Inner City Press -- Investigativ

Inner City Press Global Inner Cities Report - March 30, 2006 [Revised as indicated on March 31, 2006]

Iraq's Oil to be Metered by Shell, While Basrah Project Remains Less than Clear, As Does the UN Global Compact

UNITED NATIONS, March 30 -- From Iraq's Mission to the UN, there's finally been an answer to the months-old oil metering mystery. Shell has been given the contract, and it will take from one to two years to implement. How the accountability of oil flows and sales until then will be tracked has not yet been addressed, nor has why it will take two years. For an oil port in Basrah, the process will be faster, but it remains unclear which company has been awarded the work. [Editor's note: click here for Reuters article on this.]

Meanwhile at the UN on Thursday, Kofi Annan met with the chairman of Turkish conglomerate with a joint venture with Shell; the Turkish magnate was not available for questions, not even on challenge to the Shell joint venture in the EU Court of Human Rights. Such corporate access was discussed (or confessed) by an author who visited the UN Correspondents Association on Thursday, predicting a world made better one CEO-in-a-hot-tub at a time (see review below).

In a March 22 letter provided to Inner City Press on March 30 by the staffer from the Office of the Spokesman for the Secretary General who had responded to Inner City Press' repeated questions with an assurance that he would ask IAMB and forward their answers [editor's note: click here for Reuters' informative earlier article on this], the UN's Jean-Pierre Halbwachs was informed that

"the Iraqi Ministry of Oil has concluded an agreement with the American Project and Contracting Office (PCO) to include a project for rebuilding the metering system in the Basrah oil port of the Southern Oil State Company, as part of the other projects that are funded by the American grant to the Iraqi Ministry of Oil. This project is in progress now and is expected to be finalized by 2006. Furthermore, a preliminary agreement was reached with the Shell Group to act as a consultant to the Iraqi Ministry of Oil on matters related to metering and calibrating which would include the establishment of a measuring system for the flow of oil, gas and related products within Iraq, as well as the export and import operations. This long-term development project will be implemented in stages that may be fulfilled in one or two years."

This follows a December 2005 statement by the International Advisory and Monitoring Board for the Development Fund for Iraq that the oil metering contract had been awarded to an American firm, followed by a January 2006 IAMB statement that nothing was being done. Now named are a Dutch-based company and a "project" agreed to by the U.S. Pentagon's Project and Contracting Office, recently in the news for its dealing with Halliburton. The term in the letter, "Southern Oil State Company," does not result in any hits either via the Google search engine nor (Academic) Lexis. Inner City Press has put written questions to both IAMB and Iraq's Mission to the United Nations and will report results on this site.

The above-quoted letter is signed by Iraq's Alternate Permanent Representative to the UN Feisal Amin Al-Istrabadi, described as "an American lawyer of Iraqi origin." Click here for his curriculum vitae, via Depaul's law school -- his legal practice has been in Indiana, although the c.v. refers to hazardous chemical spills and Petroleum Marketing Marketing Act cases. Inner City Press has put written questions -- for the second time -- to the Iraqi mission's listed press attaché, including:

"For this [Basrah] project, to be completed by the end of this year, has a contractor been designated? PCO was in the news earlier this week with regard to their audits of Halliburton's performance (as well as Foster-Wheeler). Direct question: does the above quoted mean that Halliburton has gotten or could get this 'included' project? Secondarily, why does the nationwide oil metering contract described in the second paragraph of the letter need to take two years? And what will be done in the interim?"

The same questions have been put to the chair of IAMB, the UN's Jean-Pierre Halbwachs. Watch this space.

UN Round-up: upstairs at the UN headquarters on Thursday, Secretary-General Annan met at noon with the chairman of Turkey's Koc Holdings which holds, among other things, a joint venture with Shell and 87,000 employees, on the occasion of Koc Holdings joining the UN Global Compact. At the noon briefing, it was asked how it is decided which of the Global Compact's signatories get to meet with the Secretary-General, and whether these companies -- including Koc Holdings -- might take questions from the press on their adherence to the Compact's principles, including human rights, perhaps at a new Corporate Stake-Out.

