regular basis. There is little way for a reader to know if there is a lawsuit starting up or not, or if that is part of the regular shifting of articles. Thus I considered that I had given fair use of content, linkage to both parts of a dispute and review of both the original article, the subjects protest and the rejoinder. This includes all parts of it that I had cited, and I did my best to ensure that other articles linked to in my article had distinctive research outside of The Observer, in particular the work of Kommisar and Kommersant.

Do note that I did the exact, same, thing with regards to the later Financial Times article and the subject's problems with it.

The next point of interest is in the lack of reading ability by the solicitor and/or the subject: at no point in my article do I say or impute that the subject gave money to Sen. Obama's campaign funds of any sort.

With regards to having talked or spoken to Saddam Hussein: BNP-Paribas certainly had discourse with the Government of Iraq during the late 1990's as it was the chosen source for selling oil under the Oil For Food program. As the subject has a substantial investment in BNP-Paribas during the Oil For Food scandal, it is difficult to see how there could be no gain, connection or understanding that funds gained under that system would benefit the subject. For said subject to have no connection to it he must have no interest, investment or seek no gain from such things and ensure he is isolated from them via non-investment in said financial institution. Do note that the subject is cited via linkage as being the largest shareholder out of that union of banks. While a minority it is, apparently, the largest minority.

Also, movement of funds from NY to Europe would most likely take place via Clearstream and its SWIFT system. It is that system that had particular problems show up from criminal organizations utilizing it for their funds transfers. Even after that is revealed, the subject takes an interest in Clearstream, which then goes on to have yet another scandal take place while the subject is an investor. I am astonished that the subject does not do research before investing his funds.

Further I do cite, in particular, that the subject was outside of Iraq when Saddam Hussein came to power.

Further I do cite, in particular, that Saddam Hussein killed a brother of the subject in his coup that saw 66 executed.

As the subject has banking interests in CIPAF and banking in the UK arises, it is more than fair to say that those are areas in which business is transacted for the subject. As said subject is wealthy and has substantial business interests and assets utilizing the concept of 'empire' sounds applicable.

One problem raised is in a fair use excerpt of The Guardian taken from Fordham University's own fair use excerpt. Note source citation and linkage in the article. Also note that the other link to The Guardian also has the information that the author of that article apologizing to the subject.

As some of the information addresses citations to articles by Lucy Kommisar who has done hard work getting records from across Europe, the Middle East and the Americas would be in order. Those are, from my reading of her work, on the record sources from government and industry, and often court documents. Particularly that of the Italian 'Clean Hands' investigation, which has official court testimony about the subject on record.

As to the subject's conviction in France in the TotalFinaElf conviction: innocence is decided by a court.

I specifically cite the Al Taqwa banking system for *its* movement of funds as a way to examine how that is done within a larger article.

Note also that the transit system for funds is described by Lucy Kommisar and I am paraphrasing her words after a quotation linking to her work on that.

I thank you for informing the world, some few decades after published reports of the subject being Saddam Hussein's cousin that he is not. The time to correct that record, from what I have seen from multiple sites, was a couple of decades ago.

In describing how the 'nebula' of holders around BNP-Paribas interacted with Menatep bank and their work to shift funds via multiple systems to hide industrial gains in Russia, it is difficult to conceive of that as being 'small scale' or limited. Being part of that 'nebula' of ownership, and the largest minority, plus backing Russian firms seeking to go after such gains it is then incumbent upon those backing such institutions to ensure that they have no dealings with them and seek no gain from those things. As BNP-Paribas was interested in or took part in backing such companies looking to gain profit from the fall of Yukos, it is difficult to estimate how that could be a non-connection with interest in Yukos oil assets. Note articles citing that involvement with such companies. And even that the subject might become just a bit gunshy after having one of those deals turn sour on him!

I specifically cite that the subject is a passive investor in Orascom. I also note that he sought out the partnership and leave it up to a reader to examine the many, many links from defense sources, telecom sources and more general reporting sources to decide if I am giving a fair rendition of those events.

Freerepublic you will have to deal with on your own, but do note that I am not attributing post-war bribes to the subject, but as a listing of events looked at in the article.
To wrap this up:

I find it highly interesting that I am considered to be published in the UK! That means I am now global in scope, and so is each and every individual who posts anything, anywhere at anytime. As I make no money, as in zero income and a substantial time investment in this work, I gain zero benefit financially from it. And as my readership is low, due to the complexity of the work I present, I can barely say that I register on anyone's website statistics: not only is this work gaining minimal reading, but I expect that most readers will find it too challenging to read through one of my more or less normal posts.

