IT’S ABOUT THE...
Sightings from The Catbird Seat
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March 31, 2010
President Obama expands offshore drilling
By CAROL E. LEE, Politico
President Barack Obama launched an ambitious plan on Wednesday to lift a decades-long moratorium on offshore oil drilling along the East Coast from Delaware to Florida, in the Gulf of Mexico and Alaska.
“This is not a decision that I’ve made lightly,” he said in remarks at Andrews Air Force Base in Maryland. “But the bottom line is this: given our energy needs, in order to sustain economic growth and produce jobs and keep our businesses competitive, we are going to need to harness traditional sources of fuel, even as we ramp up production of new sources of renewable, homegrown energy.”
Obama’s decision is closely tied politically to the fate of the climate change bill jointly sponsored by Sens. Lindsey Graham (R-S.C.), John Kerry (D-Mass.), and Joe Lieberman (I-Conn.) And while it could win the president support from conservative Democrats and Republicans – Graham has said he would not support a bill that “doesn’t have offshore drilling in a meaningful way” – it is also likely to rile part of Obama’s Democratic base, particularly environmentalists.
In urging Congress to pass comprehensive energy and climate legislation, Obama attempted to bridge the political divide by tying offshore drilling to the nation’s security and stressing that it’s one piece of a larger energy plan.
“There will be those who strongly disagree with this decision, including those who say we should not open any new areas to drilling,” Obama acknowledged. “But what I want to emphasize is that this announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy. And the only way this transition will succeed is if it strengthens our economy in the short term and long term.”
“To fail to recognize this reality,” he concluded, “would be a mistake.”
Obama is proposing the first new offshore oil and gas sales in the Atlantic in two decades. The decision modifies a 20-year-old ban that limited new drilling, confining most to the seas off the Gulf of Mexico. The government will continue lease sales in the Central and Western Gulf of Mexico....
April 4, 2010
Pickens: Drilling isn't the answer
The Texas oilman says Obama's plan to lift bans won't provide America energy independence.
By Andrew Maykuth, Inquirer Staff Writer
DALLAS - T. Boone Pickens, the famous Texas oilman, billionaire investor and energy evangelist, listened the other day to President Obama's plan to expand offshore oil and natural-gas drilling. He was not particularly impressed.
"It was kind of disappointing," Pickens said Thursday in the office of BP Capital L.P., the hedge fund at the center of his empire.
He's fine with offshore drilling. But he said that there were no substantial Atlantic oil reserves where Obama lifted a ban on drilling, and that untapped oil in Alaska would provide only a fraction of the nation's supplies. Neither would aim the country where Pickens said it needs to go - energy independence from America's "enemies" in OPEC.
The 82-year-old businessman and philanthropist has a plan, of course: the Pickens Plan, his relentless, self-funded crusade to displace foreign oil with domestic wind farms and natural gas - though wind has become less economical in the recession, and natural gas has become more prominent because of discoveries such as the Marcellus Shale in Pennsylvania.
"This is our chance," Pickens said. "I think it's almost divine intervention that we had all this gas show up at this time in the deal."
Yes, yes, yes: His motives are not entirely altruistic - he has a dog in this hunt. He's an energy investor and chairman emeritus of Clean Energy Fuels Corp., formerly Pickens Fuel Corp., which owns and operates fueling stations for natural-gas vehicles.
But Pickens said there was more to his campaign than financial interest.
"If I was trying to make money, I wouldn't spend $62 million going on there, and a helluva lot of time - I put 629 hours on a plane in 2009," Pickens said about his campaign. "So I think there's no question about my patriotism and sincerity about trying to get us on our own resource."
Pickens said he was inspired to act because every president since Richard Nixon has promised to make America energy-independent, yet oil imports have increased from 24 percent of the nation's supply in 1970 to nearly 70 percent now. The news media failed to hold the presidents accountable, he said.
So Pickens launched his crusade two years ago. He has spent 184 days on the road, visited 37 states and 82 cities, and bought ads to appeal to sympathizers to sign his petition and support the cause. More than 1.6 million have joined the Pickens Plan Army....
July 12, 2008
Chomsky: Bush & Cheney Always Saw Iraq as a Sweetheart Oil Deal
By Noam Chomsky, Khaleej Times Online
The deal just taking shape between Iraq's Oil Ministry and four Western oil companies raises critical questions about the nature of the U.S. invasion and occupation of Iraq -- questions that should certainly be addressed by presidential candidates and seriously discussed in the United States, and of course in occupied Iraq, where it appears that the population has little if any role in determining the future of its country.
Negotiations are under way for Exxon Mobil, Shell, Total and BP -- the original partners decades ago in the Iraq Petroleum Company, now joined by Chevron and other smaller oil companies -- to renew the oil concession they lost to nationalization during the years when the oil producers took over their own resources. The no-bid contracts, apparently written by the oil corporations with the help of U.S. officials, prevailed over offers from more than 40 other companies, including companies in China, India and Russia.
"There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract," Andrew E. Kramer wrote in the New York Times.
Kramer's reference to "suspicion" is an understatement. Furthermore, it is highly likely that the military occupation has taken the initiative in restoring the hated Iraq Petroleum Company, which, as Seamus Milne writes in the U.K. Guardian, was imposed under British rule to "dine off Iraq's wealth in a famously exploitative deal."
Later reports speak of delays in the bidding. Much is happening in secrecy, and it would be no surprise if new scandals emerge.
The demand could hardly be more intense. Iraq contains perhaps the second-largest oil reserves in the world, which are, furthermore, very cheap to extract: no permafrost or tar sands or deep-sea drilling. For U.S. planners, it is imperative that Iraq remain under U.S. control, to the extent possible, as an obedient client state that will also house major U.S. military bases, right at the heart of the world's major energy reserves.
That these were the primary goals of the invasion was always clear enough through the haze of successive pretexts: weapons of mass destruction, Saddam Hussein's links with al Qaeda, democracy promotion and the war against terrorism, which, as predicted, sharply increased as a result of the invasion.
Last November, the guiding concerns were made explicit when President Bush and Iraq's prime minister, Nouri al-Maliki, signed a "Declaration of Principles," ignoring the U.S. Congress, the Iraqi parliament and the populations of the two countries.
The declaration left open the possibility of an indefinite long-term U.S. military presence in Iraq that would presumably include the huge air bases now being built around the country, and the "embassy" in Baghdad, a city within a city, unlike any embassy in the world. These are not being constructed to be abandoned.
The declaration also had a remarkably brazen statement about exploiting the resources of Iraq. It said that the economy of Iraq -- which means its oil resources -- must be open to foreign investment, "especially American investments." That comes close to a pronouncement that we invaded you so that we can control your country and have privileged access to your resources.
The seriousness of this commitment was underscored in January, when Bush issued a "signing statement" declaring that he would reject any congressional legislation that restricted funding "to establish any military installation or base for the purpose of providing for the permanent stationing of United States Armed Forces in Iraq" or "to exercise United States control of the oil resources of Iraq."
Extensive resort to "signing statements" to expand executive power is yet another Bush innovation, condemned by the American Bar Association as "contrary to the rule of law and our constitutional separation of powers." To no avail.
Not surprisingly, the declaration aroused immediate objections in Iraq, among others from Iraqi unions, which survive even under the harsh anti-labor laws that Hussein instituted and the occupation preserves.
In Washington propaganda, the spoiler to U.S. domination in Iraq is Iran. U.S. problems in Iraq are blamed on Iran. U.S. Secretary of State Condoleezza Rice sees a simple solution: "Foreign forces" and "foreign arms" should be withdrawn from Iraq -- Iran's, not ours.
The confrontation over Iran's nuclear program heightens the tensions. The Bush administration's "regime change" policy toward Iran comes with ominous threats of force (there Bush is joined by both U.S. presidential candidates). The policy also is reported to include terrorism within Iran -- again legitimate, for the world rulers. A majority of the American people favor diplomacy and oppose the use of force. But public opinion is largely irrelevant to policy formation, not just in this case.
An irony is that Iraq is turning into a U.S.-Iranian condominium. The Maliki government is the sector of Iraqi society most supported by Iran. The so-called Iraqi army -- just another militia -- is largely based on the Badr brigade, which was trained in Iran and fought on the Iranian side during the Iran-Iraq War.
Nir Rosen, one of the most astute and knowledgeable correspondents in the region, observes that the main target of the U.S.-Maliki military operations, Moktada al-Sadr, is disliked by Iran as well: He's independent and has popular support, and is therefore dangerous.
Iran "clearly supported Prime Minister Maliki and the Iraqi government against what they described as 'illegal armed groups' (of Moktada's Mahdi army) in the recent conflict in Basra," Rosen writes, "which is not surprising given that their main proxy in Iraq, the Supreme Iraqi Islamic Council, dominates the Iraqi state and is Maliki's main backer."
"There is no proxy war in Iraq," Rosen concludes, "because the U.S. and Iran share the same proxy."
Tehran is presumably pleased to see the United States institute and sustain a government in Iraq that's receptive to its influence. For the Iraqi people, however, that government continues to be a disaster, very likely with worse to come.
In Foreign Affairs, Steven Simon points out that current U.S. counterinsurgency strategy is "stoking the three forces that have traditionally threatened the stability of Middle Eastern states: tribalism, warlordism and sectarianism." The outcome might be "a strong, centralized state ruled by a military junta that would resemble" Saddam Hussein's regime.
If Washington achieves its goals, then its actions are justified. Reactions are quite different when Vladimir Putin succeeds in pacifying Chechnya, to an extent well beyond what Gen. David Petraeus has achieved in Iraq. But that is them, and this is the United States. Criteria are therefore entirely different.
In the United States, the Democrats are silenced now because of the supposed success of the U.S. military surge in Iraq. Their silence reflects the fact that there are no principled criticisms of the war. In this way of regarding the world, if you're achieving your goals, the war and occupation are justified. The sweetheart oil deals come with the territory.
In fact, the whole invasion is a war crime -- indeed the supreme international crime, differing from other war crimes in that it encompasses all the evil that follows, in the terms of the Nuremberg judgment. This is among the topics that can't be discussed, in the presidential campaign or elsewhere. Why are we in Iraq? What do we owe Iraqis for destroying their country? The majority of the American people favor U.S. withdrawal from Iraq. Do their voices matter?
Noam Chomsky's writings on linguistics and politics have just been collected in The Essential Chomsky, edited by Anthony Arnove, from the New Press. Chomsky is an emeritus professor of linguistics and philosophy at the Massachusetts Institute of Technology in Cambridge, Mass.
© 2008 Khaleej Times Online All rights reserved.
View this story online at: http://www.alternet.org/story/91123/
June 20, 2008
New offshore drilling not a quick fix, analysts say
Start-up delays, global market pressures cited
By Lisa Wangsness, Boston Globe Staff
President Bush and Republican presidential candidate John McCain have called this week for lifting a federal moratorium on offshore oil exploration, arguing that taking action to increase domestic oil supplies will help drive down prices.
But analysts say that renewed offshore drilling would have little impact on gas prices anytime soon.
It would take at least a decade for oil companies to obtain permits, procure equipment, and do the exploration necessary to get the oil out of the ground, most industry analysts say. And even then, they add, the amount of new oil produced would probably be too small to significantly affect world oil prices.
