Sunday, May 9, 2004

An international financier with ties to Saddam Hussein’s regime and the United Nations’ oil-for-food program helped Middle Eastern and European cell-phone companies edge out American firms for lucrative Iraqi contracts, The Washington Times has learned.

Nadhmi Auchi, an Iraq-born British national who was involved in international arms trading, is being investigated for purportedly rigging bids with the Iraqi Communications Ministry and the Coalition Provisional Authority, which resulted in contracts being awarded to three companies tied to Europe, according to defense officials familiar with an internal investigation.

All the companies have links to Auchi, who was convicted in France last year for taking illegal payments. The contacts could be worth some $500 million annually in future cell-phone service in Iraq, said officials who discussed details ofthe investigation on the condition of anonymity.

“The winners of the Iraqi cellular tender were Saddam’s most senior financiers, their Egyptian, Kuwaiti and Iraqi supporters, the bank BNP Paribas, European cellular corporations, particularly Alcatel and the European GMS technology it depends on, and Chinese telecom interests, such as Huawei, which had been active in breaking the Iraqi embargo,” said a defense official.

“The losers were American bidders,” the official said.

American firms that lost out in the contracting included a consortium of companies such as Qualcomm, which developed a more advanced cell-phone technology known as CDMA, and Lucent Technologies.

Auchi was convicted by a French court in November for his involvement in an illegal payment scheme involving the state-owned oil company Elf-Aquitaine. He received a 15-month suspended prison sentence and a $2.4 million fine.

He also has been linked by U.S. investigators to the United Nations’ oil-for-food program, now under investigation by the world body and the U.S. Congress for skimming oil revenue meant to buy humanitarian goods in Iraq.

Auchi, 66, is viewed by U.S. officials as a key figure in the emerging scandal because of his close relationship with officials of the Saddam regime, and because most of the $65 billion involved in the eight-year program was deposited in the Paris bank BNP Paribas. Until 2001, Auchi was a major shareholder in the bank, and investigators believe as much as $10 billion from the program was stolen by Saddam and his associates.

A former Ba’ath Party member, Auchi is believed to have a net worth of about $3 billion.

David Corker, a London lawyer who represented Auchi in the French case, referred calls to Auchi’s office. Auchi could not be reached at the headquarters of his company, General Mediterranean Holdings, in Luxembourg.

Officials said Auchi’s attorneys in the past have dismissed corruption accusations against him as rumors, at least before the conviction in France.

Auchi also has claimed that the killing of his brother by agents of Saddam’s government shows that he is not sympathetic to the ousted dictator.

According to the defense official, “significant and credible evidence” reveals “a conspiracy was organized by Auchi to offer bribes to ‘fix’ the awarding of cellular-licensing contracts covering three geographic areas of Iraq.”

The contracts were won by Asia Cell Telecommunications Co. Ltd., Orascom Telecom Iraq Corp. and Atheer Telecom Iraq.

Officials believe that the contracts-award process was arranged so that companies linked financially to Auchi won the bids and that the common European cell-phone standard, known as GSM, would be the only standard used under the contracts.

As a result, Auchi succeeded in taking over the entire postwar cellular-phone system in Iraq by using contacts and front companies to design the architecture for the phone network in three sectors in Iraq, and to make sure that he owned or controlled the components.

Several American, British and Iraqi nationals are under investigation in addition to Auchi for the reputed cell-phone bid rigging, U.S. officials said.

Two American officials working within the Iraqi Communications Ministry resigned last month and accused a Pentagon official of improperly influencing another contracting process in Iraq. The matter involving all three officials is under investigation by the Pentagon’s inspector general.

“The implications of [Auchi] having fixed the tender for the entire Iraqi cellular-telephone system go beyond mere corruption and technological empire building,” the defense official said. “It put in control of Iraqi telecommunications a man with an anti-American, anticoalition mind-set and a history of illegal international arms traffic. That control could allow him to compromise the entire Iraqi telecommunications system and undermine the Iraqi security system on an ongoing basis.”

One problem for investigators is the June 30 deadline for turning over sovereignty of Iraq to a new government in Baghdad. After July 1, it will be very difficult to figure out how the licensing process for telecommunications contracts was carried out.

The investigation by the Pentagon’s Directorate of International Armament and Technology Trade, a special unit set up to track arms and technology transfers, is under way on the telecommunications-contracting improprieties.

According to officials familiar with the investigation, Auchi used “influence peddling and access to the Iraqi regime in conjunction with his European, North African and Middle Eastern financial and business empire to build a worldwide network.”

Auchi has large cell-phone business interests in Tunisia, Algeria, Egypt and Jordan in addition to the concessions in Iraq. He is also seeking to set up cell-phone networks in Iran.

Officials also believe Auchi was involved in illegal activities related to Iraqi intelligence officers under Saddam.

The information obtained by the officials shows that Auchi bribed foreign governments and individuals in the months leading up to the Iraq war to oppose the U.S.-led effort to oust Saddam.

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