Also, when looking to give a review, I link to multiple sides of a dispute if I can determine that: A) there is a dispute, and B) that it is ongoing. In each and every instance I have done so, to allow the careful reader to go to the linked sites. It is that discourse between individuals that can yield up facts end demonstrate how differences in viewpoint can lead to differences in opinion and recording of facts.

I have tried to give an honest effort at the 'fair use doctrine' while providing links to full articles. That is necessary so as to ensure that the reader can gain a good, overall feel for the larger document, present cogent viewpoints and otherwise demonstrate that excerpts are not 'cherrypicked'. Unfortunately those not used to reading on the web may not know how to recognize when material is quoted from other sites and when a direct rendition is being given.

When dealing with those that have substantial sums to invest in institutions, it is essential to point out when the institution is doing work and when the individual is doing work. That line gets blurred when the investment goes above that of other investors.

This is some of the most complex reading that an individual can run across and I endeavor, at each and every point, to ensure that links are put in place, that I separate out the views of others by demarcating them and otherwise ensuring that readers know they are getting quotations and to otherwise make sure that there are separations between what I garner from those views and those views, themselves.

It is unfortunate that the subject wishes to have such things taken down as it is that conversation, held in the open, and openly cited and linked, that can give understanding and credence to a wider view and better understanding of events. Instead of assertions, I perform linkages, often to primary documents and, if not those, then reputable researchers who link to the primary sources. It is that honest, open dialog and understanding that can work out exactly what events are, what they mean and what they imply beyond just those involved.

This has been a few months to remember in politics with serious swings up an down on all sides with candidates going from front-runner to no-running and vice-versa in no time flat. Through it all, however, have been some sign posts that have been coming up again and again that, really, have been showing that there is an underlying set of associations between the rich and infamous and the current crop of politicians. Now not all the candidates, it is true, got to hob-nob with these folks, but the trend amongst the front-runners and well financed is interesting.

To start out lets get on with Sen. Barack Obama (D-IL) smiling his way to the nomination, if only he could shake the pesky associations with the Chicago Mob, its ties to the Democratic Machine and the relationship with one Antoin "Tony" Rezko. It is not everyday that one gets to see a Presidential candidate appear on the witness list of reputed mobster, and we might even get to hear the money exchanges between said mobster, Tony Rezko, Michelle Obama's interest in the neighbor's yard, and a bit of funding coming from the mobster's friend, Nadhmi Auchi, to help pay for the deal so that Mrs. Obama could have some 'gardening space' which would, more or less, include a whole lot next door. A lot owned by the Rezkos. Yes, all sorts of graft, corruption and cash moving around between foreign financiers, local Syrian born mobsters and a Presidential candidate will make one wonder just what the hell is going on. All of this because the friendly financier wanted to be the 'Donald Trump' of Iraqi origin in Chi-town, via land deals featuring lots in upscale areas... or soon to be upscale, at least. And a few folks realized it wouldn't look good to have a Presidential candidate of the 'new and clean' variety get a bit dirtied knowing these sorts of folks, so better to just forget it all, hmmm?

Apparently lots of folks want you to not even think about names like Rezko and Auchi because you just may have a nerve tingling on that letter one. The reason is that Nadhmi Auchi tends to have a *lot* of connections out there, due to his past, which starts with Saddam Hussein and continues on to this day getting to meet Bashar Al-Assad, President of Syria via his ties to the British parliament, Anglo-Arab organization. His main claim to infamy... no, wait a second... he has no *single* infamous claim that stands out above the rest. So it is best to start at the beginning and this article from The Observer on 06 APR 2003 (Source: waybackmachine) gives us the quick synopsis of that early life:

In a series of astonishing new developments in a story first broken by this newspaper two years ago, a fresh Observer investigation has discovered that Auchi:

· Was tried alongside Saddam Hussein for his involvement in a conspiracy to assassinate an Iraqi prime minister in Baghdad in the 1950s;

· Used money from military contracts in Iraq to establish a business and banking empire in Britain and Luxembourg; and

· Was employed to pay alleged bribes from Italian companies to win oil contracts in Iraq because of his close links to the regime.