Some analysts point out that the wells the United States now depends on are being depleted, and that new exploration could at least help offset that decline in supply from existing wells.
Expanded offshore exploration also carries with it some environmental risks, from oil spills to destruction of habitat to vibrations that damage sea life, which environmentalists say could have catastrophic consequences that far outweigh any potential benefit from further offshore drilling. But other analysts say that improved technology means the risks are much smaller than a generation ago. In this view, a sensible compromise approach would be to make decisions on potential drilling sites on a case-by-case basis.
Americans' anger over $4-a-gallon gasoline apparently has prompted greater public support for renewed offshore drilling. A Gallup poll last month found that 57 percent of respondents favored such drilling while 41 percent were opposed. Democratic candidate Barack Obama supports the moratorium.
The debate over expanded oil exploration has always been polarizing - recall the ferocity of the fight over whether to drill in the Arctic National Wildlife Refuge - but some analysts are calling for a more moderate tone.
“Clearly, drilling is not the solution to our oil dependence, but any serious energy proposal has to be comprehensive and include more oil supply and production off the outer continental shelf," said Robbie Diamond, president and founder of Securing America's Future Energy, a nonpartisan group committed to reducing the nation's dependence on oil.
In the short term, oil prices could go down slightly if Congress lifts its moratorium on new offshore drilling, which has been in place since 1981, because the market would factor in the prospect of additional oil supplies later on. But the actual oil would not be produced for 10 to 12 years.
And in any case, increased American production from offshore drilling would not necessarily mean lower prices for American consumers because oil is a global commodity whose price is set by global supply and demand.
"Suppose the US produced all its oil domestically," said Robert Kaufmann, director of the Center for Energy and Environmental Studies at Boston University. "Do you think oil companies would sell oil to US consumers for one cent less than they could get from French consumers? No. Where oil comes from has no effect on price."
And there is not likely to be enough new American oil to make much of a difference, Kaufmann and others said. About 86 billion barrels of additional oil may lie offshore, according to the US government's Energy Information Administration. Of that amount, about 18 billion barrels are subject to the moratorium. Much of the rest lies in areas that are too expensive to exploit or that oil companies have not yet tapped for technical reasons, fueling the industry's desire for fresh territory.
"We're picking over bones," said Cathy Landry, a spokeswoman for the American Petroleum Institute. "If we had new acres, we could hypothetically make a big find. We need oil and natural gas in the future."
But in the best-case scenario, Kaufmann said, the United States could only produce an additional two to four million barrels of offshore oil a day - not enough to shift the global supply-demand balance in a world market that now consumes about 86 million barrels a day and is growing fast. About a quarter of that consumption now occurs in the United States.
Kaufmann said that by the time any additional offshore oil got to market, much of it would merely offset losses from the depletion of current oil fields. Meanwhile, oil producing nations can easily keep supply constant by limiting capacity if they know the United States is adding more.
"There's nothing on the supply side that we can really do to disrupt OPEC's ability to influence prices," he said.
Environmentalists argue that the pollution caused by drilling could compromise fragile ecosystems for very little economic benefit when the United States should be focusing on conservation - the cheapest barrel of oil, they like to say, is the one we don't have to buy - and developing better renewable energy sources.
They point to a number of environmental risks. Drilling fluids contain toxic chemicals. If oil is found, one of the waste products is briny water that also contains toxic chemicals. The noise from drilling could harm some sea animals, such as whales. And the oil would also have to be transported by pipeline or ship, creating its own environmental impacts. Then there is a risk of spills.
"Today we think offshore oil drilling could be the final straw in the unfolding collapse of New England fisheries," said Priscilla Brooks, director of the Ocean Conservation Project at the Conservation Law Foundation, which successfully fought a proposed drilling lease on Georges Bank in the late 1970s.
But Nancy Rabalais, executive director of the Louisiana Universities Marine Consortium and a scientist who has studied the effects of offshore oil production in the Gulf of Mexico, said that she believes expanding offshore oil exploration would not pose terrible risks to the environment because the effects are relatively contained, and the industry is well-regulated.
Henry Lee, who teaches energy policy at Harvard University's John F. Kennedy School of Government, said he believes there is a middle ground. There is no panacea, he said, for solving America's energy problems, so it may be best to lift the prohibitions on offshore drilling, and carefully consider the oil potential and possible environmental costs in different locations on a case-by-case basis.
"Each side, I think, is not being reasonable about this," he said. "I want to do the analysis and figure out what the implications are."
New offshore drilling not a quick fix, analysts say
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March 31, 2002
Simon has millions in oil stocks as California fights offshore drilling
DON THOMPSON, Associated Press
SACRAMENTO ---- As California battles the Bush administration over plans to drill for oil off the state's coast, Republican candidate for governor Bill Simon has millions of dollars invested in companies that would benefit if drilling is allowed.
If drilling starts, the companies in which Simon owns stock could gain drilling contracts, ship the oil pumped from beneath the sea and then sell that oil. As governor, Simon could end California's legal efforts to stop drilling.
A Los Angeles millionaire and former oil company vice president, Simon has said repeatedly he opposes additional drilling off California's coast, but has defended his vast investments.
"Just because you're against offshore drilling in certain areas doesn't mean you're against offshore drilling worldwide," Simon said in January.
But his extensive ties to offshore oil interests don't comfort drilling opponents.
"To have someone heavily invested in the oil industry overseeing California's coast is a little scary," said Carl Zichella, the Sierra Club's regional director. "If he waffles (on offshore drilling) at all, it will be to his political detriment."
The Bush administration wants a federal appeals court to allow drilling off San Luis Obispo, Santa Barbara and Ventura counties. Democratic Gov. Gray Davis used the courts to block attempts to build the first new oil platforms off California's coast since 1994, rejected settlement offers and has sworn he will take the case to the U.S. Supreme Court if necessary.
Simon has at least tens of thousands of dollars invested in companies with direct interests in the dispute, financial disclosure documents show, and owns millions more in companies that drill, sell and ship oil by tankers and pipelines.
For example, he owns up to $100,000 of SeaRiver Maritime Financial Holdings Inc., a subsidiary of Exxon Mobil Corp., which is one of the companies holding the 36 leases at issue in the federal drilling case. It also owns currently producing leases. A SeaRiver subsidiary, formerly Exxon Shipping Co., operated the Exxon Valdez that ran aground and spilled oil off Alaska in 1989.
Through family trusts, Simon owns up to $100,000 of stock in USX-Marathon, an Exxon Mobil partner, and Occidental Petroleum, a Shell partner. The trusts own between $4,000 and $20,000 worth of stock in Royal Dutch Petroleum/Shell Oil Co. and ChevronTexaco; both hold California offshore leases.
While Simon owns some oil stock, campaign strategist Jeff Flint said, Davis has accepted hundreds of thousands of dollars in campaign contributions from companies including ChevronTexaco and Occidental, including $176,000 last year alone.
Simon also owns hundreds of thousands of dollars of stock in Seacor Smit Inc., a Houston-based drilling and shipping company, and its former subsidiary, Chiles Offshore Inc., which specializes in offshore drilling.
U.S. Securities and Exchange Commission documents indicate that one-third of Chiles Offshore's business comes from Shell. Seacor Smit, meanwhile, established what its chairman called a "toehold" on the California coast last year when it bought a West Coast supply vessel.
SEC documents and the Simon campaign indicate that South Street Capital LLC, an investment firm controlled by the Simon family, sold about $4 million in Chiles stock last year. Simon declared no income from the stock sale in the financial disclosure report he filed with the Fair Political Practices Commission, but reported owning a maximum of $1 million invested by South Street in the company.
Campaign finance reports and Simon's disclosure forms show some offshore oil money may have gone to his campaign. He sold hundreds of thousands worth of energy stocks last year as he poured more than $4 million of his own money into his campaign. Meanwhile, Simon's siblings, who share in family trust profits, have given him at least $750,000.
Last year, Simon sold as much as $100,000 worth of stock in Diamond Offshore Drilling of Houston, which engaged in three drilling projects off California's coast in the 1980s....
His father, William E. Simon, was President Nixon's "energy czar" through the Arab oil embargo of the early 1970s before becoming treasury secretary. In 1988, Simon and his brother joined their father in William E. Simon & Sons, an investment firm with substantial holdings in the energy industry.
Corporate records from Florida, Louisiana and Mississippi show Simon was a vice president and director through the mid-1990s in Paramount Oil Co. of Baton Rouge, La., and Shore Oil Co. of Houston, oil and exploration companies that had extensive holdings in the Gulf of Mexico region.
Paramount merged into Shore, which later merged with a firm that eventually became 3TEC Energy. Simon sold up to $100,000 in 3TEC shares last year; family trusts own as much as $1 million in 3TEC stock.
Those companies drilled off the Gulf of Mexico coast, Flint said, so it's not "fair to tie Bill's investments" to California.
Oil, gas and other energy company executives have also donated thousands to Simon's campaign, state campaign finance records show.
They include $5,000 from Tesoro Petroleum, a Texas-based company active in offshore drilling, and $22,000 from people and firms connected to Alvin V. Shoemaker, former chairman of First Boston Corp. and a director of Shore Oil and Paramount. Occidental contributed $10,000.
Davis this month accused Simon of profiting from California's energy crisis through business dealings with El Paso Natural Gas, which regulators alleged helped drive up gas and electricity prices last summer.
A Simon family investment company owns between $10,000 and $100,000 in El Paso stock. Simon also sold as much as $100,000 worth of stock last year in 3TEC Energy Corp., 20 percent of which is owned by an investment arm of El Paso.
Simon is a major investor and former board member of Houston-based Hanover Compressor Co., which does business with companies such as El Paso and the bankrupt energy giant Enron.
Davis himself is defending his acceptance since 1996 of $119,500 in campaign funds from Enron.
Simon's charitable foundation also benefits from extensive oil and gas investments, primarily Hanover Compressor.
While Simon was a board member, Hampton joined Enron in a Venezuela-based partnership, SEC records show, before Enron's collapse. After Simon left the board, Hanover ran into Enron-style accounting problems this year over its involvement in the Hampton Roads gas project off the coast of Nigeria with California leaseholder Shell Oil Co.
Though the California Coastal Commission and the state attorney general also are parties to California's suit against the Bush administration, Simon if he became governor could use his legal and budgetary power to end the state's efforts.
"He could make it not just difficult ---- impossible" to continue, said Nathan Barankin, spokesman for Democratic Attorney General Bill Lockyer.
Eleven environmental groups have joined the state's suit, arguing that most Californians want to defend their world-famous coastline.
Simon agrees "there should not be any new exploration or drilling off the coast of California," Flint said. However, he said Simon has taken no position on what he would do with existing contracts such as are at stake in the California suit.
"He would have to take a look at it," Flint said.
For more, see: William Simon Says
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April 15, 2002
Oil companies note loophole
in gas price proposal
Pacific Business News (Honolulu) - by Prabha Natarajan
Oil companies say a legislative proposal to regulate gas prices doesn't address the 50 percent of Hawaii's gas stations that are company operated, since it doesn't specify any price cap for them and doesn't require dealers to pass on savings to drivers.
These factors could lead to a situation where wholesale prices are held down, but not necessarily retail gas prices, said Albert Chee, spokesman for Chevron Hawaii.