The Office of the Spokesman for the Secretary General (OSSG) responded that while it is rare for Kofi Annan to meet with CEOs when they sign on to the Global Compact, "Mr. Koc was one of the rare exceptions because of the significance of the company's commitment to the country as a whole (Turkey) and the broader region. Also, Koc has deep partnership relations with UN agencies in the areas of health and education." Through the OSSG, a media relations and public affairs staffer of the Global Compact Office indicated a willingness to try to connect reporters with questions to the public relations staff of corporate CEOs who are slated to meet with the Secretary-General. He added that the Global Compact Office will discuss if and how they can make information about Global Compact events and meeting available ahead of time, and will be willing to forward interview requests to the involved corporations. [Editor's note: since the Secretary General's schedule is only released the night before, this may not solve the problem. The paragraph above was revised on March 31 to remove an informal characterization of corporate public relations staff and their advice. Inner City Press will going forward endeavor to obtain from the Global Compact or OSSG prior notice of CEO-Secretary General meetings and pose pre-meeting questions as appropriate.]

In this instance, to tie it all together, including Shell getting the oil metering contract in Iraq, Koc Holdings' oil refinery joint venture with Shell is being challenged to the EU Court of Human Rights by the union Petrol-Is. What is Koc Holdings (and Shell's and even the SG's and Global Compact's) positions on this? Questions, questions...

Sidelight on the (UN) literary beat: One CEO in a hot tub at a time, will the world be changed? The confessed (ex-) economic hit man John Perkins spoke Thursday before the UN Correspondents Association, urging the assembled journalists to make sure that marginalized voices from outside what he called the corporatocracy are heard. Of a current hot topic at the UN, attempts to censure Iran's moves for atomic energy, Perkins opined that the real rub is Iran's threat to start selling oil in Euros rather than dollars, and the United States' status as a debtor nation. Asked about realism of a particularly upbeat (or naïve) line in his book --

"Imagine if the Nike swoosh, MacDonald's arches, and Coca-Cola logo became symbols of companies whose primary goals were to clothe and feed the world's poor in environmentally beneficial ways" --

Mr. Perkins responded with stories about purported environmental changes at Citigroup, and of a night in California in which the CEO (well, SVP) of a corporation sat in a hot tub the director of an environmental activist group and thanked him, for providing the opportunity for the SVP to go to management with proposed green improvements. Perkins said that none of the CEOs whom he met in his years as an economic hit man were bad people, or didn't want a better world. In response to a question whether all CEOs are benign given, for example, Dick Cheney's time as CEO of Halliburton, Perkins asked, "Are you saying that Dick Cheney is not benign?" Rhetorical question: will the world really be changed by CEOs changes of heart (or of clothes) in a hot tub? Or by more stringent legislation and oversight? Mr. Perkins said that his next book will address corporation and what he called "democratic capitalism," so we'll see.

As Operation Swarmer Begins, UN's Qazi Denies It's Civil War and Has No Answers if Iraq's Oil is Being Metered

UNITED NATIONS, March 16 -- Kofi Annan's representative to Iraq, Ashraf Qazi, on Thursday described to the UN press corps a country on the upswing, where people view each other in secular terms and there is little to no danger of violence spreading over any of the country's borders. Ashraf Qazi said, "I don't personally believe they are anywhere close to a civil war" and "the situation has so far been under control." Ashraf in Wonderland, said one wag at the briefing. Out in real world, 1500 troops and 50 helicopters were conducting assaults near Samarra, part of "Operation Swarmer."

In New York, Mr. Qazi arrived more than half an hour late for the scheduled press briefing. He was accompanied by a staffer from the Office of the Spokesman for the Secretary General, who made a list of the reporters who raised their hands to asked questions, but then went out of order for the final two allowed questions. Inner City Press, which has sought since December to get an answer regarding oil metering in Iraq, was passed over, for a question that elicited from Ashraf Qazi statements that "on the streets, Iraqis don't deal with each other as Shia and Sunni," but such fissures in governance "haven't allowed ministries to become professional and competent." As the briefing ended and Mr. Qazi and his entourage made for the side door, Inner City Press' reporter shouted out, "Is oil in Iraq being metered?"

"We'll try to get Mr. Halbwachs to answer." This last was from the Spokesman's Office staffer, who acknowledged having gone out of the order on his list. "I thought you were going to ask that question," he said. [Editor's note: and then apparently forgot - see 3/30 Report, above.]

This was not mind-reading: Inner City Press began asking this question about oil metering in December 2005. There's a new context, including reports that Iraq's Oil Ministry is warning Western Oilsands of Canada against bypassing the Ministry and seeking oil directly in the Kurd-dominated north of the country, presumably unmetered.

