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Saturday, May 19, 2007

Oil for Food Scandal

The Oil-for-Food Programme was established to allow Iraq to sell oil in exchange for food, medicine and other vital supplies. It did not take long however for the Iraqi government to abuse the programme by demanding kickbacks from companies. Several investigations were launched and voluminous reports written.

One of the names that cropped up in the final report of the Independant Inquiry Committee into The United Nations Oil-For-Food Programme was the Malaysian Prime Ministed Abdullah Ahmad Badawi. Studying Chapter Two of the report, Malaysia was the fourth highest purchaser of oil under Phase IX of the programme (circa 2000 and above). This amounted to a figure of US$500 million or RM1.8 billion.

The report names Mastek Sdn Bhd as one of the companies that paid bribes to Iraqi officials amounting to US$10 million. The Prime Minister publicly denied any involvement in the scandal. He only recommended several people to participate in the Oil-for-Food Programme in his capacity as (then) Deputy Prime Minister. Malaysiakini was threatened by government officials for reporting on Abdullah Badawi's involvement.

The current Foreign Minister Syed Hamid issued a statement saying that the Prime Minister had nothing to gain from obtaining oil in Iraq. The Iraq Survey Group that prepared the report concluded that a person in the programme could profit by US$0.65 per barrel of oil obtained.

Returning to Mastek Sdn Bhd, it is listed as a saw timber company. Mastek Sdn Bhd was at that time a dormant company which was revived by three persons, namely:

  1. Noor Asiah Dato' Mahmood (Abdullah Badawi's sister-in-law)
  2. Faek Ahmad Shareef (Noor Asiah's ex-husband)
  3. Jaya Sudhir (businessman)

After it's revival it became a crude oil company, participating in Phase VII to Phase IX of the Oil-for-Food Programme. Currently Mastek Sdn Bhd is listed as a computer software develpoment company.

Prior to Phase IX, Mastek Sdn Bhd received roughly 7.5 million barrels of oil. During Phase IX however, Mastek Sdn Bhd's oil allocation rose to 39.5 million barrels. This coincided with the time when Abdullah Badawi cemented his position as the Deputy Prime Minister, after the sacking of Anwar Ibrahim. In fact, this was the single largest allocation of oil during the entire Oil-for-Food Programme.

The report specifically stated that Iraqi officials gave such a large allocation to Faek Ahmad because of his relationship to Abdullah Badawi. In written documents, Iraqi officials referred to Faek Ahmad as "Mr. Faek Ahmad Shareef/for the benefit of Abdullah". According to the definition of corruption as defined by the Anti-Corruption Agency, translated as below:

“Any officer of the civil service using his/her position or post in the service to obtain bribes/benefits regarding any decision made by the person or making a decision regarding any matter, in which he/her, his/her family members, friends or partners have a stake in the matter, whether direct or indirect.”

Abdullah Badawi's role in the scandal skirts dangerously close to the definition of corruption. Besides Mastek Sdn Bhd, another Malaysian company implicated in the report is Tradeyear Sdn Bhd. Listed as it's non-contractual beneficiaries are Faek Ahamd as well as a certain "Mr. Abdullah Badawi".

Tradeyear Sdn Bhd was allocated 9.2 million barrels of oil, after paying surcharges (aka bribes) of US$116,000. 9.2 million barrels of oil translates to a profit of US$6 million. Looks like a certain "Mr. Abdullah Badawi" is laughing all the way to the bank.

A simple search of the report turns out another two Malaysian companies that implicated in kickbacks, Jawala Corp Sdn Bhd of Dato Majid Khan (US$1 million) and Petma Oil of Dato Paduka L.M.N Affendi (US$110,000). To it's credit, Petronas was charged with surcharges but refused to pay.

As far back as June 2006, Teresa Kok (MP for Seputeh) had raised the issue in Parliament. Now it is May 2007 and no action has been taken against the companies mentioned nor has any satisfactory explanation been given. It's no wonder that Parliament leaks. The report can be found here.