Saturday, August 16, 2003

GENEVA — If Saddam Hussein is indeed orchestrating an anti-American guerrilla campaign from a hideout somewhere in Iraq, he can count on the billions of dollars he stashed away all over the world to finance his hit-and-run operations.

The latest evidence of the fugitive Iraqi ruler’s ability to return to power by covering the costs of the requisite arms acquisitions and operational outlays is the discovery of a cache of gold bars in a Swiss metallurgic firm — $5 million worth ready for meltdown.

It has been “frozen” by Switzerland’s government and the executives of Metalor who are reported to have engaged in illicit business dealings with Saddam’s half brother and finance chief, Barzan e-Tikriti. Several Metalor executives are being questioned by the Swiss police and Mr. e-Tikriti is under interrogation in Baghdad, where he surrendered to the U.S. military authorities.

Swiss law enforcement officials were not able to act against Mr. e-Tikriti during the two decades in which he ran Saddam’s financial network from this international banking center because simultaneously he enjoyed diplomatic immunity as Iraq’s chief delegate to the United Nation’s local headquarters.

According to Nicolas Giannakopoulos, head of Organized Crime Observatory (OCO), Saddam is a multibillionaire whose worldwide financial grid trades in gold, diamonds and drugs, and has links to important Russian and U.S. companies. The OCO is an independent Geneva-based investigative group specializing in dubious banking and money-laundering operations.

Saddam’s funds not only have been deposited in Swiss banks but also in banks and off-shore companies in Liechtenstein, Panama and the Bahamas, among other countries, Mr. Giannakopoulos said. The money derived from Iraq’s prewar and pre-sanctions oil revenues, 5 percent of which was skimmed off the top by Saddam for his personal fortune throughout the 1980s and to the extent that Iraq could dodge the U.N.-sponsored embargo, during the 1990s as well.

Mr. e-Tikriti funneled it to banks here and abroad — which either did not ask any questions, which is the Swiss way of doing business, or did not divulge whatever sensitive information they were able to deduce or gather.

At the Banca del Gottardo’s branch in the Bahamas, for example, the money was reportedly kept in Account Number 70531, known as the Satan Account, according to an article published in the Sunday Times in April.

Money was never deposited anywhere in Saddam’s name. According to the article, the account was said to have been managed for Saddam by Elio Borrodori, 75, a Swiss attorney who was employed by him for 10 years. Banca del Gottardo issued a news release in Nassau categorically denying the Sunday Times report.

The OCO’s attorney, Francois Membrez, contends that Saddam’s financial agents in Switzerland operate “beyond the limits of Swiss laws,” implying that it is virtually impossible to indict them in this country’s courts.

“Our judicial authorities cannot deal with this,” he said. “They are not authorized under our constitution to handle such problems as criminal cases.”

Mr. Membrez said legal proceedings cannot be initiated “unless it can be proved that the funds discovered in Switzerland are the result of criminal activities, such as corruption, theft, violation of legal obligations.”

“In this case, investigations for money laundering could be opened against Saddam’s financial agents as well as against the Swiss banks and Swiss agents where funds are discovered.”

This was borne out in a statement by Hansjurg Mark Wiedmer of the Swiss attorney general’s office. He confirmed that Swiss law enforcement personnel are invetigating the activities of Islamic and other banks suspected of funding Osama bin Laden’s al Qaeda organization, but not Saddam Hussein’s financial activities here.

A Swiss government source said this investigation began “one day after the 9/11 attacks.” Mr. Wiedmer confirmed that it is being conducted in close cooperation with the U.S. authorities, including the FBI.

Distinguishing between “criminal” and “political” cases, Mr. Wiedmer said the latter, such as violations of the U.N. sanctions regime, are within the purvey of the secretary of economic affairs.

According to Othmar Wyss, an expert who works in the office of the secretary of economic affairs, Switzerland could not freeze the assets of any Iraqi person prior to May 22. On that date, the U.N. Security Council formally authorized such action by passing Resolution 1483, he said. Beforehand, Switzerland “was not obligated to confront these persons,” he said.

Mr. Wyss pointed out that it was not until the end of June that his office received the names of 55 persons whose assets were to be frozen at the request of the U.N. body.

Turning to the treatment of companies whose activities might be deemed illicit or controversial, such as the 300 belonging to Saddam’s financial network, Mr. Wyss said the U.N. Security Council called for action against Iraqi companies immediately after the invasion of Kuwait in 1990. “This was specified in Paragraph Four of Resolution 661,” he went on, “but to date the U.N. has not published the names of these companies.”

The OCO’s Mr. Giannakopoulos said Switzerland was chosen as the hub of Saddam’s network because “the Swiss didn’t ask questions; they just let his agents do whatever they wanted to do.”