The disclosures have already prompted opposition MPs to demand full details of Auchi's relationship with the Blair government.

Nadhmi Auchi's influence stretches to the highest levels of the British political establishment and he counts princes and presidents among his personal friends. The wealth of the Iraqi billionaire outstrips the Queen and Sir Richard Branson and has given him access to the rich and powerful from Crown Prince Abdullah of Jordan to Lord Sainsbury. He collects prominent former politicians from across Europe as directors of his companies.

Yes, quite the busy life! In the earlier article, that was updated on 16 NOV 2003 at The Observer in which Mr. Auchi responds to the original, we also see some of the other things that went on with Mr. Auchi including being conveniently out of Iraq when Saddam staged his final coup in 1979 and executed 66 Ba'ath party members, including Mr. Auchi's brother. Mr. Auchi would not only include lucrative arms deals via front companies in Panama, but also dealing with the Italian Mafia. This from the report:

In the mid-1980s he got to know Pierfrancesco Pacini Battaglia, a man whose role in directing money to politicians led Italians to call him 'the one below God'. Saddam Hussein had ordered the construction of a pipeline from Iraq to Saudi Arabia. Battaglia and Auchi secured the contract for a Franco-Italian consortium. In a statement to New York lawyers Battaglia alleged he knew how. 'To acquire the contract it was necessary, as is usual, especially in Middle Eastern countries, to pay commission to characters close to the Iraqi government... In this case, the international intermediary who dealt with this matter was the Iraqi, Nadhmi Auchi.' Auchi has denied any wrong-doing.

The scandals unearthed by the 'Clean Hands' investigating magistrates destroyed a generation of corrupt Italian politicians. But they didn't affect Auchi. He carried on receiving the compliments of Labour, Tory and Liberal Democrat leaders, a tasteful water colour from Lord Sainsbury and sober advice from the presiding officer of the Scottish Parliament.

For those of you who remember the days when Italy seemed to go through a government a year, this was part of the investigation causing the turmoil. So that gets one up to the late 1980's... but Mr. Auchi would continue to be busy, so busy that he would get caught up in a few scandals as seen in this Institute for Ethics and Economic Policy at Fordham University cache of article summaries, from 2003:

LONDON: FRANCE DEMANDS EXTRADITION OF ARRESTED IRAQI BILLIONAIRE FRIEND OF UK POLITICIANS- Nadhmi Auchi the Iraqi billionaire with controversial links to Saddam Hussein's regime was arrested in London this week on a French extradition warrant after two years under British protection. Auchi whose Business Empire is worth more than Pounds 1bn, is expected to appear corruption trial involving the giant oil firm TotalFinaElf. The trial, expected to start next month, will involve testimony about Mr Auchi's alleged role in channeling a pounds 28m commission from the French oil company to buy an oil refinery from its Kuwaiti owners. British politicians linked to Auchi included former Tory chancellor Norman Lamont, former Tory health minister Gerry Malone and former Conservative Home Office minister, Tom Sackville, who resigned from a board of one of the banks Mr Auchi bought into, BCN of Germany. Scotland Yard is quoted as saying Auchi is bailed to appear at a London magistrates Court on April 8, 2003. His business empire is also involved in pounds 27m lawsuit by the National Health Service, which claims one of Auchies pharmaceuticals firms, is one of those that colluded to overcharge the NHS for the drug warfarin. (The Guardian 02 Apr 2003 summary by Davis Joseph Weddi).

He would go on to be convicted of the charges under TotalFinaElf and get 15 months suspended sentence for it. At the 10th International Anti-Corruption Conference Jean-Francois Medard presented a paper on the relationship between Elf, Angola and individuals at the head of the banking concerns involved, like Nadhmi Auchi (and for a not officially published work you can't quote from, it is excellent). The resultant method used to ensure that funds, arms, oil and company assets would not be easily traced is what is termed 'a nebula of networks' and I commonly refer to as person-to-person trust-based networks. As many have heard about jobs 'it is not what you know, but who you know' the exact, same thing goes on for illegal transactions of arms, equipment and money laundering. It is a question of who you know and who they trust who can help lead to getting whatever needs to be done, accomplished. This includes not only the direct p2p network, but also trusted organizations and the individuals in them, so that things like Masonic Lodges (quite the societal networking group for European business and mafioso) in which the establishment, itself, represents a node on the p2p network.

