Published January 13, 2015
The scandal engulfing the United Nations Procurement Department (search) now appears to be bottomless. It also shows signs of growing more sinister, especially where it involves a mysterious private company called IHC Services (search), which did big business with the procurement department until it was removed from U.N. rosters in June.
New details of how dark the scandal could prove to be have emerged from the private sale of IHC on June 3, 2005, just as the procurement scandal was about to break. It now appears that while doing business with the U.N., IHC had links both to Saddam Hussein’s old sanctions-busting networks, and to a Liechtenstein-based businessman, Engelbert Schreiber, Jr., known among other things for his ties to a figure designated by the U.N. itself as a financier of Al Qaeda (search).
Registered in New York State, with offices in New York City and Milan, IHC has been involved in possibly hundreds of millions of dollars' worth of business with the U.N. since the mid-1990s, serving both as a direct supplier and as a go-between for a wide variety of other contractors. This work has included IHC’s signing or helping to broker contracts for supplies ranging from portable generators to rations for U.N. peacekeeping troops in such trouble spots as West Africa and the Middle East.
IHC came under public scrutiny this summer, after FOX News broke the story on June 20 that IHC had maintained especially close ties with Alexander Yakovlev (search), a Russian official in the U.N. procurement department, who while handling an IHC contract with the U.N. had obtained a job for his son with the company, and had also been channeling funds to a secret offshore bank account.
Yakovlev resigned two days after the story broke. On August 8, he was accused by Paul Volcker’s U.N.-authorized probe into the Oil-for-Food scandal of taking more than $950,000 in bribes on $79 million worth of U.N. contracts. Yakovlev pleaded guilty in Manhattan Federal Court to charges of corruption, and he became a cooperating witness in the continuing federal investigation that last month led to the indictment of Vladimir Kuznetsov, head of the U.N. budget oversight committee. Kuznetsov says he is innocent.
Amid all this, one of the big mysteries has been: Who were the people who owned IHC? The answer still lies hidden behind a maze of front companies and affiliations that zig-zag from New York to Milan to the financial havens of Luxembourg and Liechtenstein. But from documents finalizing the sale of IHC on June 3, 2005, some further details can be gleaned.
Corporate board minutes of IHC, obtained by FOX News, had mentioned a “sole shareholder” of IHC. The sole shareholder, according to the June sales documents on IHC, turns out to have been an even more mysterious company called Torno S.A.H. (search), based in the financial haven of Luxembourg. And Torno, in turn, had two major shareholders who approved the sale of Torno’s 100% interest in IHC. One of these shareholders was a Milan-based businessman, Dario Fischer (search), a director of IHC since at least 1996, who at the time of the sale was chairman of the board.
The other shareholder in Torno S.A.H., who gave his proxy to Fischer to approve the sale, was a man named Engelbert Schreiber, Jr. (search) He has been linked, either directly or through father-son family business, to a number of Liechtenstein enterprises affiliated at various times from the 1970s through at least the year 2000 with Ahmed Idris Nasreddin (search), a man designated as a terrorist financier by the U.S. and U.N. shortly after Sept. 11, 2001.
A naturalized Italian citizen, Nasreddin operated for decades out of Milan and Lugano, Switzerland, both as a businessman and a member of the terrorist Muslim Brotherhood, some elements of which morphed into Al Qaeda. In 2002, Nasreddin, along with a number of his enterprises, landed on the U.N.’s list of individuals or entities “belonging to or affiliated with Al Qaeda.” He is now believed to be in Morocco.
The Schreiber father-son connections with Nasreddin are labyrinthine, but they are a subject familiar to trackers of terrorist money. Engelbert Schreiber, Sr. (search), served from the 1970s through the 1990s in a variety of legal capacities on a number of Nasreddin-related enterprises registered in Liechtenstein. The name of Schreiber Jr., -- who cast his proxy this June in the sale of IHC -- appeared in the year 2000 on Liechtenstein registry documents of the Wahda Charitable Foundation, which had Nasreddin on its board of directors, and in 1993 on the Liechtenstein registry documents of the Nasreddin Charitable Foundation. In both cases, Schreiber Jr. was named as liquidator, which in Liechtenstein tends to entail significant discretionary powers.
Both Schreibers, father and son, have been named among the defendants in a 9/11 lawsuit brought in 2003 by the estate of former FBI counter-terrorism expert John O’Neill, who died in the terrorist attacks on the World Trade Center. The lawsuit alleges that, according to Liechstenstein official documents, one of Schreiber’s businesses, Schreiber and Zindel, was “a legal entity involved in money laundering activities on behalf of Al Qaeda.” That suit is now pending a motion to dismiss.
In a sworn declaration pertaining to this lawsuit, signed May 20, 2005, Schreiber Jr. attested that while he visited the U.S. on a number of occasions between 1988 and 1998, he has never done business either directly or through an agent in the U.S. IHC sales documents show that two days earlier, on May 18, he had given his proxy to Fischer, in Milan, to approve Torno’s sale of New York-registered IHC.
