ABOUT 40 companies and some 30 individuals and organisations in Russia stand accused in the Volcker Report. The Russian government questioned the evidence gathered in the Report, while analysts suspected a conspiracy to malign Russia for having strongly opposed the U.S.-led war against Iraq.
Moscow said the Report was short on proof, and whatever evidence was available turned out to be false. Russia's Foreign Minister Sergei Lavrov said Moscow had been in contact with the Volcker Committee and had asked it to identify the source of the documents it used.
"On a number of occasions, the documents shown to us were either highly dubious or outright forged; in particular, they contained fake signatures of Russian officials," Lavrov said. He said part of the information that Moscow received from the committee was not backed by any documented evidence.
The Volcker Report targeted a number of prominent Russian officials, political leaders and companies, including the former Head of the Presidential Administration, Alexander Voloshin, who served both under President Boris Yeltsin and President Vladimir Putin.
The investigation, in which Russia participated actively, did point to some kind of a scam; it also revealed that Voloshin had nothing to do with it. "In the course of its investigation, the U.N. committee asked for samples of Voloshin's signatures dating back to the time when he headed the Presidential Administration," a Russian diplomat said. "The Russian side supplied the required documents to the Committee, which established that both Voloshin's signatures and the contracts bearing his signatures were false." The Volcker Committee, in fact, admitted this in its report, noting that Voloshin's known signatures differed significantly from those found on Iraqi contracts.
According to the Report, Russian companies purchased 30 per cent of the oil sold under the Oil-for-Food Programme (OFFP), worth approximately $19.3 billion. The Report alleged that Russian companies, including such giants as Gazprom and LUKoil, paid $52 million in illicit surcharges to Saddam Hussein's government between March 2001 and December 2002.
The companies denied the charges. Zarubezhneft, a state-owned oil company that the Report said was the largest recipient of Iraqi oil contracts, said it had operated "in strict compliance with the regime of international sanctions in effect".
LUKoil rejected the charges that it had paid nearly $1.5 million in illicit surcharges to win oil contracts. Company spokesman Dmitry Dolgov said LUKoil did not have a subsidiary by the name LUKoil Asia Pacific, which was identified in the Report as a beneficiary of the OFFP.
"Our contracts were concluded directly with the Iraqi Oil Ministry, having been checked with the U.N. Oil-for-Food Commission," the spokesman said. He alluded to the high-profile resignation of investigator Robert Parton from the Volcker Committee in April in protest against ignoring evidence critical of U.N. Secretary-General Kofi Annan. "This creates the impression that the Report is aimed at distracting attention from the oversights of U.N. officials and laying the blame with certain companies," the LUKoil spokesman said.
Experts also questioned the oil bribe figures given in the Report. They said that if one summed up the amount of oil allegedly paid as bribes and added it to Iraq's official oil exports under the OFFP the total would far exceed Iraq's known export potential of one million barrels a day at that time.
Russian companies suggested that the charges against them had been concocted to shut them out of the Iraqi oil market. It was pointed out that the Volcker Committee's list of "bad guys" included many Russian firms, but hardly any American entities. The Iraqi Oil Ministry declared that it had stopped selling oil to companies mentioned in the Report.
"One gets the impression that the Volcker Report `materials' have been compiled with the aim of discrediting a state-owned Russian company that has been successfully operating in Iraq," Zarubezhneft said in a statement. "The Report, as well as the entire activity of the Volcker Committee, is politically motivated, biased and one-sided. It is a malicious throwback to the times of the Cold War that runs against the ideals of good-neighbourly relations and the United Nations Organisation."
The Russian government promised to investigate the charges against Russian persons and entities mentioned in the Volcker Report, but politicians rubbished it as absurd. Mikhail Margelov, Chairman of the Federation Council International Committee, said the Report had not proved the guilt of the Russian individuals and companies. "The fake documents provided to the Russian side cast a shadow on the very process of the investigation, reducing the scandal and the problem to a dubious farce," he was quoted as saying.
By and large the Report caused little commotion in Russia, which saw it as little more than yet another attempt to justify the U.S.-led war in Iraq. Analysts said the main pathos of the Report was to show that Saddam Hussein manipulated the OFFP to buy international support for waiving anti-Iraqi sanctions. This explains the fact that the majority of companies accused of paying bribes and kickbacks came from Russia and France, the main opponents of the war against Iraq. The Volcker Committee findings have been widely used in the U.S. to prove that the countries that opposed the war were guided by ulterior motives.
"It is not difficult to see why powerful political interests in Paris and Moscow were so fundamentally opposed to a war that would open the archives of Baghdad to close scrutiny and subsequently cause huge political embarrassment," Nile Gardiner of The Heritage Foundation wrote.
Moscow promised to try and identify those persons who compiled falsified documents and take action against them. "If falsification is proved and documented, the Russian side will take all appropriate measures," Foreign Ministry spokesman Mikhail Kamynin warned. Analysts said the Russian companies and individuals mentioned in the Volcker Report may well sue its authors for defamation.