"This proposal doesn't ensure, require or regulate that dealers pass on savings to consumers," Chee said. "The proposal relies on dealers to pass on savings out of the goodness of their hearts."
Lawmakers are attempting to institute prices controls after a lawsuit by the state against the oil companies was settled out of court. The state settled its $2 billion lawsuit, filed in 1998 against Chevron, Texaco, Shell, Unocal and Tosco, for $20 million. In 1999, the state settled with Tesoro Hawaii and BHP Hawaii for $15 million.
Lawmakers who support price regulation argue it's in the interest of Hawaii's consumers to bring prices more in line with those charged on the mainland.
"I'm not a fan of regulation," said Rep. Ed Case, D-Manoa. "But we have no open market here. The state's antitrust lawsuit was not able to demonstrate it. The next step is to either wait for a market remedy that may lead us in the wrong direction, or go for regulation. Even if oil companies file a lawsuit against us, we have enough evidence to prevail."
Chevron will consider legal action if price controls are enacted, but hopes it doesn't come to that, Chee said.
"Most lawmakers agree; we don't want to rush to a conclusion. We don't want more lawsuits and, therefore, want to proceed with caution," Chee said. "We settled the lawsuit at 1 percent of the claim. That is a clear indication of nothing wrong going on here."
"Instead of acting hastily, we suggest they pause, take a look at all the information and determine what needs to be done," Chee added. "If measures are not given thorough examination, there could be unintended consequences of it."
Market forces should rule, said Faye Kurren, president of Tesoro Hawaii.
"We are a firm believer that the consumer is ultimate," Kurren said. "They are the ones who should decide, not government."
A group of bipartisan House representatives supported a measure to establish a wholesale gasoline price based on the average price of crude oil in four markets. The proposed price formula was introduced in a House bill at the beginning of session by Rep. Paul Whalen, R-N. and S. Kona-Ka`u, but it was not heard by the Senate.
The House later inserted the proposal in a Senate bill to keep the measure alive for discussion during conference committee.
The proposed price-setting formula in the bill calls for an average price per barrel of West Texas Intermediate, Alaska North Slope, Saudi Arabian Light and North Sea Brent crude oil, multiplied by 0.035 to arrive at the cost per gallon.
Whalen said he arrived at that number after speaking with mainland oil industry officials who look at the cost to produce oil and that the number is used within the industry to calculate the actual cost to produce a gallon of gas. Using this formula would reduce oil prices by at least 40 to 50 cents a gallon, Whalen said.
If the formula were applied to current rates of oil as reported in The Wall Street Journal on April 8, the wholesale price of gas comes to 89 cents a gallon....
Hosie, a San Francisco attorney, represented the state in its antitrust lawsuit, arguing oil companies reaped profits of 50 to 60 cents a gallon here, compared to 10 cents on the West Coast and 2 to 3 cents for the rest of nation....
Between 1988 and 1998, Chevron's average after-tax return on investment in Hawaii from dealer stations was 20.8 percent, compared to 1.9 percent in Los Angeles and 9.8 percent in San Francisco, according to the deposition.
"Without a doubt, for the past decade oil companies have made huge profits at the expense of Hawaii's consumers," said Rep. Kenneth Hiraki, D-Downtown-Ala Moana, House Consumer Protection and Commerce Committee chairman.
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THE SEVEN SISTERS
The Catbird Seat - Part II: The Nests
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The Seven Sisters - From Diplomacy by Deception:. . .
Other countries had felt the lash of the petroleum industry as well. Mexico is a classic case of petroleum companies foreign policy-making ability which transcended national boundaries and cost American consumers a huge fortune. Oil, it seemed, was the foundation of a new economic order, with undisputed power in the hands of a few people hardly known outside of the petroleum industry.
The “majors” have been referred to a number of times. This is shorthand for the major oil companies that form the most successful cartel in the history of commerce.
Exxon (called Esso in Europe), Shell, BP (British Petroleum), Gulf, Texaco, Mobile and Socol-Chevron. Together they form part of a major network of interlocking, interfacing banks, insurance companies and brokerage houses controlled by the Committee of 300, which are hardly known outside their circle.
The reality of the One World Government, or New World Order upper level government, brooks no interference from anyone, no matter who it might be — even powerful national governments — the rulers of nations great and small, corporations or private people. These supranational giants have expertise and accounting methods that have flummoxed the best brains in government, out of whose reach they remain.
Through diplomacy by deception it seems the majors were able to induce governments to parcel out oil concessions to them, no matter who opposed it. John D. Rockefeller would very much have approved this closed shop, run for the last 68 years by Exxon and Shell. It is evident from the vastness and the complexity of their operations ... that the petroleum industry is one of the most powerful components that make up the economic operations of the Committee of 300.
In secret, the Seven Sisters club has plotted wars and decided amongst themselves which governments must bow to their depredations. When trouble arises ... it is only a matter of calling upon the right air force, navy, intelligence service to solve the problem and get rid of the “nuisance.” . . .
The Seven Sisters became a government within a government . . .
If one would like to know American and British foreign policies for Saudi Arabia, Iran or Iraq, one need only study the policies of BP, Exxon, Gulf Oil and ARAMCO.
What is our policy in Angola? It is to protect Gulf Oil properties in that country, even though it means supporting an avowed Marxist. . . .
Is any other group so exalted, so favored with showers of tax concessions that run into billions of dollars per annum? I am often asked why it is that the American domestic petroleum industry, once so bustling and full of promise, went into a steep decline. The answer, in one word, is GREED.
For this reason, domestic production of oil had to be curtailed, in case the public should ever discover what was going on. This knowledge is much more difficult to obtain when dealing with foreign operations. What does the American public know about what goes on in the oil politics of Saudi Arabia? Even while making record profits, the petroleum industry demands and gets additional tax breaks, both open — and hidden — from public view.
Have the citizens of the United States benefitted from the huge profits made by Exxon, Texaco, Chevron and Mobile (before it was sold)? The answer is no, because most of the profit was made “up-stream” — that is, outside of the United States, which is where the profits were kept, while the U.S. consumer paid ever-rising prices for gas at the pumps. . . .
Rockefeller’s main area of concern became Saudi Arabia. The oil companies, by various stratagems, had entrenched themselves with King Ibn Saud. The king, worried that Israel would one day threaten his country and strengthen the Israeli lobby in Washington, needed something that would give him an edge. The State Department, at the urging of the Rockefellers, said it could only follow a pro-Saudi polity without upsetting Israel by using Exxon (ARAMCO) as a front. This information was given to the Senate Foreign Relations Committee. It was so sensitive that committee staffers were not even allowed to see it.
Rockefeller had in fact paid only a small fee, $500,000, to secure a major oil concession from Ibn Saud. After considerable diplomacy, a deception was worked out — a deception which cost the American taxpayers at least $50 million in its first year.
What came out of the discussions between Exxon and Ibn Saud is known as “the Golden Gimmick” in the inner sanctums of the Rockefeller board rooms. The American oil companies agreed to pay a subsidy to the Saudi ruler of not less than $50 million a year, based on the amount of Saudi oil pumped. The State Department would then allow the American companies to declare such subsidy payments as “foreign income tax,” which Rockefeller, for example, could deduct from Exxon’s U.S. taxes.
With production of cheap Saudi oil soaring, so did the subsidy payments soar. This is one of the greatest scams perpetrated upon the American public. The bottom line of the plan was that huge foreign aid payments were made annually to the Saudis under the guise of “subsidies.” When the Israeli government uncovered the scheme, it too, demanded “subsidies” which today amount to $13 billion per annum — all at the expense of the American taxpayers.
Since the American consumer actually helps pay for cheaper imported crude oil than domestic crude oil, shouldn’t we benefit from this arrangement through cheaper gasoline prices at the pumps? . . . No way. Apart from geopolitical considerations, “the majors” are also guilty of price fixing. The cheap Arab oil for instance, was fixed at the higher domestic crude oil price when imported into the United States by a subterfuge known as “phantom freight rates.”
According to hard evidence presented to the Multi-national Hearings in 1975, the major oil companies ... made 70 percent of their profits abroad, profits which could not be taxed at the time. With the bulk of their profits coming from “up stream,” the petroleum industry was not about to make a major investment in the domestic oil industry. As a consequence, the domestic oil industry began to decline. Why spend money on the exploration and exploitation of domestic oil when it was theirs for the asking in Saudi Arabia— at a cheaper price than the local product and at a far bigger profit? The unsuspecting American consumer was and is being shafted, without knowing it. . . .
The immorality of this gross deception is that, had the big oil companies ... not been so greedy, they could have produced domestic oil which would have made our gasoline prices the cheapest in the world. In my opinion, the manner in which this diplomatic deception was set up between the State Dept and Saudi Arabia, makes the State Dept a partner to a criminal enterprise. . . .
The policies of the petroleum companies cost the American taxpayer billions of dollars in additional taxation and billions of dollars in excess profits at the pumps. The petroleum industry, and, in particular, Exxon, has no fear of the U.S. government. Thanks to the control exercised by the permanent upper-level parallel secret government of the Council on Foreign Relations, Rockefeller is untouchable. That enabled ARAMCO to sell oil to the French Navy at $0.95 per barrel, while at the same time the U.S. Navy was charged $1.23 per barrel....
See in The Catbird Seat - Part I: Dick Cheney; George Bush; George W. Bush, Jr; John D. Rockefeller
June 7, 2008
Oil price soars as US woes mount
The price of oil has made a record jump to nearly $139 a barrel, amid reports it could reach $150 by July because of rising demand and political tension.
Crude in New York gained more than $10 - its biggest-ever one-day rise.
The spike in oil prices coincided with a dollar slump, plummeting share prices on Wall Street and US unemployment suffering its biggest rise in 20 years.
It also comes as energy officials from the world's biggest consuming nations meet in Japan to discuss fuel prices.
Officials and ministers from the Group of Eight key industrialised nations (G8), as well as China, India and South Korea, are meeting for two days in the northern city of Aomori, to plot a strategy to deal with volatility in oil, gas and coal markets.
June 16, 2008
Paulson, Darling Face `Stagflation'
Risk on Oil Price
By Simon Kennedy, Bloomberg
Finance ministers from the world's richest nations face another week of inflation headlines after signaling concern that the global economy risks a dose of stagflation as commodity prices soar.
Officials from the Group of Eight ended talks in Osaka, Japan, on June 14 by saying record fuel and food costs threaten to spur inflation. They also pose a ``serious challenge'' to growth, eclipsing the credit squeeze, the ministers said...
The G-8 officials didn't propose any new policies, apart from promising to take ``appropriate actions.'' They repeated their call of the past four years for producers to pump more crude and consumers to use it more efficiently...
The absence of central bankers meant there was no mention of currencies in their statement, although U.S. Treasury Secretary Henry Paulson backed a ``strong dollar.''
The ministers met after the price of oil doubled in a year to an unprecedented $139.12 a barrel on June 6. Costs of foods such as wheat and rice have set records this year....
``The predominant concern is the inflationary effect that oil in particular and also food prices are having,'' U.K. Chancellor of the Exchequer Alistair Darling said. Deputy German Finance Minister Thomas Mirow said oil's rise means ``an enormous withdrawal of purchasing power.''...
