Expert Blogger Ahmed Mousa Jiyad on Unaoil Corruption Scandal

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Unaoil Corruption Scandal: International and Iraq update and follow-up

The recent joint report by Australia's Fairfax Media and the Huffington Post uncovering serious international corruption scandal allegedly masterminded by a Monaco based company, Unaoil, has quickly gained publicity, captured  worldwide attention and prompted formal investigations in many countries, including Iraq.

On 1 April, the headquarters of Unaoil and the homes of its executives have been raided by police in Monaco. In a statement, the Monaco government said it was helping British authorities investigate the "vast corruption scandal" revealed in recent days by Fairfax Media and The Huffington Post.

Monaco government statement said that several of the company's senior executives had been questioned between 29-30 March and their homes and headquarters searched following an urgent request from Britain's Serious Fraud Office-BSFO.

The searches and interviews were conducted in the presence of BSFO officers and the items collected during the search will be now be used by the BSFO in their investigations.

Fairfax Media revealed on Thursday, 31 March, that the British police had teamed up with the Australian Federal Police, the US Department of Justice-DoJ and the FBI to investigate the vast cache of emails on which their joint report was based.

The Monaco government said it would not release further details at this stage in case it compromised the investigation. The British, Australian and US authorities above mentioned might make some statements and provide further information on their investigation in the coming days; as more information on this scandal unfolding so we have to keep watching. The implications of such international investigations will not be confined to Unaoil, the corrupting company through deal fixing, but could implicate also a number of American, British, Australian, Dutch and Italian companies among others.

In Iraq, the development of the case has been, unusually, surprisingly and unexpectedly, very fast and substantive indeed.

9 Responses to Expert Blogger Ahmed Mousa Jiyad on Unaoil Corruption Scandal

  1. Ahmed Mousa Jiyad 4th April 2016 at 21:35 #

    I received the following feedback from Dr. Hussain Al-Shahristani who also agrees to post it as comment. His feedback was cc-ed to the Prime Minister and many senior government officials, especially at the Ministry of Oil.

    Dear Dr Ahmad Mousa Jiyad
    Thank you for your thorough follow-up on the recent Huffington Post and Fairfax Media report. As you may have noticed, I responded immediately to the report publishers and made public statement that I have not known, met or communicated in any way with anybody from Unoil or Ahmad Al Jubouri, and called on the Prime Minister, the Integrity Commission and Ministry of Oil to investigate the allegations and I demanded handover of any documents, emails or other available evidence to the competent Iraqi authorities to help them with the investigation.
    I am pleased that the relevant authorities in UK, USA, France, Australia and Monaco are teaming up to uncover any wrongdoing or corruption in regard to this and I am asking the Iraqi government to join this international investigative team to obtain all documents or evidence related to Iraq.
    I hope you will continue to follow-up this case eagerly, as you have been on other matters concerning oil contracts in Iraq, and make any new findings available to the widest possible circles as we all owe it to the Iraqi people to inform them truthfully and responsibly about any mishandling of their public funds.
    I offer my full cooperation to identify and bring to justice any individual regardless of his position, and to recover any misappropriated public funds.

    Best regards,
    Hussain Al-Shahristani

    Ahmed Mousa Jiyad,
    Iraq/ Development Consultancy & Research,
    4 April 2016

    Ahmed Mousa Jiyad,
    4 April 2016

  2. Ahmed Mousa Jiyad 5th April 2016 at 23:19 #

    Statement of the Ministry of Oil on Unaoil Corruption Scandal
    On 4 April the Ministry issued a statement on the Unaoil scandal posted on its website (in Arabic) and the day after, the English text posted on the same website:

    In a nutshell, the Statement (or Clarification) whether in its Arabic or English text, is very disappointing reflecting very limited understanding of the issue, inconsistent, contradictory, vague and lacks respect for Iraqi authorities and the informed public. Here is why.
    1- The Statement asserts, “the press investigation which was made by the two Australian & American journals is only information that does not have any Investigative journalist working criteria, especially when it did not have any documents or papers Corroborates the allegations. Which makes it an in accurate press investigation and Free of credibility accusations.”
    Apart from its apparent weak language, which I am copying as is, it seems the Ministry or its Public Relation & Press Office-PRPO did not read the long parts of the related article and it is not aware of the thousands emails upon which the article was premised. Email messages are considered, for the legal investigation and courts of law verdicts, powerful documents. It is also laughable for the Ministry’ PRPO to say the article “does not have any Investigative journalist working criteria” when it does not recognize email messages as significant evidence for investigative journalism;
    2- By concluding that the article is “in accurate press investigation and Free of credibility accusations” (meaning inaccurate, not credible and accusing press investigation), the Statement shows no respect to national and international efforts to investigate the allegations of corruption and wrong doing that were uncovered by the article. In fact the Statement makes “conclusions” even before the investigations began!!
    3- Also the Statement is contradictory and inconsistent. If the Ministry thinks that these are inaccurate and not credible accusation, why then the Ministry took many measures to address, “the concerned authorities in order to supply it with the documents which confirms these accusations. And the ministry did also address the supervisory and security authorities to let them know about the subject in order to make a high level coordination about it”;
    4- But what the Statement says about Unaoil sub-contract is the most alarming and causes serious concerns. It says, “Regarding to (Unoil): it is the secondary contractor and their contracts was signed with the main contractor and the ministry of oil has no relation these assignments.”
    This is in fact in response to what I mentioned in my email communication of 3 April 2016, which says “In addition to the corruption cases referred to in the reports, I suggest the Iraqi investigation should also include the sub-contract that was awarded to Unaoil for the rehabilitation of West Qurna oilfield Compressor Stations CS7 and CS8 in July 2015.”
    What warries and alerts me is the following:
    (i)- The Ministry did not specify the “the main contractor” who concluded the sub-contract deal with the allegedly corrupt company, Unaoil. Here there are three possibilities: Basrah Gas Company-BGC; West Qurna 1-WQ1 oilfield; or West Qurna 2-WQ2 oilfield.
    (ii)- If the sub-contract is related to BGC, which Iraq holds 51% of the Joint Venture the then the Ministry of Oil, through South Gas Company-SGC and as a majority shareholder, is legally responsible for any financial irregularities, wrong doing or corruption relating to sub-contracting;
    (iii)- If the sub-contract is related to either WQ1 or WQ2 then first; there is no such “main contractor” in the signed contracts for these oilfields; what is there is “Operator”. That could indicate PRPO have not read the contracts properly; second, the related Operator or the Joint Management Committee-JMC, or the South Oil Company-SOC or/and the Ministry of Oil is responsible for such sub-contract; depending on the value of the said sub-contract according to Article 9.19 (c) of the signed contracts for WQ2 and Article 9.20 (c) of the signed contracts for WQ1.
    But, under both Articles the sub-contracting should be done under specific conditions and procedure, which makes the Ministry the ultimate guardian to protect the Iraqi interest against any infringement whatsoever.
    (iv)- By stating the Unaoil “contracts was signed with the main contractor and the ministry of oil has no relation these assignments” is gross violation of the signed contracts and inadmissible waiver of the Ministry’s sovereign right and obligation; and this gives the impression that the “main contractor” / Operator can sub-contracts at will.
    Article 43 on General Business Ethic of the WQ1 signed contracts permits the termination of the sub-contract on grounds of corruption; similar provisions are applicable also for WQ2 and also for BGC. If the allegations against Unaoil are proven in a court of law that would call for immediate termination of its sub-contract(s)
    Finally, may I strongly remind the Ministry’ PRPO that these signed WQ1& 2 contracts are service contracts and the Ministry should be very keen to monitor and audit all cost including sub-contracts. Moreover, for corporate income tax purposes the sub-contractors are included under the tax related contractual provisions and Law.

    I think the said Statement by or on behalf of the Ministry of Oil does disservice to the Ministry itself and, therefore, I suggest for the Ministry to withdrew such a statement; apologies for it; hold tight and strong leash on its PRPO to prevent such unworthy and damaging statement; and issue new, reasonable and responsible statement. No harm to start afresh.

    Ahmed Mousa Jiyad,
    Iraq/ Development Consultancy & Research,

    5 April 2016

  3. Ibn Al Iraq 7th April 2016 at 09:41 #

    Dear Sir,

    It's very common that an official denies any wrongdoing! nothing new !

