Involvement of Congress and a former Foreign Minister Natwar Singh

As the discussion of European and Indian purchases of Russian energy continues, an older story regarding the Congress Party’s role in a global oil scam during an energy crisis is worth highlighting. We are talking about the Iraqi oil-for-food scam.

What was the oil-for-food scam?

During Saddam Hussein’s reign in Iraq, the oil-for-food scam involved illegal oil transactions. The United Nations Security Council introduced the Oil-for-Food program in 1996 to enable Iraq to sell enough oil to pay for food and other basic necessities for its population, which was suffering from harsh sanctions imposed by the United Nations following the first Gulf War. Saddam Hussein, on the other hand, benefited from the initiative, amassing $1.7 billion in bribes and surcharges and $10.9 billion in fraudulent oil smuggling.

According to the Volcker report, published in October 2005, about half of the 4,500 participating companies paid bribes and illegal surcharges to obtain major contracts, allowing Saddam Hussein to rack up $1.8 billion in expense of Iraqis suffering from UN economic sanctions.

Since its creation in April 2004, the Volcker Committee has published four interim reports. According to the report, Kojo Annan, son of UN Secretary General Kofi Annan, was also indirectly involved in the scam. Between 1995 and 2004, Kojo obtained $400,000 from the Swiss company Cotecna Inspections SA. The final report also explicitly stated that “the Indian Congress Party” and Natwar Singh’s family were non-contracted beneficiaries of the Oil-for-Food programme.

How was Congress involved?

The Volcker Committee report cited Kunwar Natwar Singh, former external affairs minister, and the Congress Party as “non-contractual beneficiaries” of Iraqi oil sales in the 2001 United Nations Oil-for-Food scam .

Singh, then head of the Congress’s international affairs cell, led the Congress delegation to Baghdad via Jordan in January 2001, when the party was in opposition. Former Union ministers P. Shiv Shankar and AR Antulay, as well as Aniel Matherani, joined him. He was joined by two others: Jagat Singh, his son, and Andaleeb Sehgal, an exporter from Delhi who is also linked to the family, according to a detailed report in India Today.

This trip was followed by a series of illegal oil deals with Natwar and Congress under Saddam Hussein’s regime’s oil-for-food program, as detailed in the Volcker Committee report.

Matherani, who became ambassador to Croatia after the Congress Party came to power in 2004, said Singh used the 2001 trip to lay the groundwork for Jagat and Sehgal to strike deals under the oil program against food.

He added that planning began on Nov. 27, 2000, when then-Vice President Taha Yassin Ramadan visited India and invited a congressional delegation to Iraq. Natwar, according to Matherani, then planned for his son to accompany him as “it would be a difficult journey” for someone his age.

Matherani said that when they met Ramadan and Tariq Aziz, then Iraqi Deputy Prime Minister, Jagat and Sehgal followed them and were introduced as members of the delegation. He said that by involving them in the meeting, Natwar signaled to the Iraqis that they were his representatives and that they could be granted any business favors the regime would bestow on him.

Sehgal and Jagat then negotiated with Iraqi officials to register Sehgal’s Hamdan Exports company to do business in Iraq. Following this, Hamdan registered with the Iraq Grain Board to supply wheat on January 30, 2001, and Sehgal continued to travel to Iraq to monitor wheat tenders.

However, interestingly, Sehgal never received an offer of wheat from the Iraqi government. Nonetheless, according to the Volcker report, Sehgal initially paid what appears to be an advance surcharge of $60,000 (Rs 27 lakh) for a deal to raise two million barrels through Masefield AG, a Swiss oil trading company.

Natwar and Congress were both listed as “uncontracted beneficiaries” of the Saddam government’s illegal oil allocations in the Volcker committee’s 630-page report. It is said that Natwar got four million million barrels of oil, while the Congress party got the other four million.

In addition, nearly three million barrels were raised, including two million from the four million barrels allocated to Natwar and one million barrels from Congressional allocations. In the records of the Iraqi National Petroleum Marketing Organization, Sehgal’s company, Hamdan Exports, was listed as having paid the premium levied by the Iraqi government for the transfer of these oil quotas in both cases.

What followed next?

When the Congress Party took power in 2004, Natwar Singh was appointed Minister of External Affairs under Prime Minister Manmohan Singh. However, following the publication of the Volcker report, he was forced to resign as minister and was subsequently suspended from the party. Two committees have been appointed to investigate the Volcker report and all allegations: a judicial inquiry headed by India’s former Chief Justice RS Pathak and a fact-finding mission headed by former diplomat Virender Dayal.

In August 2006, the RS Pathak Committee delivered its report to the Prime Minister, in which Congress was cleared of all charges. The Law Enforcement Branch subpoenaed Natwar Singh and his son in September 2006.

Image via: India Today

The Law Enforcement Branch, which investigated Natwar and Jagat under the Foreign Exchange Management Act (FEMA), continues to argue that shreds of evidence point to the connection between the Singhs and Sehgal. According to a report by India Today in 2014, ED discovered that Natwar had received foreign money totaling $898,027 (Rs 5.4 crore) in violation of FEMA.

Natwar Singh claimed innocence in the oil-for-food scam that ended in his shameful political departure in his autobiography, One Life is Not Enough. Singh argued that if we look at the appendix to the Volcker report, it indicates that Congress was appointed in 1997 and the name was inserted in March 2005 because Sonia Gandhi said he needed to be “repaired”. He further claimed that Judge RS Pathak, who investigated Volcker’s charges, cleared him in the report of the investigating committee. However, the report, which was presented to then-Prime Minister Manmohan Singh, has yet to be made public.