At the same time, the global expansion is faltering. The World Bank last week predicted growth of 2.7 percent this year, a percentage point less than in 2007. The G-8 officials said ``downside risks persist,'' citing declines in U.S. house prices and financial-market strains. Paulson said the cost of oil ``risks prolonging the U.S. economic downturn.''...
The G-8 ministers also indicated they are less worried that tight credit poses an obstacle to growth than they were when they met in April, noting conditions in financial markets have improved....
The officials disagreed on what's propelling oil and told the IMF to study the topic. Paulson and Darling blamed constrained supply and robust demand, rebuffing Italian Finance Minister Giulio Tremonti's argument that speculation is behind it.
Ministers were also split over whether the dollar's 30 percent decline in trade-weighted terms since 2002 explains the surge in commodity costs. Lagarde and Russia's Alexei Kudrin suggested investors are buying oil and food as a hedge against the weaker dollar. Paulson said oil's gain had outpaced his currency's dive....
January 25, 2008
Activists call on Vanguard Group
to divest $200M
Out of Africa
Philadelphia Business Journal - by Jeff Blumenthal Staff Writer
Jim Remsen, executive director of the Darfur Alert Coalition, believes investments in Sudan are funding genocide. (View)
While state and city governments are considering reducing their investments in companies that do business with the government of Sudan, the investment management industry has largely rejected activist calls for divestment.
Locally, Malvern-based Vanguard Group, which has roughly $200 million invested in a Chinese company known to do business with Sudan, said it is frequently asked by clients to divest from stocks for a variety of reasons -- from environmental and social issues to humanitarian and political concerns -- but it has declined, citing fiduciary duty.
"We think we should manage the funds to produce the best returns for the investors," Vanguard spokeswoman Rebecca Cohen said. "We do offer a social index fund, but beyond that we are not required to make a decision on social or political concerns."
Twenty-two states have adopted legislation to divest their public pensions, and Pennsylvania's legislature is considering a couple of bills (see story on page 30). At the end of last year President Bush signed into law the Sudan Accountability and Divestment Act, which protects states and investment firms from being sued by investors if they divest from companies with connections to the government of Sudan and also prohibits federal contracts with such companies.
Three of Vanguard's funds have investments in PetroChina, an oil company owned largely by the Chinese government which has been targeted by activists as the largest of four international oil companies doing business with the Sudanese government. The others are Sinopec of China, ONGC of India and Petronas of Malaysia.
Activists allege that the majority of oil revenue gained from these companies is used to fund the Sudanese government and militia's actions against non-Arab ethic groups in the Darfur region of the country, where it is estimated that as many as 400,000 people, mostly civilians, have been killed and roughly 2.5 million have fled to neighboring Chad.
Other local mutual fund companies touched by the issue are Oaks-based SEI Investments, which serves as the distributor for the iShares fund run by Barclays [Committee of 300], and Great Britain-based Aberdeen Asset Management, which has its U.S. headquarters in Center City. Both iShares and Aberdeen have significant investments in PetroChina. Several colleges, including the University of Pennsylvania, have divested.
Mutual fund companies are being targeted by divestment activists because they hold the retirement savings for millions of Americans. One of those people was Eric Cohen, who had his savings at Boston-based Fidelity Investments.
Now executive director of Investors Against Genocide in Lexington, Mass., he began to push the Massachusetts state government to divest from companies with Darfur connections in September 2006. He noticed Fidelity was the largest holder of PetroChina stock on the New York Stock Exchange.
"It raised the question of what happens with that money," he said. "It turns out that my family savings were invested in genocide."
Eric Cohen looked more broadly at the investment management industry and found that all of the major mutual fund companies were invested in PetroChina. He began engaging the companies, but found the industry's response disappointing.
"They have basically said it's their job to make money and not break laws and as long as they do that, they are not changing their position," he said.
Vanguard manages nearly $1.3 trillion in U.S. mutual fund assets, including more than $350 billion in retirement plans sponsored by employers....
Vanguard officials said they have not received many calls from clients about their connections to Darfur or wishing to move their investments to the social index fund -- which consists of investments based on social and humanitarian concerns -- or leave Vanguard all together.
"It really has been a handful proportionally," Rebecca Cohen said. "Especially when you consider how many investors we have."
For more, GO TO > > > Behind the Blinds at Fidelity Investments; The Great Nest Egg Robberies; Marsh & McLennan: The Marsh Birds; Vultures Caught in the Health Net; Vultures in The Vanguard
September 16, 2007
Alan Greenspan claims Iraq
war was really for oil
Graham Paterson, The Sunday Times
Greenspan on the 'irresponsible' Bush
AMERICA’s elder statesman of finance, Alan Greenspan, has shaken the White House by declaring that the prime motive for the war in Iraq was oil.
In his long-awaited memoir, to be published tomorrow, Greenspan, a Republican whose 18-year tenure as head of the US Federal Reserve was widely admired, will also deliver a stinging critique of President George W Bush’s economic policies.
However, it is his view on the motive for the 2003 Iraq invasion that is likely to provoke the most controversy. “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil,” he says.
Greenspan, 81, is understood to believe that Saddam Hussein posed a threat to the security of oil supplies in the Middle East.
Britain and America have always insisted the war had nothing to do with oil. Bush said the aim was to disarm Iraq of weapons of mass destruction and end Saddam’s support for terrorism.
May 12, 2007
Billions in Oil Missing in Iraq,
U.S. Study Says
By AMES GLANZ, New York Times
Between 100,000 and 300,000 barrels a day of Iraq’s declared oil production over the past four years is unaccounted for and could have been siphoned off through corruption or smuggling, according to a draft American government report.
Using an average of $50 a barrel, the report said the discrepancy was valued at $5 million to $15 million daily.
The report does not give a final conclusion on what happened to the missing fraction of the roughly two million barrels pumped by Iraq each day, but the findings are sure to reinforce longstanding suspicions that smugglers, insurgents and corrupt officials control significant parts of the country’s oil industry.
The report also covered alternative explanations for the billions of dollars worth of discrepancies, including the possibility that Iraq has been consistently overstating its oil production.
Iraq and the State Department, which reports the numbers, have been under relentless pressure to show tangible progress in Iraq by raising production levels, which have languished well below the United States goal of three million barrels a day. Virtually the entire economy of Iraq is dependent on oil revenues.
The draft report, expected to be released within the next week, was prepared by the United States Government Accountability Office with the help of government energy analysts, and was provided to The New York Times by a separate government office that received a review copy. The accountability office declined to provide a copy or to discuss the draft.
Paul Anderson, a spokesman for the office, said only that “we don’t discuss draft reports.”
But a State Department official who works on energy issues said that there were several possible explanations for the discrepancy, including the loss of oil through sabotage of pipelines and inaccurate reporting of production in southern Iraq, where engineers may not properly account for water that is pumped along with oil in the fields there.
“It could also be theft,” the official said, with suspicion falling primarily on Shiite militias in the south. “Crude oil is not as lucrative in the region as refined products, but we’re not ruling that out either.”...
Several analysts outside the government agreed that such a large discrepancy indicated that there was either a major smuggling operation in place or that Iraq was incapable to generate accurate production figures.
“That’s a staggering amount of oil to lose every month,” said Philip K. Verleger Jr., an independent economist and oil expert. “But given everything else that’s been written about Iraq, it’s not a surprise.”
Mr. Verleger added that if the oil was being smuggled out of Iraq, there would be a ready market for it, particularly in smaller refineries not controlled by large Western companies in places like China, the Caribbean and even small European countries.
The report also contains the most comprehensive assessment yet of the billions of dollars the United States and Iraq spent on rebuilding the oil and electricity infrastructure, which is falling further and further behind its performance goals.
Adding together both civilian and military financing, the report concludes that the United States has spent $5.1 billion of the $7.4 billion in American taxpayer money set aside to rebuild the Iraqi electricity and oil sectors. The United States has also spent $3.8 billion of Iraqi money on those sectors, the report says.
Despite those enormous expenditures, the performance is far short of official goals, and in some cases seems to be declining further. The average output of Iraq’s national electricity grid in 2006, for example, was 4,300 megawatts, about equal to its value before the 2003 invasion. By February of this year, the figure had fallen still further, to 3,800 megawatts, the report says.
All of those figures are far short of the longstanding American goal for Iraq: 6,000 megawatts. Even more dispiriting for Iraqis, by February the grid provided power for an average of only 5.1 hours a day in Baghdad and 8.6 hours nationwide. Both of those figures are also down from last year.
The story is similar for the oil sector, where — even if the Iraqi numbers are correct — neither exports nor production have met American goals and have also declined since last year, the report says.
American reconstruction officials have continued to promote what they describe as successes in the rebuilding program, while saying that problems with security have prevented the program from achieving all of its goals. But federal oversight officials have frequently reported that the program has also suffered from inadequate oversight, poor contracting practices, graft, ineffective management and disastrous initial planning.
The discrepancies in the Iraqi oil figures are broadly reminiscent of the ones that turned up when some of the same energy department experts examined Iraq’s oil infrastructure in the wake of the oil-for-food scandals of the Saddam Hussein era. In a United Nations-sponsored program that was supposed to trade Iraq’s oil for food, Mr. Hussein and other smugglers were handsomely profiting from the program, investigations determined.
In reports to Congress before the 2003 invasion that ousted Mr. Hussein, the accountability office, using techniques similar to those called into play in its most recent report, determined that in early 2002, for example, 325,000 to 480,000 barrels of crude oil a day were being smuggled out of Iraq, the majority through a pipeline to Syria.
But substantial amounts also left Iraq through Jordan and Turkey, and by ship in the Persian Gulf, routes that could also be available today, said Robert Ebel, a senior adviser at the Center for Strategic and International Studies in Washington.
“Any number of adjacent countries would be glad to have it if they could make some money,” Mr. Ebel said.
Mr. Ebel said the lack of modern metering equipment, or measuring devices, at Iraq’s wellheads made it especially difficult to track smuggling there. The State Department official agreed that there were no meters at the wellheads, but said that Iraq’s Oil Ministry had signed a contract with Shell Oil to study the possibility of putting in the meters.
The official added that an American-financed project to install meters on Iraq’s main oil platform in the Persian Gulf was scheduled to be completed this month.
As sizable as a discrepancy of as much as 300,000 barrels a day would be in most parts of the world, some analysts said it could be expected in a country with such a long, ingrained history of corruption.
“It would be surprising if it was not the case,” said John Pike, director of GlobalSecurity.org, which closely follows security and economic issues in Iraq. He added, “How could the oil sector be the exception?”
April 7, 2007
Occidental CEO got more than
$400 million in 2006
CHICAGO (Reuters) - Occidental Petroleum Corp.'s chairman and chief executive took in more than $400 million in compensation last year, the company said in a filing, one of the biggest single-year payouts in U.S. corporate history.
The largest part of Ray Irani's 2006 payout was $270.2 million from the exercise of options awarded from 1997 to 2006, representing more than 7.1 million shares, according to the company's annual proxy statement, which was filed with the Securities and Exchange Commission in March.
Irani also received $93.3 million in stock and dividends from a deferred stock program when the company closed the plan in October due to increases in liability and expenses for the program, the company said.
Irani's salary in 2006 was $1.3 million and his cash bonus was $1.4 million, according to the filing. But stock and option awards and other benefits lifted his 2006 compensation to $55.6 million, the proxy said.
