Overview

The SFO is conducting a wide-scale investigation, believed to have cost £22m, into alleged breaches by British companies of the UN’s Oil for Food programme in Iraq. This was triggered by the “Volcker Report” in 2005, being the report of the UN Independent Inquiry Committee into the manipulation of the UN Oil for Food Programme, which had been established following the 1991 Gulf War and the imposition of UN sanctions upon Iraq.
The purpose of the Oil for Food Programme was to alleviate the hardship caused by the sanctions upon the Iraqi people by allowing Iraq to sell oil to whomsoever it chose in exchange for humanitarian aid. The sale proceeds were paid into a UN bank account and used to purchase humanitarian supplies and services.

It is now clear that the Oil for Food programme’s mechanism gave rise to two forms of unlawful practices. First, parties were making payments to be allocated oil by the Iraqi regime at below market prices, which they then sold on in the open market for a profit. Secondly, companies made payments to the regime to be awarded contracts to provide humanitarian services, paid for out of the UN account. The services were over charged
to the account by up to ten per cent, with part of this over charged amount being paid back to the Iraqi regime. The Volcker Report linked 2,200 companies across 40 countries to these activities.
Mabey & Johnson was one of the British companies implicated by the report as being involved in such practices in
order to obtain humanitarian services contracts, and initially denied the accusations. In its annual accounts published in 2008, however, the company announced that it had recently identified and self reported to the SFO two possible payments to Saddam Hussein’s regime. In addition, the company admitted that it had “...recently been notified of allegations that certain historical contracts may have been procured through corrupt acts.”