It is this network that would include individuals like Pierre Falcone, Etienne Leandri, Charles Pasqua, Marc Rich, Bill & Hillary Clinton, Nadhmi Auchi and organizations like Elf, the corrupt Menatep Bank of Russia (used by the Abromovich organization) and the Bank of New York system compromised by the Berlin couple and Semion Mogilevich. By exchanging Angolan debt and cash from other parts of the system, the entire affair was able to arrange for arms to be shipped illegal to Jonas Savimbi in Angola. That entire deal, involving so many multiple level 'cut-outs' in the banking structure (between BNP and the corrupt BoNY system), off-shore banks and money transfers (mostly to paper front companies) plus the high level of individuals and organizations ensured that no one would be able to properly figure the whole thing out. Just to be sure, President Clinton pardoned Marc Rich due to his high level of involvement in that and with the Russian Mafia.

Yes a busy 1990's for Nadhmi Auchi that would see, beyond this, beyond his overcharging for medications in the UK and generally making money hand over fist, he would also be involved with the other TotalFinaElf scandal: Oil For Food. This would become Saddam Hussein's main method of money laundering and moving funds outside the oversight of the UN because the UN, quite plainly, lacked the ability to conduct oversight on the entire affair. It says a lot when Saddam was able to tell the UN to use BNP-Paribas which just happens to have Nadhmi Auchi as its largest shareholder. One of the recent sidelights of BNP-Paribas is its takeover of a previous bank used to support Saddam Hussein's regime: Banca Nazionale del Lavoro (BNL). Actually he may have been involved in that, but, as Kenneth Timmerman points out in a 01 NOV 1996 document (Source: gulfweb) it may have had so many high level individuals on both sides of the political aisle involved, including Bill and Hillary Clinton, that the Dept. of Justice let those things that might actually still be prosecutable slide under the Reagan, Bush and Clinton administrations.

What was apparent, however, is that the system that Saddam had been setting up since the 1960's and 1970's to supply Iraq and launder its funds had demonstrated its capability. In the Middle East Review of International Affairs Journal of DEC 2000, Amatzia Baram looks at how that system operated on a p2p level and was utilized to undermine OFF and ensure that there would be a supply of arms and munitions for the Iraqi regime, plus funds available for enticing French, German and Russian companies into pressuring their governments to remove the sanctions. On 13 APR 2003 the Times Online (UK) would publish the background on how the system set up by Said al-Mahdi for Saddam worked in the west.

Like the work seen in TotalFinaElf and its 'nebula', the al-Mahdi system would feature numerous offshore companies and accounts in Liechtenstein, Switzerland, Panama, Bahamas and elsewhere. The account also links those to the French firms Dassault and Thomson-CSF, along with Russian arms manufacturers that continued to sell to Iraq during the sanctions. Other firms included in this web are Dumynta, Radistal and Technoservice International (Vaduz). The funding web, itself, would go much farther, however, and the reporting of Lucy Komisar on 02 JUN 2004 would show the connections between Saddam Hussein's al-Mahdi system and the Taqwa banking system used by al Qaeda:

The Banca del Gottardo in Lugano, Switzerland, moved al-Qaida money via the Al Taqwa bank, a shell bank that operated through correspondent accounts at the Gottardo branch in Nassau. It also handled payments for the Saddam money network. The bank’s spokesman wrote, “Please be advised that we do not intend to make any comments or discuss any issues with you regarding the article you proposed in your e-mail.”

Banque Paribas, headquartered in Paris, with a significant portion of shares owned by Saddam’s cousin Nadhmi Auchi, moved money for the Al-Mahdi network in the 1980s and was the bank chosen to handle the Iraqi oil-for-food payments. In fact, Iraq insisted that Paribas handle the oil-for-food escrow account.

A corporate document for Al Taqwa Trade, Property and Industry Co. Ltd. of Liechtenstein — an al-Qaida network shell company also shut down by the United States — lists Banque Paribas, Lugano, where it had accounts. (Paribas in 2000 merged with another French bank to create BNP Paribas, with Auchi continuing as one of the largest shareholders.)

