Mark Jessop has admitted breaking United Nations sanctions during the Oil For Food Programme by making illegal payments to Saddam Hussein's government. He has been sentenced today at Southwark Crown Court to 24 weeks' imprisonment and ordered to pay compensation and costs.
Background
Mark Rodney Jessop (D.O.B. 17/09/57) sold medical goods to the Iraqi market, initially as an employee of a British surgical instruments company but later through his own companies when in 1987 he set up JJ Bureau Ltd and Opthalmedex Ltd, of which he was sole director. These became the principal vehicles for his business activity in Iraq, though he also acted as an agent for other suppliers, negotiating contracts on their behalf.
Contracts for medical goods were awarded by the Iraqi government (in this case the State Company for Marketing Drugs and Medical Appliances, known as Kimadia). Between 1996 and 2003 Jessop entered into 54 contracts, making him the most active supplier of medical goods in contract numbers. The face value of these contracts amounted to US $12.3 million.
The backdrop to his illegal actions was the Oil For Food Programme. Iraq was suffering hardship because of trade sanctions imposed by the world community following its invasion of Kuwait. To alleviate the effect sanctions were having on the people of Iraq, the UN Security Council allowed Iraq to export its oil in order to pay for the importation of humanitarian goods. The Oil For Food Programme, which commenced in December 1996, was a UN monitored scheme whereby oil revenue was not made directly available to the Iraqi government but managed through a UN escrow account and used to pay for the supply of humanitarian goods. This included medical products.
Kimadia negotiated with suppliers and awarded contracts for such goods. However, in the UK, a supplier would then need British government approval to proceed by applying for an export licence through the Sanctions Control Licensing Unit of the Department of Trade & Industry. (Similar arrangements applied in other countries). If there were no objections the application would then be referred for ultimate approval to a UN committee in New York responsible for overseeing sanctions. That committee's approval would enable the DTI to grant the supplier an export licence.
When a contract had been executed suppliers were paid from the UN escrow account upon presentation of contract and consignment documents to show that the goods had reached Iraq, been inspected by UN appointed agents and cleared into the country by the authorities there.
The illicit payments
In August 2000, the Iraqi government imposed a policy that contract prices be uplifted to allow for a 10% kickback to the regime. Suppliers who accepted this condition were required to submit pro-forma invoices that did not reveal the uplift, or described it as "after sales service fees". Contracts were duly awarded, consignments shipped and documents presented by the supplier to be paid out of the escrow account. The supplier was required to pay the kickback into accounts held by the Iraqi government before the goods were shipped to Iraq.
Mark Jessop accepted contracts on this basis. He admits that nearly €104,649 was illegally transferred to benefit the Iraqi regime, with a further € 235,237 outstanding, unpaid because of military intervention in March 2003. The conduit was an old business contact in Jordan, an Iraqi named Dr Janan Matloob who had contacts with Kimadia and who provided Jessop with information on tenders. The kickbacks were paid to Dr Matloob who then transferred them (after retaining a small fee) to Jessop's account at the Jordan National Bank, Amman ready for on-forwarding to a Kimadia account at an Iraqi bank (Rafidain Bank) in Amman.
Jessop also had contract dealings with Kimadia through a local agent Dr Ishan Ibrahim whose business, Beja Scientific Office, was authorised by Kimadia to represent foreign firms. Jessop paid commission to Ibrahim for his services in the form of cash during his visits to Iraq. These commission payments to Ibrahim, amounting to £40,000, represented cash withdrawn from Jessop's companies' dollar or euro accounts.
Such payments were outside the scope of the contracts and, like the 10% contract value payments into a Kimadia account, were made without approval from HM Treasury, therefore in breach of UN sanctions that prohibited payments to Iraq or persons in Iraq without (in the UK) a Treasury licence.
In January 2001 Jessop contacted the Foreign & Commonwealth Office for advice on the recently introduced Iraqi government demand that contracts be uplifted to include 10% "after sales service fees", which he explained was code for payments to the Iraqi regime. He was advised that he should not proceed with contracts that would put him in breach of UN sanctions. Despite this, later that month Jessop applied for a licence to supply goods to Iraq in a contract that was inflated to pay the kickback.
Investigation and Proceedings
The Iraq Government's demands for kickbacks on contracts came under UN scrutiny following the international action against Iraq in 2003. The UN Independent Inquiry Committee was established and published its final report ("the Volcker Report") on the manipulation of the Oil-For-Food Programme in October 2005 and made a referral to the UK authorities in December 2005. Following the provision of additional funding from HM Treasury (with the support of the Attorney General), the SFO commenced an investigation in 2007.
The defendant was charged in November 2009 and a trial was set for 21 March this year. He indicated shortly ahead of trial that he would plead guilty and has today admitted ten counts of engaging in activities to make funds available to the Iraqi Government in contravention of the legislation implemented in 2000, i.e. The Iraq (United Nations Sanctions) Order 2000 (Statutory Instrument 3241) which made it a criminal offence to do so without a licence granted by HM Treasury.
In addition to the custodial sentence of 24 weeks imposed by HHJ Leonard, the defendant has been ordered to pay £150,000 to the Development Fund for Iraq and pay prosecution costs of £25,000. Both orders are to be paid within 12 months.
