An investigative report by Maa'riv (Israel's second largest daily) in this Friday's weekend newspaper by Ben Kaspit (A well connected Israeli Journalist) claims that James Bake's law office made millions of dollars via a deal it made with the Saddam's Iraqi government while sanctions were in effect.
The main witness and supplier of documented proof is Israeli businessman Nir Gouaz, who was asked by Baker's office to mediate in the deal, and did so.
Nir came out with the story to Maa'riv after the ISG report - which he thought couldn't be honest (either way) due to James Baker's Iraq profits.
Due do the Jewish Sabbath and Hanuka, everything here in Israel is in slow-motion, so the story has not gotten out across the Web yet.
Diary includes complete story.
The story published in the Maa'riv newspaper encompasses three pages. It has been condensed and divided into chapters here for the reader's sakes.
Background
Nir Gouaz claims he was convinced to come out with the story by James Baker's ISG report.
Nir Gouaz returned to Israel in 2004, after living for 15 years in the USA. 48 year old, married, father of four. He is rich, his name linked to a few international affairs, especially in Sierra Leone's diamonds, Link here but never convicted.
His work, based in Miami's Fisher Island, was being middleman (ER- He was not an American citizen, so could do things American's couldn't). He had connections in the Middle east and Africa, and was called in when big money was stuck in problematic countries. His successes netted him money and reputation.
A Few Pesky Problems
In August 1998 he was called by Jeffrey Stonerock, one of Baker's senior associates in the BakerBotts firm, with such a problem. Gouaz went to 1299 Pennsylvania Ave. where he met Baker himself. Baker told him the deal was to be discrete. A Chinese (Apparently a Hyundai representative) contact gave the details:
Hyundai's Civil Engineering Wing constructed several infrastructure projects in Saddam's Iraq for a decade. The accumulated pay was in $800M's worth of Iraqi government bonds to be redeemed on various dates. After the 1991 Gulf War, Iraq suspended the payments to many suppliers, Hyundai included, and the debt to the Korean company threatened to topple it. Hyundai was willing to collect even just a part of the debt now and forefit the rest.
Dealing
The biggest problem was US/UN enforced/administered Oil-For-Food. Gouaz was tapped to find a buyer for the bonds because of his contacts, reputation, discreetness, and because no US citizen should be involved in bypassing Oil-For-Food, especially James Baker.
Goaz decided Jordan would be the only country that would deliver the goods, since they were close enough to smuggle their way around Oil-For-Food. Via Jeffrey Stonerock a meeting was arranged with Shaiker Tawfik Fakoury - president of the Bank of Jordan.
They arranged an "Everybody Wins" deal:
- The Bank of Jordan would purchase the Iraqi bonds from Hyundai for about a third of their value - Hyundai would get about a third of the debt back...
- The Jordanians would resell the bonds to the Iraqis at a profit in exchange for oil. (Making a profit worth 20% of the deal)
- Iraq would get rid of a Billion Dollar Debt at about half the cost. (and in oil which they had plenty of)
- Mediators (=Baker and Gouaz) get their cut...
The deal took a while to close, and was done in a meeting in Jordan in March 1999. Gouaz brought the Iraqi bonds, The Chinese go-between and a representative of Jordan's King was there too. The King's rep Ahmed Barakat thanked Gouaz for choosing the Jordanians for this lucrative deal.
A follow up meeting with Hyundai Execs in Honk Kong confirmed how much they needed. Talks with the Iraqi Foreign Minister Tariq Aziz closed the deal on their part.
The Iraqis, however, demanded a raise the quota of oil that they were allowed to export. That happened after several months (ER- How???), and the deal got under way in August 1999.
Closing the Deal
The deal was completed by July 2000. The Jordanians bought the bonds from Hyundai via Baker's firm for $272M, Hyundai's VP signing it. They then sold the bonds to the Iraqis for $450M worth of oil. Gouaz estimated that Baker's law firm got a $33M cut for their "services". He got a nice cut too.
Two months after 9/11 Gouaz says Jeffrey Stonerock called him and told him to destroy all records of the deal. He kept some.
Jeffrey Stonerock's response: "Commitments of ethics prevent us from discussing issues concerning our clients, but we can confirm that BakerBotts was not a 'Go-Between' or provided significant legal advice in the described deal. Your descriptions of our firm's role during the deal and of my contacts with Mr. Nir Gouaz in November 2001 are imprecise. If you have any documents that you think claim otherwise, we would be happy to see them as to respond appropriately"
Please note that I translated this from Hebrew. Some usual (minor) language errors are probably present, especially in the quotes that went English->Hebrew->English.
Concluding thoughts:
I have not been able to find direct evidence for this on the web. I have seen it published in a shorter form here
One piece of circumstantial evidence that Hyundai actually had deals with Saddam's Iraq is This.
How would this reflect on the ISG's work? Could it have altered it in either direction?
I personally (mostly) approve of it, but after this, should we check the ISG member's respective histories?
Happy Hanuka to all