In the proxy, the company said that from December 1990 -- when Irani succeeded Armand Hammer as chief executive -- through 2005, the company's stock rose to about $40 a share from $9 and its total shareholder return was 699 percent.
"When you look at this, this is solid pay for performance," said Richard Kline, an Occidental spokesman. "It serves the best interest of the corporation and the best interest of the shareholder."
Occidental shares closed on Thursday at $49.95 on the New York Stock Exchange.
According to the Wall Street Journal, only a few CEOs have ever made more money in one year. In 2001, Oracle Corp. CEO Larry Ellison received $706 million from exercising stock options and in 1998, former Walt Disney Co. CEO Michael Eisner received $570 million, according to the newspaper.
December 15, 2006
Iraqi Unions Attack
Institute for Public Accuracy
United Press International is reporting: "Five Iraqi trade union federations have condemned federal oil law negotiations for being too corporation-friendly."
The wire service quoted Hasan Jum'a, president of the Federation of Oil Unions, as saying: "This law has a lot of problems. It was prepared without consulting Iraqi experts, Iraqi civil society or trade unions."
Dow Jones reports: "Iraqi trade unionists criticized the major role for foreign companies in the draft law, which specifies that up to two-thirds of Iraq's known reserves would be developed by multinationals, under contracts lasting 15 to 20 years. The negotiations for a new Iraq hydrocarbon law continued this week with the circulation of a draft law that recommends the government sign production sharing agreements and other service and buyback contracts."
Muttitt met with Iraqi union leaders while in Amman this week and has just returned to London. He is lead researcher at the British group Platform and primary author of the report "Crude Designs: The Rip-Off of Iraq's Oil Wealth," which outlines the structure of production sharing agreements.
Muttitt said today: "The opposition by Iraq's powerful trade unions will dismay the U.S. government, which is keen to see the law in place by the end of the year. Since the summer, U.S. officials have been calling for an oil law to encourage foreign investment in Iraq's oil -- a call reiterated by the Baker-Hamilton Iraq Study Group in its report last week. ...
"In a joint statement, the trade unions rejected 'the handing of control over oil to foreign companies, whose aim is to make big profits at the expense of the Iraqi people, and to rob the national wealth, according to long-term, unfair contracts that undermine the sovereignty of the state and the dignity of the Iraqi people.' The statement added that this was a 'red line' they would not allow to be crossed."
SAMEER DOSSANI, firstname.lastname@example.org, http://50years.org Director of 50 Years Is Enough,
Dossani said today: "In announcing its agenda for the privatization of Iraqi oil, the Baker-Hamilton report leaves no doubts as to what the U.S. must achieve in order to call its mission successful. It is an agenda laid out by U.S. corporate interests, by what will benefit their bottom line in a world of shrinking oil reserves.
“By these terms, what President Bush and others are calling a U.S. victory would be a defeat for the Iraqi people who have struggled for decades to control their own fates, their own destinies and their own resources."
"The institutions that the report suggests should enforce these policies are the same institutions that are in charge of ensuring that corporate profits take priority over public need in the rest of the world, namely, the International Monetary Fund and the World Bank."
For background see "Iraq War and Oil," Institute for Public Accuracy news release, at: http://accuracy.org/newsrelease.php?articleId=1406
December 14, 2006
5 oil and gas companies
to pay royalties
By H. Josef Hebert, Associated Press Writer
WASHINGTON --Five oil and gas companies, including Shell, ConocoPhillips and BP, have agreed to pay royalties on future production under flawed drilling leases in the Gulf of Mexico, the government said Thursday.
The companies are among 59 energy producers that hold the leases at issue from 1998 and 1999. Because of a government mistake, the leaseholders have avoided royalty payments on oil and gas taken from federal waters. The leases omitted language requiring royalties when prices reached a certain level.
The agreements with the five companies are "a step in the right direction" and may lead others to find a way to rework the flawed leases, said the Interior Department's assistant secretary, Stephen Allred.
Some members of Congress have estimated that the royalty exemptions have cost the government $2 billion. Allred put the amount at "somewhat less than $900 million."
Congressional auditors have put the total government loss for past and potential future production under the leases as high as $10 billion.
The companies that reached agreement to begin paying royalties as of this past Oct. 1 are Shell Oil Co., BP PLC, ConocoPhillips Co., Marathon Oil Co. and Walter Oil & Gas Corp.
More than 1,040 of the leases were issued and about 570 are actively held by 59 companies, according to the Minerals Management Service, the agency that manages the leasing program. The companies that settled hold all or parts of 131 of the flawed leases.
"They're significant players," Allred told reporters.
He said other major leaseholders have refused to rework the deals and that some have refused even to discuss them.
Allred also acknowledged that the agreements Thursday deal only with royalties from future production and not oil and gas already taken.
"We do not believe that we have any ability to unilaterally change a contract," he said, explaining why the department is not seeking to recover royalties already lost from production.
The refusal of most of the companies to even discuss ways to correct the error in the 1998-99 leases has produced a political firestorm in Congress.
Both Democrats and Republicans have threatened to bar companies from future Gulf of Mexico drilling leases unless they agree to renegotiate the flawed leases.
Speaker-to-be Nancy Pelosi, D-Calif., said on Thursday that resolving the matter will be a priority in the House's first 100 legislative hours after Democrats take control in January.
Allred, however, said banning companies from future leases if they do not rework the flawed ones would lead to legal fights and significantly could reduce domestic oil and gas production.
"Our fear is that our program would shut down" if companies were banned from future lease sales, Allred said.
Reps. Henry Waxman, D-Calif., incoming chairman of the House Government Reform Committee, and GOP Rep. Tom Davis of Virginia, the current chairman, asked Attorney General Alberto Gonzales on Thursday to review the Interior Department's claim it cannot legally recover past royalty losses.
They cited a private law firm's analysis that argued the government has "legal recourse to immediately seek recovery of lost taxpayer revenue" from past production under the defective leases.
"It appears that the assertions by MMS that there are no available remedies may be incorrect," Waxman and Davis said.
December 7, 2006
Oil for Sale: Iraq Study Group
By Antonia Juhasz, AlterNet
In its heavily anticipated report released on Wednesday, the Iraq Study Group made at least four truly radical proposals.
The report calls for the United States to assist in privatizing Iraq's national oil industry, opening Iraq to private foreign oil and energy companies, providing direct technical assistance for the "drafting" of a new national oil law for Iraq, and assuring that all of Iraq's oil revenues accrue to the central government.
President Bush hired an employee from the U.S. consultancy firm Bearing Point Inc. over a year ago to advise the Iraq Oil Ministry on the drafting and passage of a new national oil law. As previously drafted, the law opens Iraq's nationalized oil sector to private foreign corporate investment, but stops short of full privatization. The ISG report, however, goes further, stating that "the United States should assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise."
In addition, the current Constitution of Iraq is ambiguous as to whether control over Iraq's oil should be shared among its regional provinces or held under the central government. The report specifically recommends the latter: "Oil revenues should accrue to the central government and be shared on the basis of population." If these proposals are followed, Iraq's national oil industry will be privatized and opened to foreign firms, and in control of all of Iraq's oil wealth.
The proposals should come as little surprise given that two authors of the report, James A. Baker III and Lawrence Eagleburger, have each spent much of their political and corporate careers in pursuit of greater access to Iraq's oil and wealth.
"Pragmatist" is the word most often used to describe Iraq Study Group co-chair James A. Baker III. It is equally appropriate for Lawrence Eagleburger. The term applies particularly well to each man's efforts to expand U.S. economic engagement with Saddam Hussein throughout the 1980s and early 1990s. Not only did their efforts enrich Hussein and U.S. corporations, particularly oil companies, it also served the interests of their own private firms.
On April 21,1990, a U.S. delegation was sent to Iraq to placate Saddam Hussein as his anti-American rhetoric and threats of a Kuwaiti invasion intensified. James A. Baker III, then President George H.W. Bush's secretary of state, personally sent a cable to the U.S embassy in Baghdad instructing the U.S. ambassador to meet with Hussein and to make clear that, "as concerned as we are about Iraq's chemical, nuclear, and missile programs, we are not in any sense preparing the way for preemptive military unilateral effort to eliminate these programs."*
Instead, Baker's interest was focused on trade, which he described as the "central factor in the U.S-Iraq relationship." From 1982, when Reagan removed Iraq from the list of countries supporting terrorism, until August 1990, when Iraq invaded Kuwait, Baker and Eagleburger worked with others in the Reagan and Bush administrations to aggressively and successfully expand this trade.
The efficacy of such a move may best be described in a memo written in 1988 by the Bush transition team arguing that the United States would have "to decide whether to treat Iraq as a distasteful dictatorship to be shunned where possible, or to recognize Iraq's present and potential power in the region and accord it relatively high priority. We strongly urge the latter view." Two reasons offered were Iraq's "vast oil reserves," which promised "a lucrative market for U.S. goods," and the fact that U.S. oil imports from Iraq were skyrocketing. Bush and Baker took the transition team's advice and ran with it.
In fact, from 1983 to 1989, annual trade between the United States and Iraq grew nearly sevenfold and was expected to double in 1990, before Iraq invaded Kuwait. In 1989, Iraq became the United States' second-largest trading partner in the Middle East: Iraq purchased $5.2 billion in U.S. exports, while the U.S. bought $5.5 billion in Iraqi petroleum. From 1987 to July 1990, U.S. imports of Iraqi oil increased from 80,000 to 1.1 million barrels per day.
Eagleburger and Baker had much to do with that skyrocketing trade. In December 1983, then undersecretary of state Eagleburger wrote the U.S. Export-Import Bank to personally urge it to begin extending loans to Iraq to "signal our belief in the future viability of the Iraqi economy and secure a U.S. foothold in a potentially large export market." He noted that Iraq "has plans well advanced for an additional 50 percent increase in its oil exports by the end of 1984." Ultimately, billions of loans would be made or backed by the U.S. government to the Iraqi dictator, money used by Hussein to purchase U.S. goods.
In 1984, Baker became treasury secretary, Reagan opened full diplomatic relations with Iraq, and Eagleburger became president of Henry Kissinger's corporate consultancy firm, Kissinger Associates.
Kissinger Associates participated in the U.S.-Iraq Business Forum through managing director Alan Stoga. The Forum was a trade association representing some 60 American companies, including Bechtel, Lockheed, Texaco, Exxon, Mobil, and Hunt Oil. The Iraqi ambassador to the United States told a Washington, D.C., audience in 1985, "Our people in Baghdad will give priority -- when there is a competition between two companies -- to the one that is a member of the Forum." Stoga appeared regularly at Forum events and traveled to Iraq on a Forum-sponsored trip in 1989 during which he met directly with Hussein. Many Kissinger clients were also members of the Forum and became recipients of contracts with Hussein.
In 1989, Eagleburger returned to the state department now under Secretary Baker. That same year, President Bush signed National Security Directive 26 stating, "We should pursue, and seek to facilitate, opportunities for U.S. firms to participate in the reconstruction of the Iraqi economy, particularly in the energy area."
The president then began discussions of a $1 billion loan guarantee for Iraq one week before Secretary Baker met with Tariq Aziz at the state department to seal the deal.