This puts Nadhmi Auchi's role in the banking system front and center, having BNP (and then BNP Paribas) serve as the transit bank for funds shifting from the al Qaeda banks of Al Taqwa and for the corrupt Al-Mahdi banks for Saddam Hussein. Saddam had sent his half-brother, Barzan Ibrahim Hasan Al-Tikriti, to Switzerland in 1968 (yes, you read that correctly) to scope out the lay of the financial land as he knew that Iraq would need a method to quietly and untraceably move funds for arms, munitions and other needs, so that Western institutions would have trouble tracking them. She then points to Said Rahim Hussein Al-Mahdi and Nadhmi Auchi as the key operatives sent in after that to establish ties with Said's father-in-law, who had ties to the Muslim Brotherhood in Egypt, and who was already working for Barzan in Switzerland. Nadhmi Auchi's role was to establish multiple offshore companies and accounting systems, and would see the construction of a web of companies that were approximately one sheet of paper deep. Even more fun is that Banca del Gottardo is the subsidiary of the collapsed 'Vatican Bank', which had collapsed due to fraud via offshore companies. Al-Mahdi himself, however, would not resist temptation to skim funds and was executed in 1986 by beheading in Iraq.

Marc Rich, who had been indicted for tax evasion to the tune of $48 million dollars and illegally trading in Iranian oil after the revolution there, was *also* a part of this network. The Kroll report would detail the links between Marc Rich and Iranian banking sources and the ability to use those in shifting funds through the al-Mahdi and Al Taqwa systems. Before the 'Clean Hands' investigation in Italy, a previous Italian report had detailed the following:

After Roger Watson in 1987 became Saddam’s financial consultant, he also became an adviser to Auchi’s International Company of Banking and Financial Participations (CIPAF). According to official Italian documents, Auchi used Panama to launder kickbacks for two contracts for the Iraqi military. An Italian parliamentary report in 1987 said that one of them, Dowal, set up by Watson, was used to collect $23 million in hidden commissions on Baghdad’s purchase of warships manufactured by the Italian shipyard, Cantieri Navali Riuniti.

This sophisticated system of bribes, kickbacks, overcharges, offshore banks and companies would exist *before* the OFF scandal broke and *before* the Bank of New York penetration a bit less 6 years later by the Red Mafia. Nadhmi Auchi was no stranger to large scale financial fraud by the time OFF rolled around, to say the least, and had his own network clearly set up when the Red Mafia added its capability into as seen from the Angolagate material above. For a time the largest criminal and underground network for financial transactions and illegal purchases spanned from the Bank of New York (done by the Ivankov gang with help of Semion Mogilevich), trading in the largest industrial money laundering scheme seen in Trans World Commodities run by the Chernoy brothers and with the most complex schema of paper companies ever seen (or unseen) done by Simon Reuben, shift funds via BNP Paribas system to and from Iraq (my look at this part of the Red Mafia is here), Iran and al Qaeda, and include the burgeoning natural gas empire being shifted over to Dmitri Firtash in Ukraine (my look at DF Group is here). This banking and funds transfer system literally spanned the globe, reaching all the way to bank affiliates in China and Japan, to Australia, and across Africa and South America all the way to San Francisco and Vancouver, BC. While BCCI may have been a forerunner of this, it is dwarfed by orders of magnitude by this combined system and the complexity of it remains so opaque that multiple individuals running it remain not only free but uncharged with *anything* because no one in securities and banking investigation can figure it out. Or, as Jules Kroll points out, no one wants to figure it out.

To get an idea of how the Al Taqwa system worked there is the testimony of Steve Emerson before the House Committee on Financial Services Subcommittee on Oversight and Investigations, looking at this problem of terrorist funding, on 12 FEB 2002. He goes through the informal p2p ethnic systems like the Hawala system (my previous article on that and the Black Market Peso Exchange system is here) and then goes on to the more formalized Al Taqwa banking system:

Al-Taqwa was founded by the Muslim Brotherhood in 1988 in the Bahamas and later in 1991 in Algeria, as the beginning of —establishing a world bank for fundamentalists“ aimed to compete with Western financial institutions.64 Al-Taqwa reportedly has other branches in Liechtenstein, Italy, Malta, and Panama with its headquarters in Switzerland. As a world bank for fundamentalists, al-Taqwa was open to money laundering with a number of terrorist organizations, most notably al-Qaeda and, in the past, Hamas.