At the December 2005 press briefing at the United Nations, regarding oil metering, the UN's Jean-Pierre Halbwachs stated that we “understand that a recent agreement has been reached between the Government of Iraq and a U.S. company to undertake the task.” See, http://www.iamb.info/trans/tr122805.htm

The minutes of the Jan. 23 meeting (also online at www.iamb.info) vaguely state that “the IAMB was informed that no progress had been made with regards to the metering contract.”

Midday on March 16, Inner City Press sent an email to Mr. Halbwachs at the address he gave at the December press briefing, and raised the matter -- and others -- at the regular noon press briefing, including the report about Western Oilsands of Canada and oil in the Kurdish north. The spokesman had no response about oil metering, stating that the oil belongs to the people of Iraq. That's the point -- if the oil is continuing to flow unmetered, it makes the use of the revenue to benefit Iraq's people ever less likely.

Finding no answers from the United Nations, which chairs the International Advisory & Monitoring Board on the Development Fund for Iraq, Inner City Press will also be pursuing these issues elsewhere, including in Washington with the International Monetary Fund, whose Bert Keuppens sits on the Advisory & Monitoring Board. Watch this space.

Elsewhere at the UN on March 16, the Democratic Republic of the Congo was critiqued at length before the human rights panel in Conference Room 2. DR Congo's representative claimed that some of the question-letters had gotten lost. One wag thought, even on human rights, it's like the dog-ate-my-homework defense...

UNITED NATIONS, Feb. 24 – While Iraq is on lockdown, that country’s oil continues to flow unmetered. Basic information about the issue continues to be shrouded in mystery by the International Advisory and Monitoring Board for the Development Fund for Iraq. In just-released minutes of IAMB’s Jan. 23 meeting in Paris, it is vaguely stated that “the IAMB was informed that no progress had been made with regards to the metering contract.”

IAMB had previous stated, in December 2005 press briefing at the UN, that it “underst[ood] that a recent agreement has been reached between the Government of Iraq and a U.S. company to undertake the task.”

Faced with questions on Feb. 24, at the UN Secretary-General’s Spokesperson’s press conference, and in writing to Iraq’s UN mission, none of these officials would answer these questions:

-does a contract or agreement for the oil metering exist? If so, with which company? If not, was IAMB’s public-stated December understanding inaccurate? If so, why?

Inner City Press raised these questions at the Feb. 24 noon briefing by the UN Secretary-General spokesperson. The UN’s Jean-Pierre Halbwachs is the Secretary-General’s representative on the IAMB, and chairs the IAMB. Inner City Press was encouraged to ask the Iraqi mission to the UN. Despite submissions of written questions, as the UN emptied out on the afternoon of Feb. 24, no answer had been received. The online minutes of IAMB’s Jan. 23 meeting name all of the participants at the meeting except for the Government of Iraq / IGI, of which it is only stated “Adviser, Ministry of Finance.” Inner City Press then bypassed the Iraqi mission’s press attaché, and was referred to a staffer who while not providing the name of the “U.S. company,” speculated that his government’s representative to IAMB might be one Mr. Turki of the Supreme Board of Audit, whose contact information he said would be provided next week.

Subsequently the IAMB’s spokesman at the IMF informed Inner City Press that since Iraq’s first representative to IAMB was assassinated, it has since been the policy not to name subsequent representatives, nor even the venues where IAMB meets. He stated that prior to the December 2005 press briefing, IAMB had been informed that a contract had been let, but that in Paris in late January, the unnamed Iraqi representative(s) now said that no contract was awarded. He committed to asking IAMB to make some public statement regarding the contract, prior to IAMB’s next meeting in late May. What was the identify of the referenced “U.S. company”? ICP was told that IAMB’s spokesman has no direct access to IAMB’s chairman, Jean-Pierre Halbwachs, regarding whom questions should be directed to the UN: full circle.

Elsewhere at the UN headquarters on Feb. 24, at a Black History Month presentation in Conference Room 8 in the basement, names were named: a call was made, to Attorney General Gonzalez and to the U.S. Attorney for the Middle District of Alabama to convene a grand jury regarding a murder on February 8, 1965 of Jimmy Lee Jackson. The name named as Jackson’s killer was Alabama state trooper James Bernard Fowler. A reporter who’d faced a day of Iraqi oil metering run-around sighed, it’s not so hard to name names…

January 31, NEW YORK – The U.S. government has required Halliburton subsidiary Kellogg, Brown & Root to repay only $9 million on a controversial contract, and promised information about the metering of Iraq’s oil output has still not been provided, in the stealth January 30 release by the International Advisory and Monitoring Board for Iraq.