But once Hussein invaded Kuwait, all bets were off. Baker made a public plea for support of military action against Hussein, arguing, "The economic lifeline of the industrial world runs from the Gulf and we cannot permit a dictator such as this to sit astride that economic lifeline."
Baker had much to gain from increased access to Iraq's oil. According to author Robert Bryce, Baker and his immediate family's personal investments in the oil industry at the time of the first Gulf War included investments in Amoco, Exxon and Texaco. The family law firm, Baker Botts, has represented Texaco, Exxon, Halliburton and Conoco Phillips, among other companies, in some cases since 1914 and in many cases for decades. (Eagleburger is also connected to Halliburton, having only recently departed the company's board of directors). Baker is a longtime associate and now senior partner of Baker Botts, which this year, for the second year running, was recipient of "The International Who's Who of Business Lawyers Oil & Gas Law Firm of the Year Award," while the Middle East remains a central focus of the firm.
This past July, U.S. Energy Secretary Bodman announced in Baghdad that senior U.S. oil company executives would not enter Iraq without passage of the new law. Petroleum Economist magazine later reported that U.S. oil companies put passage of the oil law before security concerns as the deciding factor over their entry into Iraq. Put simply, the oil companies are trying to get what they were denied before the war or at anytime in modern Iraqi history: access to Iraq's oil under the ground.
They are also trying to get the best deal possible out of a war-ravaged and occupied nation. However, waiting for the law's passage and the need to guarantee security of U.S. firms once they get to work, may well be a key factor driving the one proposal by the Iraq Study Group that has received great media attention: extending the presence of U.S. troops in Iraq at least until 2008.
As the recommendations of the Iraq Study Group are more thoroughly considered, we should remain ever vigilant and wary of corporate war profiteers in pragmatist's clothing.
*All quotes are referenced in my book, "The Bush Agenda."
Antonia Juhasz is a visiting scholar at the Institute for Policy Studies, author of "The Bush Agenda: Invading the World, One Economy at a Time," and a contributing author, with John Perkins and others, of "A Game as Old as Empire: The Secret World of Economic Hit Men and the Web of Global Corruption." www.TheBushAgenda.net.
© 2006 Independent Media Institute. All rights reserved.
October 8, 2006
LETTERS TO THE EDITOR
What are real reasons for Bush's obstinacy?
Sixteen U.S. intelligence agencies revealed that the war is causing more Iraqis to hate America and fight against U.S. troops. Many retired military officers ( including generals ) report that we can't win the war with President Bush's leadership.
Journalist Bob Woodward, who unmasked the crimes of Richard Nixon, reports the Bush administration is covering up the fact that U.S. troops are being hit with 100 insurgent attacks daily. Now Bush says he wouldn't pull out even if only his wife, Laura, and his dog, Barney, were his only supporters. Is this democracy?
Remember when Bush's Secretary of Treasury Paul O'Neill revealed that Bush had plans to auction Iraqi oil fields six months before 9/11? If that auction took place, and if the U.S. withdraws, Bush would have to return huge sums of money for his failure to deliver the oil fields to his constituent oil corporations.
Could it be why Bush is adamant about staying the course, or is it the loss of a dozen permanent U.S. military bases bolstering American business control of the Mideast?
October 27, 2005
Report: U.N. oil-for-food fraud widespread
2,000 firms made $1.8 billion in illicit
payments to Iraq, investigation finds
UNITED NATIONS (AP) - About 2,200 companies in the U.N. oil-for-food program, including corporations in the United States, France, Germany and Russia, paid a total of $1.8 billion in kickbacks and illicit surcharges to Saddam Hussein’s government, a U.N.-backed investigation said in a report released Thursday.
The report from the committee probing the $64 billion* program said prominent politicians also made money from extensive manipulation of the U.N. oil-for-food program in Iraq.
The investigators reported that companies and individuals from 66 countries paid illegal kickbacks using a variety of ways, and those paying illegal oil surcharges came from, or were registered in, 40 countries.
There were two main types of manipulation: surcharges paid for humanitarian contracts for spare parts, trucks, medical equipment and other supplies; and kickbacks for oil contracts.
Daewoo, Siemens, Texas firms implicated
Among the companies that paid illegal surcharges were South Korea’s Daewoo International and Siemens SAS of France. On the oil side, contractors listed included Texas-based Bayoil and Coastal Corp., and Russia’s oil giants Gazprom and Lukoil.
Russian companies were contracted for approximately $19.3 billion in oil from Iraq, which amounted to about 30 percent of oil sales, by far the largest proportion among all participating countries.
Germany-based automaker DaimlerChrysler, meanwhile, appears to have paid just $7,000 on a contract worth $70,000. DaimlerChrysler said it was aware of the report but declined to comment because of an ongoing investigations by the Securities and Exchange Commission and the Justice Department.
In July, DaimlerChrysler said it had been asked for a statement and documents regarding its role in the oil-for-food program, according to documents filed with the Securities and Exchange Commission.
The report said, for example, that Brussels-based Volvo Construction Equipment paid $317,000 in extra fees to Iraq on a $6.4 million contract. Volvo Construction is part of Swedish-based Volvo Group, which referred all questions to Volvo Construction Equipment’s headquarters in Brussels. The group is separate from Volvo automobiles, which is owned by Ford.
Beatrice Cardon, a Volvo spokeswoman, said she was unaware the company was listed in the U.N. report, or what the alleged payments were for. “This is the first I hear about it,” she said.
Former French envoy accused
The report alleged that Jean-Bernard Merrimee, France’s former U.N. ambassador, received $165,725 in commissions from oil allocations awarded to him by the Iraqi regime. He is now under investigation in France.
Merrimee “began receiving oil allocations that would ultimately total approximately 6 million barrels from the government of Iraq,” the report said.
Other so-called “political beneficiaries” included British lawmaker George Galloway; Roberto Formigoni, the president of the Lombardi region in Italy, and the Rev. Jean-Marie Benjamin, a priest who once worked as an assistant to the Vatican secretary of state and became an activist for lifting Iraqi sanctions.
Vladimir Zhirinovsky, who heads Russia’s Liberal Democratic Party, received millions of barrels of oil he could turn around and sell for a profit, the report said. Iraqi Oil Ministry records show that 4.3 million barrels were allocated to Alexander Voloshin, who at the time was chief of staff in the administration of Russia’s president. Both Voloshin and Zhirinovsky have denied any wrongdoing.
Report criticizes Security Council
Thursday’s final report of the investigation led by former Federal Reserve chairman Paul Volcker strongly criticizes the U.N. Secretariat and Security Council for failing to monitor the program and allowing the emergence of front companies and international trading concerns prepared to make illegal payments.
In a letter to Secretary General Kofi Annan, the committee said its task had been to find mismanagement and evidence of corruption, and “unhappily, both were found and have been documented in great detail.”
It said responsibility should start with the U.N. Security Council, which is dominated by its five permanent members: Britain, China, France, Russia and the United States.
The program left too much initiative with Iraq,” the letter said. “It was, as one past member of the council put it, a compact with the devil, and the devil had means of manipulating the program to his ends.”
Once a sprawling operation
The oil-for-food program was one of the world’s largest humanitarian aid operations, running from 1996-2003.
It allowed Iraq to sell limited and then unlimited quantities of oil provided most of the money went to buy humanitarian goods. It was launched to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam’s 1990 invasion of Kuwait.
But Saddam, who could choose the buyers of Iraqi oil and the sellers of humanitarian goods, corrupted the program by awarding contracts to — and getting kickbacks from — favored buyers, mostly parties who supported his regime or opposed the sanctions.
Tracing the politicization of oil contracts, the report said Iraqi leaders in the late 1990s decided to deny American, British and Japanese companies allocations to purchase oil because of their countries’ opposition to lifting sanctions.
At the same time, it said, Iraq gave preferential treatment to France, Russia and China, which were perceived to be more favorable to lifting sanctions and were also permanent members of the Security Council.
Volcker’s previous report, released in September, said lax U.N. oversight allowed Saddam’s regime to pocket $1.8 billion in kickbacks and surcharges in the awarding of contracts during the program’s operation from 1997-2003.
According to the new findings, Iraq’s largest source of illicit income from the oil-for-food program was the more than $1.5 billion from kickbacks on humanitarian contracts.
Volcker’s Independent Inquiry Committee calculated that more than 2,200 companies worldwide paid kickbacks to Iraq in the form of “fees” for transporting goods to the interior of the country or “after-sales-service” fees, or both.
Kickbacks in detail
Tables accompanying the report give a detailed look at the value of each company’s contracts and the amount of money it paid in kickbacks.
According to the findings, the Banque Nationale de Paris S.A., known as BNP, which held the U.N. oil-for-food escrow account, had a dual role and did not disclose fully to the United Nations the firsthand knowledge it acquired about the financial relationships that fostered the payment of illegal surcharges.
The report chronicles Saddam’s manipulation of the program and examines in detail 23 companies that paid kickbacks on humanitarian contracts including Iraqi front companies, major food providers, major trading companies, and major industrial and manufacturing companies.
According to the findings, the program was just under 3 years old when the Iraqi regime began openly demanding illicit payments from its customers. The report said that while U.N. officials and the Security Council were informed, little action was taken.
The report is the fifth by Volcker and concludes a year-long, $34 million investigation that has faulted Annan, his deputy, Canada’s Louise Frechette, and the Security Council for tolerating corruption and doing little to stop Saddam’s manipulations.
The smuggling of Iraqi oil outside the program in violation of U.N. sanctions poured much more money — $11 billion* — into Saddam’s coffers in the same period, according to the report.
© 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
* Compare with the cost of the Iraq war.
For more, GO TO > > > First Hawaiian Bank: Conquered by the French in ‘98
November 17, 2004
French Bank Is a Focus of Oil Inquiry
Times By Judith Miller, New York Times
A House committee and an independent United Nations panel exploring fraud and abuse in the oil-for-food program are focusing on the role of BNP Paribas, a French bank that managed billions of dollars in Iraqi oil revenue for the program, according to investigators.
In a statement yesterday, Representative Henry Hyde, Republican of Illinois, who is chairman of the House International Relations Committee, said investigators had found suggestions of banking violations. "If true, these possible banking lapses may have facilitated Saddam Hussein's manipulation and corruption of the program," Mr. Hyde said.
Investigators said the bank may not have verified the identity of some payment recipients. The bank's activities are to be the subject of a committee hearing today.
Bob Bennett, a lawyer for the bank, called the assertions "outrageous" and said that while it was possible the bank made a few questionable payments, it was "grossly unfair" to suggest it had "sloppy procedures." "Overall, this bank did an amazing job of handling a series of vast, complex transactions," he said.
Two people familiar with the United Nations investigation, led by Paul A. Volcker, said investigators had become frustrated with BNP resistance to requests for records and other information. But Mr. Bennet said the bank was cooperating.
The United Nations panel is also seeking assistance from foreign bank regulators in tracing payments connected with the program, under which Iraq was permitted to buy food and other goods with $64 billion in oil revenues from 1996 to 2003.
Congressional investigators said that federal regulators had placed BNP under "supervisory action" in July owing to what investigators called "deficiencies" in its operations.
Allegations have spawned several investigations. Yesterday, the Volcker panel sent a letter to the Senate Permanent Subcommittee on Investigations essentially declining to make available United Nations documents and personnel.
