On Wednesday, the New York Times reported that Iraqi officials have begun demanding kickbacks and illegal commissions from foreign companies seeking to sell humanitarian supplies in Iraq. The paper quoted unidentified diplomats and U.N. officials saying Iraqi officials required companies to pay bogus fees or hide commissions behind false prices for commodities such as wheat, sugar, rice or cooking oil. The money would then be deposited in foreign accounts for Iraq. Diplomats told the paper that some governments were investigating reports from companies that said they had refused Iraq's demands for kickbacks. The report on kickbacks comes after accusations that Iraq was demanding that buyers of its crude pay a per-barrel surcharge directly into its coffers, in violation of sanctions.
Industry analysts say Baghdad is still trying to force oil companies to pay the premium.
As a result, buyers have stayed away. The Security Council imposed the sanctions after Iraq's 1990 invasion of Kuwait. They sanctions cannot be lifted until U.N. inspectors declare that Iraq's nuclear, chemical and biological weapons have been destroyed. Inspectors who pulled out of Iraq in December 1998 ahead of U.S. and British airstrikes have since been barred by the Iraqi government from returning. U.S. military officials accuse China of helping Iraq install fiber-optic communications cable at the defense sites in violation of U.N. sanctions, an allegation China has publicly denied.