The IAMB last took questions from the media, including Inner City Press, on December 28 at the United Nations in New York. At that time, IAMB stated that an oil metering contract had recently been let. It promised to provide more information shortly. Inner City Press twice asked the IMF for this additional information, but none was provided. Then on January 30 a summary of a January 23 meeting in Paris was placed online. The release tersely states that at the meeting, the IAMB

“reiterated its concern that key actions, especially the installation of an oil metering system, were taking a long time to implement. The IAMB urged the Government of Iraq to implement all IAMB recommendations promptly."

Apparently, the December 28 statement that the oil metering contract was in place was incorrect. No one has apologized, and the (unmetered) oil continues to flow. The Jan. 30 release also states, in the nature of disclosure:

“The U.S. Government informed the IAMB that a global settlement of all six DFI funded task orders under the KBR contract was reached between the U.S. Government and KBR on December 22, 2005. The settlement provided for a reduction of contract costs of US$9 million.”

This is much less than had been contested, and previously reported. Given the costs, most importantly in lives, of this Iraq war, what kind of transparency is this? It also raises questions, on timing and other issues, in light of Halliburton's January 27 announcement that it intends to sell off a stake in Kellogg, Brown & Root in an initial public offering of stock.

More Questions than Answers about the Development Fund for Iraq: Representatives of Iraq Absent from UN Meeting and Press Conference, Purportedly Due to Visa Problems

On December 28, four of the five members of the oversight board of the Development Fund for Iraq answered reporters’ questions for an hour at the United Nations in New York. Missing was the representative of Iraq on the International Advisory and Monitoring Board. The explanation offered by the IAMB’s chairman Jean-Pierre Halbwachs was that the Iraqi representatives had not been able to obtain U.S. visas in time. Their absence proved convenient, as questions soon arose about a line in Mr. Halbwachs prepared remarks, regarding the ongoing lack of metering on oil production in Iraq. Mr. Halbwachs read out: “we understand that a recent agreement has been reached between the Government of Iraq and a U.S. company to undertake the task” of oil metering.

When asked for the name of the U.S. company, the IAMB chairman’s response was that only the Iraqi representatives would have that information. When a question arose about the Iraqi representative’s written reference to the cost of metering being covered by “donations,” no answer was forthcoming. When asked why it has taken two years to make even this gesture toward metering, the representative of the Arab Fund for Economic and Social Development Khalifa Ali Dau shrugged and smiled. Finally, the IMF’s deputy press secretary said he will be providing follow-up information about the metering contract (presumably on the IAMB’s web site, www.iamb.info).

There were questions about KPMG’s partial audit, and Halliburton’s subsidiary Kellogg, Brown & Root. The IMF’s representative Bert Keuppens confirmed reports of oil smuggling out of, and in some cases back into, Iraq. (For another report, which puts the Iraqi absence last, see CNN. The UN’s own write-up is here).

When asked in conclusion to assign a grade to the transparency of the spending process at the Development Fund for Iraq, the World Bank’s representative Fayezul Choudhury declined to assign a grade, and pointed out that even most European Union countries, and also the United States, have only qualified opinions from their auditors. The press conference ended with many questions unanswered. The IMF’s Bert Keuppens rushed out of the briefing room. He returned a few minutes later and handed out two business cards. It would have made sense, one wag said, to provide contact information for the representatives to the IAMB from Iraq. And to have thought more deeply about this question of their visas. The IAMB's online self-description:

"The IAMB shall consist of duly qualified representatives of each of the Secretary-General of the United Nations, the Managing Director of the International Monetary Fund, the Director-General of the Arab Fund for Economic and Social Development and the President of the International Bank for Reconstruction and Development and a duly qualified individual designated by the Government of Iraq.

"B. The IAMB, after consulting with the Government of Iraq, may appoint up to 5 observers to the IAMB from a list of independent, qualified candidates, which should include Iraqi nationals nominated by the Government of Iraq.

"C. At any meeting of the IAMB, each member may be accompanied by an alternate, designated in a way identical to the designation of each member, and up to two advisors."

Neither the Iraqi representative nor his alternate / deputy nor even advisors were present, for the meeting or to answer questions.

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