    The current faces who rule Iraq have to retire and sit at home. The Iraqis have been demanding and demonstrating vigorously for the past two years. Dr Shahrestani and his peers have failed badly to manage the country. in fact they have casued substantial financial and other losses to the country. Why can't they admit this ?, and leave with dignity if they have any !!

    Thank you

  4. Ahmed Mousa Jiyad 7th April 2016 at 14:13 #

    New statement from the Ministry of Oil.
    MoO issues today 7 April the following statement in Arabic:
    استنادا الى توجيهات الدكتور حيدر العبادي رئيس مجلس الوزراء عقد في وزارة النفط اجتماعين ضم الاول اللجنة التحقيقية المشكلة في هيئة النزاهة ومكتب المفتش العام والثاني ضم رئيس لجنة النزاهة مع اعضاء لجنتي النزاهة والنفط والطاقة النيابيتين والكادر المتقدم في الوزارة ومكتب المفتش العام وتم التاكيد في الاجتماعين على ما يلي .
    1- تأكيدا لنهج وزارة النفط في التنسيق والتواصل مع جميع السلطات الرقابية والتدقيقية والتنفيذية للوصول الى الحقائق والادلة حول ما اثير من شبهات فساد تتعلق بعقد تصعيد الطاقات التصديرية وما نشرته وسائل الاعلام من معلومات تتعلق بذلك فقد تم عقد اجتماع يوم الثلاثاء 5/4/2016 في مكتب المفتش العام في الوزارة مع اللجنة التحقيقية المشكلة في هيئة النزاهة والمكونة من نائب رئيس هيئة النزاهة ومدير عام الدائرة القانونية ومدير عام دائرة التحقيقات للاطلاع والتداول بشأن الاوليات والاجراءات المتخذة من قبل وزارة النفط في كشف ملابسات الموضوع وما اثير حولها في وسائل الاعلام .
    2- وفي نفس السياق عقد في مبنى وزارة النفط يوم الثلاثاء 5/4/2016اجتماعا مشتركا ضم رئيس لجنة النزاهة النيابية مع اعضاء لجنتي النزاهة والنفط والطاقة النيابيتين والكادر المتقدم في الوزارة ومكتب المفتش العام وتم مراجعة جميع التفاصيل المتعلقة بشبهات الفساد المثارة في وسائل الاعلام والاتفاق على استمرار اللقاءات وتبادل المعلومات للوصول الى الحقائق .
    3- وقد بينت الوزارة في الاجتماعين انها سبق واتخذت الاجراءات الضرورية مع الجهات ذات العلاقة حال ورود المعلومات المنشورة والمتعلقة بشبهات الفساد ومنذ عام 2012 ومنها ايقاف التعامل مع الشركة مورد الشبهة ، وقد شكلت عدة لجان في حينها لمتابعة واستكمال الاجراءات بهدف الوصول الى الحقائق والادلة لتقديم المتورطين الى القضاء .
    4- وفي ذات الوقت فأن الوزارة تدعو الجهات التي تمتلك معلومات او وثائق تتعلق بهذه الشبهات لتقديمها الى الوزارة واللجان المشكلة في مجلس النواب او هيئة النزاهة.
    وزارة النفط

    Obviously, the current statement is more reasonable, responsible and factual; it refers to the two meetings with the Integrity Commission and Integrity Commission, which I mentioned in my last commentary on the previous statement by MoO dated 4 April. Also the new statement is empty from the shallow rhetoric that characterizes its previous statement.
    But in item 3 of the new statement the Ministry mentions it had previously taken the necessary measures when it received such information alleging or concerning corruption cases.
    In my view the Ministry should now provide full information on such cases; what measures were taken; what are the outcomes so far. It is honorable course of action to be proactive in disclosing fully all such cases.

    Ahmed Mousa Jiyad,
    Iraq/ Development Consultancy & Research,
    7 April 2016

  5. raad zahid 7th April 2016 at 19:33 #

    Dear Mr. Ahmed,
    In Iraq corruption is well documented for many cases that includes minsters, high public servants, politicians, academic and so on. However accountability is lacking without punishment every official has a room to get exposed to corruption.
    Whether una oil has bribed Iraqi officials or not, nobody will be sentenced and no money will recover for the public benefit. I say it is a tragedy for Iraqis.
    Raad zahid
    Retired employee