The Enforcement Directorate (ED), which is responsible for enforcement of the country’s exchange control laws, has sought finance ministry approval to approach authorities in Iraq, Lebanon and Jordan for details on whether the Mukesh Ambani group's Reliance Petroleum Ltd (RPL) paid anything extra to Saddam Hussein's regime to secure oil contracts under a UN-administered oil-for-food programme that ran from 1995 to 2003.
In its letter to the finance ministry, the ED said a payment "over and above the actual value of oil by RPL or on their behalf by some other person/entity to the Iraqi authorities without the permission of the RBI cannot be ruled out".
The humanitarian programme was designed to allow Iraq to sell oil on the world market in exchange for food, medicine and other needs for ordinary Iraqi citizens without allowing Iraq to rebuild its military. The programme was widely criticised for widespread corruption, the principal allegation being that Iraqi officials were bribed in return for contracts under the programme. The scandal cost Natwar Singh his job as external affairs minister, owing to his son’s involvement in some of the contracts.
An investigation report under former Federal Reserve Chairman Paul Volcker said a “surcharge” of over $3.5 million was paid for three contracts allocated by Iraq's State Oil Marketing Organisation (SOMO) to an Iraqi account maintained with Jordan National Bank in Jordan through wire transfers from First National Bank in Lebanon.
Volcker’s report mentioned RPL as one of the "non-contractual beneficiaries" in the three contracts.
The ED has sought the department of revenue’s approval to issue letters of request under the Foreign Exchange Management Act (FEMA).
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"In order to obtain confirmation to this effect, as also to obtain supporting documents," ED said, it proposes to approach the authorities in Iraq, Jordan and Lebanon. Asked about the development, a Reliance Industries group spokesperson said: "We have not violated any rules and regulations laid down by the RBI or FEMA."
The Volcker report said 19 million barrels of oil were allocated under these three contracts, of which 15.78 million barrels were lifted and a surcharge amount of over $3.5 million and above the price of oil fixed by the UN was paid into a designated Iraqi account.
The ED's probe into the matter based on the Volcker report found that RPL, a subsidiary of India's most valuable company by market value Reliance Industries, did not lift the oil allocated to it by SOMO, but authorised Liechtenstein-based Alcon Petroleum to do so on its behalf. Consequently, Alcon signed the contracts with SOMO and lifted the oil. The Reliance Group, however, said it had no relationship with the Alcon Petroleum. "Reliance Industries Ltd has always followed national and international laws and norms in all its business transactions... We have not been approached by any government authority in the last two and half years regarding this issue," a company spokesperson said.
Sukhram was also found to have favoured an HFCL-led con