Thursday, March 14, 2013

Iraq’s Oil-for-food Corruption Case Dismissed by the US Judge

A US judge on Wednesday (NZT Thursday) dismissed Iraq’s lawsuit blaming the dozens of companies of conspiring with the regime of Saddam Hussein to frustrate the United Nations’ oil-for-food program, and depriving Iraqis of approximately US$10 billion of necessary aid. Sidney Stein, the US District Judge in Manhattan said that the Iraqi government could not improve from the damages and other remedies under an anti-racketeering law because most of the wrongful conduct took place in foreign countries. He also stated that Iraq did fail to allege the companies’ conduct was a major reason for the injury and that laws governing sovereign nations did not let the present government escape their responsibility for Hussein’s abuses. He wrote that the court refuses Iraq’s view that it may sidestep responsibility because the conduct was not legal or the actors held power illegitimately. More than 90 firms, subsidiaries and affiliates were named as defendants in the 2008 lawsuit over the US$ 64.2 billion oil-for-food program, which ran from 1996 to 2003. Amongst them were French bank BNP Paribas SA, which administered a UN escrow account for the program; Swiss engineering company ABB Ltd; Dutch chemicals company Akzo Nobel NV; US oil company Chevron Corp; German automaker Daimler AG; British drugmaker GlaxoSmithKline Plc, and German electronics company Siemens AG. A lawyer representing BNP Paribas, Robert Bennett said that it is clearly the total right decision. He said he is extremely satisfied. James Gillespie, another lawyer, representing ABB, said Stein followed the arguments in the defendants’ papers very directly, and in our view properly applied the law. A lawyer representing Iraq, Christian Siebott did not immediately respond to requests for comment. SURCHARGES AND KICKBACKS The UN program let Iraq sell out oil to finance the purchase of medicine, food and other goods for citizens hurt by global trade sanctions. Many of the present government’s allegations had been drawn from a scathing October of 2005 UN report by a panel led by previous US Federal Reserve Chairman, Paul Volcker. According to the report, Iraq had sold US$64.2 billion of oil to 248 companies under the oil-for-food program, while 3614 companies sold US$34.5 billion of humanitarian goods to Iraq. Oil surcharges were paid in connection with the contracts of 139 companies, and humanitarian kickbacks in connection with the contracts of 2253 companies, the report said. RACKETEERING ALLEGED In its lawsuit, Iraq said that the regime of former President Saddam Hussein defrauded the program by selling out oil at below-market prices in exchange for the kickbacks, and paying too much for food and drugs in exchange for side payments. It told that the defendants’ engagement deprived the citizens of Iraq of necessary supplies that should have been paid from the escrow account. While noting the agreement of the parties, that Hussein had been responsible for the alleged injustices, Stein refuses the effort of Iraq to hold the corporate defendants liable under the federal Racketeer Influenced and Corrupt Organizations Act (RICO). It was said by the judge that the alleged racketeering took place outside the United States, even though the United Nations is headquartered in the city, New York, and that applying RICO to such extraterritorial action would not be honest. Stein also rejected the effort made by Iraq for recovering under the Foreign Corrupt Practices Act, saying that federal law does not afford a private right of action.

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