Al-Taqwa enabled al-Qaeda‘s financial network to obscure its paper trail by transferring money from one al-Taqwa branch to another. French Intelligence officials claim that by 1999, the bank was channeling funds for Osama Bin Laden.65 A Swiss investigation that started in 2000 revealed that al-Taqwa transferred funds for Bin Laden from Kuwait and the United Arab Emirates to al-Taqwa‘s affiliates in Malta and then on to Switzerland and the Bahamas.

He then goes on to describe how institutions obscure their past via name changes, shifting of connections and other means so as to remove those prior connections from current institutions. Then by utilizing the paper companies and institutions offshore, the money trail becomes harder and harder to trace. After that he looks at HAMAS' Al-Aqsa Bank, Beit al-Mal, and its working with Citibank via Joint Ventures. Finally he examines the purely p2p courier system, for securely moving documents and cash via trusted routes and individuals outside of the banking system.

It is *that* system that was added on to the Al-Mahdi system of Saddam Hussein. As Lucy Komisar reports on 15 MAR 2002, this Al-Taqwa system was going on to the knowledge of the FBI for 4 years and it was only 9/11 that drove them to actually start looking at shutting it down.

Now to catch up on *another* scandal of Nadhmi Auchi, and that is the Clearstream scandal. Clearstream is, or was, the trusted financial transaction system for Europe to exchange currencies during financial moves overseas. This system, in theory, had its own safeguards to ensure that each financial transaction was from a reputable source, covering a reputable company with assured funds. Unfortunately it didn't work out so well and was compromised by the Bank of New York system and was then utilized by the likes of Auchi for shifting OFF funds through it via less than reputable banks and companies. This was part of the reason he was prosecuted by France on the Elf deal, as TotalFinaElf was also involved in the oil shipment end of Oil For Food.

Auchi's contacts via Angolagate and OFF would lead in two directions during the end of the BoNY phase of the system. The two cover almost the same timeframe but two distinctly different areas: 1) Yukos and the entire financial problems and scandals around the Russian oil giant, and, 2) Orascom and the cell phone scandal in post-invasion Iraq as Auchi flexed his financial and personal relationships in Iraq to land that deal. Going by size, then, is Yukos, which was part of the great 'oil bonanza' period in post-Soviet Russia that saw investors trying to throw money at anything with an oil well attached to it or a funding source with it. BNP Paribas would invest in Tyumen Oil (Source: Global Finance JUN 2002, via findarticles), Russian Standard Bank (Source: Global Finance SEP 2004, via findarticles) and $10 billion into Gazprom as part of the Yukos deal (Source: The Independent (UK) 30 DEC 2004, via findarticles). As Yukos failed under investigation for fraudulent deals, the various backers would start lining up for their share of it, and that would include BNP-Paribas.

On 01 NOV 2003 Lucy Komisar would start to look at the French raid of the offices of Menatep bank, the bank behind so much of the Red Mafia and Russian Oligarchs, and lists the transactions and major front companies utilized by Menatep in its financial fraud system. In just a bit over a year the entire arrangement had come apart, and the shaky finances underlying Yukos crumbled, as described by Kommersant on14 DEC 2004. A few days later the NYT on 18 DEC 2004 described the syndicate of banks unwilling to back bad money with good as the following:

A Deutsche Bank spokeswoman in London, Joanna McCulloth, declined to comment. But the syndicate of banks - which included Deutsche, J. P. Morgan, ABN Amro, BNP Paribas, Calyon and Dresdner Kleinwort Benson - will not be lending money to Gazprom in the next 10 business days or risk defying the judge in Houston.

Gazprom "strongly believes the decision was unfair and the filing of a bankruptcy proceeding by Yukos in the U.S. was an attempt to circumvent Russian law," said Nikolai Krylov, a partner at the Winston & Strawn law firm, which is representing Gazprom. "Their main assets were in Russia."

In one of the delightful turn-arounds of East-West relations, the Yukos representative in the US owning a single house in Houston was able to file for bankruptcy of the Russian oil giant in the US! No wonder the banks were upset... BNP Paribas, having been burned by Yukos and unable to get its money out of it also would pull out of its deal with Standard Bank. They would also try a lawsuit in the UK, but that would not work out, either, and so the thing slowly dragged on with no one wanting to declare Yukos fully dead, but not alive, either. By 21 MAR 2007 the very same syndicate of banks would try to back Rosneft's bid for Yukos, or what remained of it, but that wouldn't work out. This is one case where 'writing off the loan' just might be the best idea, but at $10 billion, I can see why they want their share of the remains.