As posted in Free Republic...
For more, GO TO > > > First Hawaiian Bank: Conquered by the French in ‘98
May 12, 2004
Update: U.N. Oil for Food Scandal
Continues to Grow
Center for Individual Freedom
Last week, the Center for Individual Freedom outlined the growing scandal surrounding the United Nations’ Oil for Food program. But in the last few days, even more information evidencing the breadth of the scandal and the possible extent of the cover-up has come to light.
On May 11, the Wall Street Journal uncovered a third "hush" letter from the office of U.N. Deputy Secretary General Benon Sevan. Recall that Sevan managed the Oil for Food program and has been implicated in the scandal. Though Sevan remains on vacation pending his retirement, the letter from his office is a clear warning to the recipient, an Oil for Food consultant, that the U.N. will take legal action should any information be disclosed to Congressional or other investigators outside of the U.N.
As the Journal points out, "The Secretary-General has the authority to waive all these confidentiality agreements. The fact that Kofi Annan has chosen instead to pursue a campaign of legal intimidation is a pretty good indication that he intends as much of a whitewash as he can get away with."
Also this week, the New York Post reported that the French bank BNP Paribas, which handled the bulk of the $111 billion worth of Oil for Food transactions, has hired attorney and Washington insider Bob Bennett who represented President Bill Clinton in the Paula Jones sexual harassment lawsuit. According to the Post, the bank is expecting subpoenas from any of the three Congressional committees now investigating the scandal-plagued program.
Rather than hiding behind gilded lawyers, BNP Paribas ought to provide all of its Oil for Food records to Congressional and other investigators post haste. There have been enough cover-ups. And Congress needs the complete facts, especially the bank’s records of Oil for Food transactions, if it’s going to make a useful independent assessment of the damage the corruption of this program has done to U.S. interests, the war on terrorism and the Iraqi people.
Most important, it’s time for Secretary-General Annan to direct the U.N. bureaucracy to stop stonewalling. If he’s unwilling to do so or unable to bend the bureaucracy to his will, he should resign.
The Oil for Food scandal is already undermining the U.N.’s ability to contribute usefully to the reconstruction of a liberated Iraq. Thanks to the scandal, Iraqi citizens are reported to be very skeptical of the U.N. — and rightfully so, as it is now clear that Oil for Food money which was supposed to be feeding them was instead employed for bribes and pay-offs with billions going to Saddam, himself, and other enemies of peace, possibly even including Al Qaeda.
In order to preserve any notion that the U.N. can play a roll in achieving peace and democracy in Iraq, it must come clean about Oil for Food — right now.
January 2, 2004
U.S. CONSIDERED SEIZING MIDEAST OIL FIELDS IN ‘73, PAPERS SAY
By Lizette Alvarez, The New York Times
LONDON – The U.S. government seriously contemplated using military force to seize oil fields in the Middle East during the Arab oil embargo 30 years ago, according to a declassified British government document made public yesterday.
The document reveals that the U.S. Government, under President Richard Nixon, was prepared to act more aggressively than previously thought to secure America’s oil supply if tensions between Israel and its Arab neighbors continued to escalate after the October 1973 Mideast war or the oil embargo did not abate. In fact, the embargo did dwindle, by March 1974.
If this “dark scenario” played out, the British memorandum continued, the United States would consider launching airborne troops to seize oil fields in Saudi Arabia, Kuwait and Abu Dhabi.
The use of military force would be a measure of “last resort,” the document said.
Defense Secretary James Schlesinger delivered the warning to the British ambassador in Washington, Lord Cromer, the documents show.
The seizure of the oil fields was “the possibility uppermost in American thinking when they refer to the use of force,” said the memorandum.
The potential for conflict was taken so seriously by British intelligence that it wrote a report assessing the situation and listing the likeliest scenarios for the use of force and their consequences. The report, dated Dec. 12, 1973, was sent to Prime Minister Edward Heath by Percy Cradock, head of Britain’s Joint Intelligence Committee.
The memorandum was one of hundreds of documents released by Britain’s National Archives under a law that makes government papers public after 30 years.
The exchange between Schlesinger and Lord Cromer came on the heels of the three-week war between Israel and Egypt and Syria in October 1973. Arab members of OPEC imposed the embargo to try to pressure the United States and other Western nations to force Israel to withdraw from Arab land.
The oil embargo lasted almost half a year. It led to sharp increases in the price of fuel and long lines at gasoline stations, and prompted Washington to question its reliance on Arab oil.
As recounted by Lord Cromer, Schlesinger said the United States was unwilling to abide threats by “under-developed, under-populated” countries.
The documents did not rule out the possibility that Washington would consider pre-emptive strikes if Arab governments began issuing greater demands. “The U.S. government might consider that it could not tolerate a situation in which the U.S. and its allies were in effect at the mercy of a small group of unreasonable countries.”
As outlined, military action would be relatively straightforward; two brigades were seen as needed to seize the Saudi oil fields and one each for Kuwait and Abu Dhabi.
The greatest threat would arise in Kuwait, “where the Iraqis, with Soviet backing, might be tempted to intervene,” the document said.
The British warned in their assessment that any occupation of Saudi Arabia, Kuwait and Abu Dhabi might have to last as long as 10 years. The use of force would also anger and alienate Arab countries and irritate the Soviet Union, although a military confrontation with the country would be unlikely, the document stipulated.
Discontent among Western allies was also cited as a possible consequence of military intervention.
“Since the United States would probably claim to be acting for the benefit of the West as a whole and would expect the full support of allies, deep U.S.-European rifts could ensue,” it said.
- - -
For some of the latest news: http://www.crudedesigns.org/
April 5, 2003
U.S. Makes Progress on Trial of
Saddam’s Hidden Wealth
By Robert Cohen and J. Scott Orr, Newshouse News ServiceIt's been dubbed "Saddam Inc.," a mysterious, multibillion-dollar empire of stolen riches that Saddam Hussein and his sons are said to have methodically stashed away in secret bank accounts around the globe.
Now, as the American military moves closer to toppling Saddam's regime in Baghdad, U.S. Treasury officials and intelligence agencies are scoring new successes in their effort to unravel and seize Saddam's hidden wealth.
Last week, the Treasury Department uncovered more than $1 billion in what it says are Saddam's personal assets in overseas locations that it would not disclose.
Authorities are moving to take control of those holdings, which are on top of $1.62 billion in Iraqi government assets seized by U.S. authorities last month under provisions of the Patriot Act, which gave the government enhanced power to go after suspect accounts abroad.
"We have identified and located previously unknown assets that so far have exceeded $1 billion," David Aufhauser, the general counsel for the Treasury Department, said in an interview. "We are now talking to these countries and are seeking to have them take measures to secure these funds for the repatriation of this wealth to the Iraqi people."
Aufhauser said investigators are tracking Saddam's assets in more than a dozen nations, where the funds are believed to have been hidden through what he described as "traditional but sophisticated ruses." He declined to name the countries.
He also declined to reveal the specific assets, but said they could be hidden in secret bank accounts, disguised by phony corporations or concealed as investments in "monetary instruments or commodities like diamonds or product credits."
How rich is Saddam? Jules Kroll, whose international private investigations company probed Saddam's financial empire for the Kuwaiti government in the early 1990s, said estimates range into the tens of billions of dollars.
"Is it $10 billion? Is it $20 billion? I'd say it's somewhere in between," he said.
Bush administration officials say there is evidence that Saddam's fortune what they call his "blood money" has come from smuggling, kickbacks and a variety of business deals engineered by his sons Odai and Qusai, and by other relatives.
The administration's financial task force is focusing on evidence that Saddam and his sons extorted huge sums in kickbacks from foreign businessmen who participated in the Oil for Food program sanctioned by the United Nations.
Set up in 1996, the program allows Iraq to sell some of its oil to purchase food and medicines for its citizens. But, according to a number of government and private reports, Saddam demanded that kickbacks be deposited in bank accounts in the Middle East and Europe controlled by him and his family and associates.
The General Accounting Office last year estimated that Saddam generated some $6.6 billion in illegal revenues between 1997 and 2001. It said the money came from Oil for Food kickbacks and from the smuggling and sale of oil through neighboring countries in violation of the sanctions.
Last year, the Coalition for International Justice, a nonprofit organization based in Washington, released a report estimating that Saddam and his family members earned an average of $2 billion a year by illegally exploiting the U.N. system and running extensive smuggling operations in Turkey, Jordan, Syria, Lebanon, Iran and the Gulf states.
The report, "Sources of Revenue for Saddam & Sons: A Primer on the Financial Underpinnings of the Regime in Baghdad," projected that family earnings were close to $2.5 billion for 2002, with oil smuggling making up 90 percent of that revenue.
The coalition also charged that Saddam's family enriched itself by exploiting the Iraqi Olympic Committee, fleecing Shiite pilgrims visiting Iraq's holy sites and exploiting Iraq's radio and television stations.
Saddam and elder son Odai also have been accused of profiting handsomely in a cigarette-smuggling scheme.
In a lawsuit filed last year in New York, the European Union alleged that R.J. Reynolds Tobacco Holdings Inc. sold billions of cigarettes to Iraq in violation of U.N. and U.S. sanctions, creating bogus paperwork trails that listed Russia instead of Baghdad as the destination for the products.
The lawsuit claims the cigarette sales brought millions of dollars to Saddam's regime, and specifically to Odai, who "oversees and personally profits from the illegal importation of cigarettes into Iraq."
R.J. Reynolds has called the allegations "absurd" and has asserted that it operates its businesses "in a legal, responsible manner."
Although a good deal of the money has gone to finance the building of ornate palaces and a lavish lifestyle for Saddam and his family, Aufhauser said the Bush administration believes Saddam also has used the illegal revenues to purchase weapons of mass destruction.
Others have said he has used some of these proceeds to pay bribes to win the allegiance of various factions inside Iraq. "He's had expenses. This is money he used to keep himself in power, to buy people off, to bribe people in other countries. It's not just a saving account," Kroll said.
Kroll said his company's investigation following the first Gulf War revealed a sophisticated conspiracy by Saddam to skim the spoils of his country's oil wealth. At the time, Kroll estimated Saddam's wealth at $10 billion. Since then Saddam's hidden treasures have likely increased.
Kroll Associates drew on assertions from Iraqi defectors, intelligence information and corporate records to uncover a flourishing multibillion-dollar global financial network operated out of Geneva.
At the time, the network was being run by Saddam's half-brother Brzan al-Tikriti and his son-in-law Hussein Kamel, who was later killed by Saddam.
Jerry Long, director of Middle East studies at Baylor University, said he sees Saddam's thirst for wealth as evidence of "a personality disorder" that is based on his own grandiose vision of himself.
"He sees himself as the embodiment of Iraq. This is more than someone who is selfish," said Long. "He sees the country as an extension of his ego and believes he is entitled to what he takes."
Howard Simons, an expert on the international oil industry and a professor of finance at the Illinois Institute of Technology, said he suspects stories of Saddam's vast wealth are true.
"Is there proof? No. Does it seem plausible? You bet," he said. "What's the point of being a greedy dictator if you can't act like one? A lot of it probably went to buy weapons systems and anything else he felt like buying."
