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James Baker III: fingered for flouting US law in 1998
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| By Israel Insider staff and partners December 18, 2006 |
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Maariv journalist Ben Caspit reports that he has obtained documentation which shows that the law firm in which former American secretary of state James Baker is senior partner used an Israeli agent to bypass the US sanctions on business dealings with Iraq.
Houston-based Baker Botts, with extensive dealings in the Arab world, earned tens of millions of dollars in fees from a deal it brokered between the Korean Hyundai concern and the Iraqi government at the peak of the sanctions imposed on the government of Saddam Hussein, according to Israeli businessman Nir Gouaz, who has been asked in 1998 by Baker's office to mediate in the deal.
Now Gouaz wants to come clean and spill the beans to show Baker's hypocrisy and conflicts of interest. "I read all the essays about Baker's vision, about the Baker Report, about the man whom the United States placed at the head of the committee that is to decide on the future of the Middle East, and I decided that there is a limit to chutzpah. The time has come to tell the story," Gouaz told Ma'ariv.
In August 1998, Jeffrey Stonerock, one of the senior partners at Baker Botts, an American law empire directed by former secretary of state James Baker, specializing in international law, contacted Gouaz. The Israeli was asked to help the company collect a debt of approximately 900 million owed by the Iraqi government to Hyundai.
Hyundai had carried out a series of enormous infrastructure projects in Iraq for a decade in exchange for government bonds to be redeemed on various dates. But in the wake of the Gulf War, Iraq suspended payments to suppliers, and its unwillingness to pay threatened the future of the Korean company, according to Gouaz, who was interview on Israel Army Radio.
To evade the international boycott of Iraq, Gouaz -- who, as an Israeli, did not need to obey the sanctions -- was selected to mediate the deal. Gouaz met with James Baker in his early contacts with the firm and, at Baker's behest, in August 1998 met with the president of the Bank of Jordan, Shaiker Tawfik Fakoury, who agreed to purchase the Iraqi government bonds in exchange for 30 percent of their value and resell them to the Iraqis at a profit in exchange for oil. For their part, the Iraqis demanded in exchange to raise the quota of oil that they were allowed to export. After several months, after the quota of oil was raised, the deal got under way.
The Jordanians then bought the bonds from Hyundai via Baker's firm for USD 272 million, and sold them to the Iraqis for USD 450 million dollars' worth of oil. In Gouaz's estimation, Baker's law firm received USD 33 million in fees for services rendered. The deal was completed in July 2000.
Jeffrey Stonerock of Baker Botts responded to the Maariv report: "Your descriptions of our firm's role during the deal are imprecise."
But Gouaz says that he has plenty of documentation that Baker Botts, with James Baker's direct involvement, knew very well that it was skirting the sanctions and flouting US law. He says he has put the paperwork, including recordings of phone conversations, in a safe place.
For Baker, helping the Korean giant extract a fraction of the debt Iraq owed was just a stepping stone to an even bigger fish. "In a surprise move on December 5, 2003, George W. Bush named James Baker as a special envoy charged with seeking "the restructuring and reduction" of $130 billion in foreign debt piled up by the regime of Saddam Hussein," Justin Alaxander reports. "Until Baker's appointment," he continues, "the United States and the international community had largely sidestepped this minefield, pleading uncertainty about the size of the debt, the need to focus on more pressing matters or the fact that only a sovereign Iraqi government can hammer out debt relief agreements in the end."
Alexander writes at length of Baker's protracted efforts to extract a fraction of the debt owed by the Baathist regime. In a speech at the Center for Strategic and International Studies (CSIS), a center-right Washington think tank, Bush's special envoy explained the agenda behind his globe-trotting. "What I have asked of the major creditors is agreement on three principles. First, that Iraq cannot be reconstructed successfully without debt reduction. Second, that any reduction must be substantial, or a vast majority of the total debt. And third, that we must begin now to have any chance to complete the project in 2004." He added that his remit did not include war reparations or privately held debt, and emphasized that "Iraq's debts are simply too onerous and the issues too complicated and too urgent to wait ... until a new Iraqi government is formed."
Baker's special services for Bush may serve to "launder" his previous dealings bypassing US law during the Clinton Administration, when he and his firm relied, with questionable legality, on an Israeli "fixer."
Israel Behind the News and Maariv contributed to this report. |
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