This then takes us to the smaller part of things with Orascom, and Naguib Sawiris. Mr. Sawiris is an Egyptian who is the head of Orascom, and brought in a new IT director in 2004 to help out with the Iraq contract, but is also on the lookout to expand his cellphone business to Italy, which is pretty natural as head of one of the largest private equity groups in the region. This expansion would also see opportunity in Hong Kong and by moving into that market, Orascom would become one of the 10 largest telecom companies on the planet. That said, going into Italy it almost is a given that you will get corruption charges laid against you, as happened with Mr. Sawiris this year.

It is that Auchi backed deal in Iraq that, however, keeps coming up in the news, even once the contract was let in 2003. One of the major requirements was that anyone looking to provide cellphone service had to have actual backing inside Iraq. Also, there would be three contracts let for the North, Central and South of Iraq, so no one service would get the entire deal. Thus when Orascom backed by Mr. Auchi arrived the cry of 'cronyism' went up (Source: Atwola 09 NOV 2003, NY Daily News 10 NOV 2003) which would lead to investigations delaying the contracts (Source: Globalsecurity 14 NOV 2003). By 16 NOV 2003 the Guardian's Nick Cohen would write about The Politics of Sleaze and then apologize for a few parts once Mr. Auchi complained in 2007. By 26 NOV 2003 the Financial Times was looking at how a swift cellphone process had become entirely bogged down due to the cronyism charges. They, too, would apologize to Mr. Auchi about getting some facts wrong. In DEC 2003 the African and Middle Eastern Telecom Newsletter was reporting that there were accusations of vote rigging in who would get the cellphone contracts. As would the Baltimore Sun.

On 22 JUN 2004 Defense Tech would report the military was going to cancel the cellphone contracts because Orascom was on the verge of bankruptcy. And on 01 AUG 2004 the Times Online would publish (cache here) a report on some of the problems of OFF, BNP Paribas, and Orascom, and here is what the view taken by Mr. Auchi on Orascom was:

However, last November the businessman was fined £1.4m and received a 15-month suspended sentence in France for receiving illegal commissions from Elf, the oil firm.

He has extensive hotel, banking, construction and aviation interests in the Middle East. Another company in which he has a significant stake, Orascom, won a contract to provide a mobile phone network in Iraq after the war. But American officials now allege that the firm paid bribes of more than $10m to secure this deal.

Auchi says he is a passive investor in the firm, had nothing to do with the mobile phone contract and is unaware of any wrongdoing.

Yes, just a 'passive investor', so don't blame him for any problems in his home country! I am sure he had *nothing* to do with finding 'local representatives' or investors! A UN report in DEC 04 would be a bit more prosaic noting that Orascom had over-promised and under-delivered on service, quality and quantity of units. By 20 FEB 2005 The Age of Australia would report on the corruption involved with the Orascom deal and even that the late Yasser Arafat had been an *investor* in it. By 25 APR 2007 PM Maliki would be demanding payment of $250 million for the licenses to operate in Iraq from each of the three companies involved, as part of an extended deal. Orascom would finally have enough of this and sell its Iraqi unit to a Kuwaiti firm called Iraqna.

What did catch my eye during this, however, was a Newsmax article cache at Freerepublic of 24 NOV 2005 that looked at Mr. Auchi, post-war bribes, and the companies involved with Orascom:

Another major supplier of equipment for the Iraqi cellular system is French-based Alcatel. The French communications company has already been linked to BNP Paribas. Alcatel profited from U.S. and Iraqi money supplied to rebuild the war-torn country.

"The winners in the Iraqi cellular license tender were Saddam's most senior financiers, their Egyptian and Iraqi supporters, the bank BNP Paribas, European cellular corporations - particularly Alcatel and Chinese telecom interests such as Huawei," states the May 2004 Defense Department report.

"If the French had provided a couple of divisions to take Baghdad they could not have gotten more," concluded John Shaw with disgust.

Now that is not a name that I really expected to see in Iraq, again, as the article points out the Chinese company in question had supplied a fiber optic air defense comm system to Saddam pre-war. So a bit of looking into things and, sure enough, on 24 SEP 2004 the People's Daily Online announces that Huawei is getting backed by BNP Paribas for putting in a network in Algeria. And Nigeria. This also brings up the problem of the Huawei deal to try and buy 3COM which is *also* being backed by BNP Paribas. And that brings up a connection to another Presidential candidate in this, that I had previously written about on this exact, same, topic: Mitt Romney.