< < < FLASHBACK < < <
AUGUST 1984 - VOLUME 5 - NUMBER 8
N E W S M O N I T O R
Oil Money in Alaska Politics
by James Love
Over the past decade the state of Alaska has charted a difficult course of developing its resources while preserving it's environment. It has also struggled with the problem of planning for the future, as its richest asset, the Prudhoe Bay oil field, is rapidly being depleted.
Through the 1970s progressive citizens and political leaders were successful in increasing taxes on oil production, and modernizing the state's oil and gas leasing program. At present, the state collects roughly 30 percent of the gross revenue, about $3.5 billion annually, from its North Slope oil production. Part of this is invested in a trust fund for the future, part returned directly to citizens, and the remainder is used to finance a number of social programs, public works, and low interest loans.
The oil industry has profited handsomely from its Alaskan investments, but is constantly at odds with the state over tax and other development issues. In order to control the "political environment," the major oil companies finance elaborate lobbying and public relations programs, and are involved deeply in state and local political contests. Following are some examples of how oil money is being used to corrupt the political process.
In 1982 Democrat Bill Sheffield was elected governor, following a divisive race that turned on the regional issues of moving the state capital and rural development. Sheffield had spent a lot of money for the campaign, much of it from corporations, and about S566,000 in his own money. Following his inauguration, Sheffield sought to raise campaign funds so that he could pay himself back.
This led to trips to New York, Dallas, Houston and Denver, where he raised $155,000 from companies that handled the state's investments, like Prudential-Bache, Dean Witter, Reynolds, and Lehman Brothers; oil interests, including members of the Hunt family; and firms and executives of dozens of major oil companies, such as Arco, Shell, Phillips, Sohio Diamond Shamrock, Dresser Industries, Brown and Root, and Tesoro.
The governor traveled with his attorney general, and commissioners of Revenue and Natural Resources, on private aircraft supplied by three firms with oil interests- Enserch Inc., a resources conglomerate; ERA, an aviation company; and Parker Drilling. Organizers of the trip included Ely, Guess and Rudd, a politically well connected law firm, whose former partner, Norm Gorsuch, was a top campaign official for Sheffield, and now serves as his attorney general. The firm represents a long list of oil companies, including Exxon, Shell, Tesoro, VECO International, and Alyeska Pipeline - the consortium of Sohio, Exxon, Arco, Mobil, Union and other companies that operate the Trans-Alaska Pipeline System (TAPS).
The fundraising trip occured simultaneously with a decision by the governor to drop opposition to a proposed federal oil and gas lease sale in the environmentally sensitive Norton Sound area. As news of the trip leaked out, critics questioned the ethics of the fundraising. Sheffield was forced to appoint a special prosecutor, but he was subsequently cleared of breaking any state law.
Later in 1983, Gorsuch's former law firm, Ely, Guess and Rudd, began working with VECO International, an oil field service company, to establish a program for making unreported campaign contributions. Under advice from lawyer Robert Ely, the company solicited contributions of $100 each from its employees, which it withheld from paychecks and forwarded to state legislative candidates.
VECO hired a former state senator, Ed Dankworth, to replace Gorsuch as its lobbyist, and to help distribute the funds. Dankworth had once served as head of the Alaska State Troopers and had served as chairman of the powerful Senate Finance Committee, which oversees oil industry taxation, until he was forced to give up his seat in 1982 amid criminal conflict of interest charges.
Dankworth's problems stemmed from his attempt to use his influence to sell the state an oilfield service camp that was once used to build the TAPS pipeline. According to testimony before a grand jury, Dankworth was approached by another former Trooper Chief, Pat Wellington, who was working as a security agent for Alyeska. Wellington told Dankworth that Alyeska had a surplus pipeline construction camp that it wanted to sell, and that might be useable as a state prison facility. Dankworth said he was personally interested in buying the camp. Wellington told the grand jury, "I said . . . 'Alyeska will be willing to sell the camp to anybody, I'm sure. But,' I said, `I extended the invitation and the offer to you Ed, as a member of the Finance Committee and as a state official interested in law enforcement."'
Dankworth found a partner and signed an agreement to buy the camp for $900,000 from Alyeska, and began trying to sell the camp to the state for $3 to $4 million. Dankworth subsequently used his position on the Finance Committee to insert a special appropriation, titled "surplus property," into the state budget to purchase the camp. In November 1982 he was indicted on two counts of conflict of interest violations, but escaped prosecution when a state judge ruled that he was protected by legislative immunity.
Having left the legislature, Dankworth started a business as a lobbyist, picking up VECO and other clients. Despite his troubles over the conflict of interest charges, he remained an influential figure in the state legislature.
In the fall of 1983 Dankworth began meeting with legislators to discuss changing the leadership of the state senate, promising $35,000 in campaign contributions for senators who followed his plan.
The money, or a large part of it, was to be raised through the VECO contributions. Under Alaskan law, corporations are allowed to contribute to legislative candidates, but the maximum allowable contribution is $1,000. Moreover, disclosure is required for all contributions over $ 100. VECO sought to get around these restrictions by asking its oil field workers to make $100 contributions, which were then deducted from paychecks.
Once employees agreed to the payroll deduction, they were sent a memo from the chairman of VECO and told the names of the candidates to whom their contribution would be sent, unless they voiced objections. Through this device VECO channeled thousands of unreported campaign contributions to candidates for the state senate.
The scheme began to unravel when news reports appeared about the VECO contributions and Dankworth's plan to reorganize the senate leadership. The Alaska Public Offices Commission, which is charged with overseeing Alaska's campaign disclosure laws, launched an investigation. In August the Commission staff reported that it believed VECO had violated three campaign disclosure laws, including making contributions in excess of $1,000; making contributions under another person's name; and failing to file reports of its contributions with the Commission.
These examples are but a small part of the larger picture of the oil industry's power in Alaska. The industry is actively promoting its candidates for city and borough government in the Eskimo community of Barrow and the surrounding villages, which have the power to levy property taxes and impose environmental restrictions on nearby oil development. Local charities-including, if not especially, public broadcasting-constantly have their hands out to the oil companies. And the government sector is now seeing a steady stream of public officials taking jobs with the industry, after dealing with the industry as a guardian of the public interest.
Sheffield and pro-industry legislators are unlikely to reduce current taxes on the oil industry, primarily because the money is already committed to projects with growing constituencies. But there is a disturbing trend of giveaways to the industry on issues that will have the greatest impact in the future, such as changes in lease terms on properties where production has yet to begin, speeding up the schedule of lease sales, or relaxing environmental controls.
James Love is a graduate student at Princeton University, and former director of Alaska PIRG. Maureen Kennedy assisted with this article.
From American Dynasty: Aristocracy, Fortune, and the Politics of Deceit in The House of Bush, by Kevin Phillips (copyright 2004):
George H. W. Bush:
Man in the Brooks Brothers Trench Coat?
...George H.W. Bush’s intelligence connections may have affected when and why he went to Texas. Working for Ray Kravis in Tulsa might not have been relevant; working for Neil Mallon, as Dresser shifted its focus and headquarters from Ohio to Texas and turned global, would have been more so. Dresser had top secret clearances during the 1941-45 war years for various projects, and after Mallon relocated to Dallas in 1950, the company’s greatest growth came from overseas activity, conceivably including some covert projects.
The international side of the oil business, whether in the Middle East or the Caribbean, lent itself to close involvement with the CIA and U.S. intelligence, as numerous chroniclers have elaborated....
In 1988, during Bush’s presidential campaign, Kwitny revealed that back in 1960, Bush and Zapata Offshore, together with Jorge Diaz Serrano, a Mexican oilman recommended by Dresser, had set up a new Mexican company called Permargo. The latter, under the authority of Pemex, the Mexican oil monopoly, was to do deep-sea drilling off the Mexican coast for Pan American Petroleum, a firm run by U.S. oilman Ed Pauley.
Pemex and Pauley were both known for CIA connections.
Bush, however, was already drilling for Pauley under a Zapata Offshore contract. Details about Zapata’s Permargo involvement didn’t check out, and Kwitny smelled a rat or two, especially when it emerged that in 1981, shortly after Bush had been elected vice president, the SEC “inadvertently destroyed” the Zapata Offshore SEC filings for 1960 to 1966.
Some years later Loftus wrote, “The ‘old spies’ say Bush lost his virginity in the oil business to Ed Pauley.”...
- For more on the Sultan of Brunei, the CIA, and Ronald Rewald, GO TO > > > Flying High in Hawaii
- For more on the slick and dirty oil business, GO TO > > > Aloha, Harken Energy!; The Myth and The Methane; Vampires on Gilligan’s Island
FROM THE GREAT ORATOR...
By its past and present actions, by its technological capabilities, by the merciless nature of its regime, Iraq is unique. As a former chief weapons inspector of the U.N. has said, ‘The fundamental problem with Iraq remains the nature of the regime, itself. Saddam Hussein is a homicidal dictator who is addicted to weapons of mass destruction.’...
“We know that the regime has produced thousands of tons of chemical agents, including mustard gas, sarin nerve gas, VX nerve gas. Saddam Hussein also has experience in using chemical weapons. He has ordered chemical attacks on Iran, and on more than forty villages in his own country. These actions killed or injured at least 20,000 people, more than six times the number of people who died in the attacks of September the 11th....
“Iraq is a land rich in culture, resources, and talent. Freed from the weight of oppression, Iraq's people will be able to share in the progress and prosperity of our time. If military action is necessary, the United States and our allies will help the Iraqi people rebuild their economy, and create the institutions of liberty in a unified Iraq at peace with its neighbors.”...
– George W. Bush, October 7, 2000
IRAQ BODY COUNT
National Priorities Project - Cost of War
A Timeline of Oil and Violence in Iraq
THE EAGLE HOODED: THE 9-11 COVERUP
PART I - PART II - PART III
The Real Cindy Sheehan
IMPEACH GEORGE W. BUSH
AND MORE CONNECTIONS...
Allied World Assurance: Axis of Evil
Aloha, Harken Energy!
AIG: The Un-American Insurance Group
BCCI: The Bank of Crooks & Criminals
Behind the Blinds at Fidelity Investments
Birds in the Lobby
Birds on the Power Lines
British Petroleum: Buzzards in the Pipelines
Confessions of a Whistleblower
Dirty Gold in Goldman Sachs
Dirty Money, Dirty Politics & Bishop Estate
First Hawaiian Bank: Conquered by the French in ‘98
The Great Nest Egg Robberies
The Mating of Chevron-Texaco
Of Vampires & Daisies
The Story of Enron
Citigroup: Vampires in the City
The Eagle Hooded: The 9-11 Coverups
Halliburton from Hell!
The Kissinger of Death
Kroll, the Conspirator
P-s-s-t, wanna buy a good audit?
The Myth & The Methane
Marsh & McLennan: The Marsh Birds
Marsh & McLennan’s Putnam Investments
Nests Along Wall Street
Nests in the Pentagon
Pimps to Power
The Indonesian Connection
RICO in Paradise
The Secret Nests
What Price Waterhouse?
William Simon Says
Birds that Drink from Cesspools
Spotting the SEC
Vampires on Gilligan’s Island
Vampires on Jupiter Island
Vultures Caught in the Health Net
Vultures in The Vanguard
Vultures up to their Beaks in Tesoro Petroleum
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Originally posted: January 5, 2004, by The Catbird
Last Updated: April 4, 2010