Paolo Fusi, an Italian investigative reporter, has spent nearly two years on Saddam’s money trail. He began his research immediately after the September 11 attacks on the World Trade Center and the Pentagon.

“Saddam’s financial network was modeled on that of the late President Gamal Abdel Nasser of Egypt,” Mr. Fusi said.

“Saddam fled to Cairo in 1959 after having participated in an abortive coup d’etat [during which he was wounded, arrested and escaped] and became an admirer of the Egyptian regime and its charismatic leader. His goal was to turn Iraq into a replica of Nasser’s Egypt.” The Egyptian president relied on substantial sums of money that were deposited in foreign banks and controlled by a special emissary based in Milan, Italy, Mr. Fusi went on to say.

Its purpose was to pay for weapons purchases and to provide a financial cushion in case he were overthrown and forced into exile, Mr. Fusi said. Mr. Fusi, who has exceptional access to the Italian judiciary and police, managed to penetrate the dealings of Saddam’s secret brigade of business agents with European industrialists. He also cut through the web of bank transfers, money-laundering activities and dummy companies that enabled Iraq’s fallen Ba’athist leader to turn his totalitarian state into a regional military power.

The Iraqi network’s financial activities were anchored in Lugano, Switzerland’s Banca del Gottardo, in conjunction with which one of its component firms, Mediterranean Enterprises Development Projects (MEDP) moved $5 billion annually. The MEDP had developed into one of Switzerland’s biggest companies by the end of the 1970s.

Returning from self-imposed exile after spending five years in Cairo, Saddam took over Iraq in 1979. He had sent his half-brother, Barzan e-Tikriti, to Geneva nearly a decade before his seizure of power to set up the network, Mr. Fusi said.

The network’s financial power reached a peak of $31 billion annually, Ernst Backes, an international banking expert based in Luxembourg, estimated. Mr. Backes, who specializes in international clearing houses which expedite interbank money transfers worldwide, said that funds allocated by Saddam from 1979 to 2002 for the purchase of weapons or raw materials for their manufacture totaled $100 billion.

The network had the wherewithal to buy or obtain controlling shares in various industrial firms on three continents.

German manufacturers topped its list of industrial investments. Contracts were signed by the network with several of them for raw materials ostensibly to be used in the manufacture of pharmaceuticals in Iraq but that were earmarked for military purposes such as chemical weapons.

Israel’s Mossad intervened at least twice, Mr. Backes said, recalling that it tried to scuttle major Iraqi military acquisitions: Condor-2 missiles from Switzerland’s Consen AG and poison gas from two German firms, WET and H-H Metallform.

One of the network’s boldest exploits was laundering millions of Iraqi and Kuwaiti dinars (the latter plundered by Iraqi troops during the 1991 Persian Gulf war for recycling back to the Levant).

“The money was packed into suitcases, which were transported by truck from Bled, Slovenia, to Zurich, where a fair exchange was guaranteed by Youssef Nada of El-Taqwa Bank” — an outfit included in President Bush’s list of al Qaeda’s money suppliers, Mr. Fusi said. El-Taqwa’s headquarters were in Campione, a tiny Italian enclave surrounded by Swiss territory, which also serves as an international tax haven.

“The neatly packaged bills then were shipped to Lebanon and Syria after which they disappeared,” he said.

Another case entailed a consignment of weapons purchased in Slovenia from Russian, German and American arms merchants by one of Saddam’s agents. The contraband was sent to the Croatian port of Koper, where landlocked Slovenia has extraterritorial shipping privileges. It was listed on the outgoing freighter’s manifest as “grain” and delivered to Syria.

“Ironically, the boat was named the Nada after the Egyptian financial family whose scion, Youssef, founded El-Taqwa Bank,” Mr. Fusi said.

Saddam’s penchant for cruelty and sadism did not exempt his financial emissaries. When he learned that Saad el-Mahdi, a nephew who worked out of Milan, was siphoning off much more money than is the norm on such missions, as was a colleague, he summoned both to a closed-door hearing in Baghdad, gave them a week to tell their side of the story and had them beheaded.

El-Mahdi’s bereaved family engaged a crack Swiss-Italian lawyer, the late Gianluca Boscaro, to sue the Iraqi president for its share of the funds in question. The case never went to court because Mr. Boscaro, a champion skydiver, was killed last August when the ropes on his paraglider became inextricably tangled in flight and his paraglider crashed near Northern Italy’s Lake Orta.

The Italian police did not have a chance to investigate nor conduct an autopsy, Mr. Fusi said, because their Swiss counterparts arrived at the crash scene three hours before they did and took Mr. Boscaro’s corpse back to Switzerland for burial. This was legitimate because of a standing agreement between the Swiss and the European Union according to which the former can take instant charge of forensic investigations that relate to their own citizens.

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