You see Mitt Romney is the head of the Bain Capital group of companies and they have been working with Huawei ever since Huawei took a bit of Cisco technology and needed some backing to strongarm their way into the long distance router/services market. This has raised alarm bells all over the place as Huawei is seen as an organ of the People's Liberation Army of mainland China, and is more than willing to exploit any and all technical advances it can get its hands on. That deal is nearly dead, but their Joint Venture continues on. Amazing to think that there are now firm connections by Nadhmi Auchi to Barack Obama, both the Clintons (via Marc Rich) and now to Mitt Romney (via Huawei).

This, then, brings us to the next connection to make and that is going back to Russia again. Here the name is familiar to me, and I've been doing some side research on it and, well, lets just take a look at the article via Miningweb 03 JUL 2007:

The more insiders like Goldman and Gilbertson leave Rusal disgruntled, the more evidence that could be sought from them to indicate what, until now, the insiders have been reluctant to concede that they have even discussed - what is Deripaska's ongoing relationship with Cherney, and why doesn't he pay him off? This question has become especially sharp for US citizens working for Deripaska, since it was revealed that sometime between July and October of last year, the US Government decided that Deripaska's undertakings to it lack the veracity to warrant his retaining his entry visa. US citizens with potentially culpable knowledge of Deripaska's business practices in Tajikistan, Nigeria, and Guinea, for example, include Peter Clateman, Rusal's general counsel, and the new coordinator of the legal side of the IPO. Under the US Foreign Corrupt Practices Act, Clateman is liable to answer the allegations lodged in ongoing or decided court cases filed in the US and UK, regarding payments to foreign officials. US bankers and banks, through which Rusal's cash to and from Tajikistan and Nigeria, has flowed, appreciate they may be in a similar position.

It is noteworthy that the banks reported to be in line for Rusal's IPO mandate - JP Morgan, Morgan Stanley, Goldman Sachs, Credit Suisse, UBS, and Deutsche Bank - don't include a bank from the large syndicates which have loaned money to Rusal over the past six years, since its formation. In June, Rusal announced a $2 billion secured fund-raising by ABN AMRO, Barclays Capital, BNP Paribas, Calyon, Citi, ING, Natexis and Societe Generale. Why is there no overlap? Why aren't the banks which know Rusal best also participating in the IPO?

One reason is that the banks which have been lending cash to Rusal longest also have in place the most elaborate methods to secure repayment of aluminium loans, in the event of default. Thus, they know how Rusal's aluminium trading schemes work; why the metal changes title as it crosses the Russian frontier; and how title, metal and money move between intermediary traders, final users, and Rusal's profit centres.

Knowing the confidential secrets of Rusal's trading schemes - also the subject of a successful lawsuit against Rusal by the Reuben brothers of London - creates for the lending banks a knowledge of transaction risk, cashflow and taxation risk, which these banks have sworn to keep secret. They would be in a more exposed position towards unsecured share- buyers, a position they may not want.

Yes, BNP Paribas involved with Oleg Deripaska! Yes, I've written about him, too. He has been working hard to get a visa to get into the US, but the FBI has been shutting down that effort... but he had hired someone unexpected to lobby for him: Sen. Bob Dole. And he has worked just a bit more to spend some time with the final person to be connected to him via a meeting with Sen. John McCain.

There you have it, the billionaire once removed from all the major Presidential candidates: Nadhmi Auchi.

Who knew that Presidential politics would turn out to be so fun?


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Unknown said...

Romney, remember, left Bain completely, I believe, when he decided to run for the Presidency.This was not accurately reported when this business with 3COM occurred and reported.He was long gone from Bain by then.

A Jacksonian said...

Mundus - Romney did leave Bain in a leadership role, but not an ownership one. The EDGAR/SEC postings make clear who makes that determination, which is the owner of the fund itself.

I do understand what you are saying and went through that looking at Huawei and my problems post with Mitt Romney.

Anonymous said...

I'll have to spend more time here. Your attention to detail is rare, and refreshing. Thanks for the excellent work!

A Jacksonian said...

ytba - My thanks! On a bit of a slow-down recently due to personal events, but I do try to ensure that research backs my pieces.