Schreiber also had a link to the U.N. Oil-for-Food program in Iraq, as a legal representative of a Liechtenstein-based company called Napex, which was among those approved by the U.N. to buy oil from Saddam’s regime under the 1996-2003 relief program. A report released last year by CIA chief weapons inspector Charles Duelfer alleged that Saddam’s regime allocated oil to be sold to Napex in 2002, shortly before Saddam's government fell. There is no public evidence that this oil was actually shipped.
IHC itself turns out to have a connection with Saddam’s former networks by way of a shipping company based in Jordan, Petra Navigation Group (search), which advertises itself on its Web site as IHC’s agent in the Middle East, and has also been a registered vendor to the U.N. since mid-2003. That’s a big change from Petra Navigation’s earlier history; from 1991 to 1994, the U.S. Treasury placed Petra Navigation on the blacklist of firms blocked from doing business with the U.S. on grounds of sanctions-busting activities related to Iraq.
In 1994, Treasury lifted the block on Petra Navigation’s offices in Egypt and Jordan, but Petra Navigation’s office in Baghdad is still on Treasury’s blacklist “on account of claims involving Iraq,” according to the Treasury order maintaining the designation. Asked repeatedly by FOX News to explain these connections and circumstances, Petra Navigation did not respond.
The timing of Petra Navigation’s arrival on the U.N. Procurement Department vendor list raises questions about whether IHC might have been involved in Petra’s approach to the U.N. Petra Navigation was registered on the U.N.’s list of approved vendors on June 27, 2003. Less than a month later, on July 10, 2003, Petra signed an agreement to act as IHC’s “exclusive” agent in the Middle East, according to a notice posted as recently as this week on Petra Navigation’s English-language web site.
Both IHC and another of its business partners, Eurest Support Services (search), both now the subject of various probes, have recently disappeared from the U.N. registered vendor list. Petra Navigation is still on it.
What exactly these connections amount to, or how IHC came to occupy its special niche with the U.N. procurement department, is not clear. But it seems IHC changed character following an earlier change of ownership in the late 1980s. The company was founded in the U.S. in 1944 under the name of International Manufacturing and Equipment Company (search), or IMECO, as a small business dealing mainly in spare parts for construction and mining. In 1988, IMECO, merged with another U.S. company, Hofortech (search), to become IHC.
According to the then-owner, Ernest Ulrich, interviewed by phone recently in New York, IHC soon after the 1988 merger was bought out by a big construction company that Ulrich remembers as based in Milan. Ulrich says that under his ownership, IHC had done no business with the U.N. He says he continued working for the company for a few years after he sold it, then left in the early 1990s and has had nothing to do with it since. Ulrich does not recall any entity such as the Torno SAH in Luxembourg that had evidently acquired control by the time of this year’s sale of IHC.
There is a large international construction firm in Milan with a strikingly similar name to that of Torno S.A.H. – the Milanese company being Torno S.P.A (search). FOX News has not found any direct connection between the Torno SPA in Milan and the Torno SAH in Luxembourg. Torno S.P.A. in Milan did not respond to repeated queries, nor did IHC’s current chief executive officer, Ezio Testa, who has worked in IHC’s New York office for years.
FOX News has, however, come across one indirect link between Torno S.P.A. in Milan and IHC – via the name Angelo Simontacchi (search), a man who served in 1996 on IHC’s board of directors, according to IHC board minutes. According to another set of documents obtained by FOX News, there was an Angelo Simontacchi who, on behalf of Torno S.P.A. in Milan, signed a contract in 1984 enlisting the consulting services of another firm, Dumyntha Co. Inc, based in Lugano, Switzerland, to help bid on work for Saddam Hussein’s Ministry of Trade, related to a Baghdad trade fair in pre-sanctions Iraq. Queries to Torno SPA about Simontacchi also went unanswered.
By 1997, Simontacchi had left the IHC board, but another man with ties to Iraq had signed on as an IHC director. He was Giandomenico “Gianni” Picco (search), a veteran of many years on the U.N. staff, but at that time working in the private sector. Picco, who hails from Milan, had worked for the U.N. from 1973-1992, helping in the late 1980s to negotiate an end to the Iran-Iraq war. In 1992, just before leaving the U.N., Picco had also led a round of the early negotiations with Saddam’s regime over setting up the U.N. Oil-for-Food program in Iraq.
Later that same year, Picco left the U.N. and founded his own private consulting business, New York-based GDP Associates. According to a report by U.S. Senate investigators, Picco on a number of occasions from 1997-2003 was consulted by an American oilman doing business under Oil-for-Food, David Chalmers — who was indicted in April for allegedly paying kickbacks to Saddam’s regime. Chalmers has pleaded not guilty.
Picco’s arrival on IHC’s board came at roughly the same time that IHC appears to have first established ties to the U.N. On Dec. 22, 1996, according to the U.N., the company was registered on the U.N. Procurement Department’s list of approved vendors. That was the same month that the U.N. Oil-for-Food program began operation in Iraq.
From 1998 until at least February, 2000, Picco went on to serve as chairman of the board of IHC Services. During that time, in August 1999, he accepted an overlapping appointment by U.N. Secretary-General Kofi Annan to serve as a U.N. undersecretary-general and personal representative for Annan, starting in August, 1999, working on a project called the Dialogue of Civilizations. That project has ended, but Picco is currently a special adviser to Annan, with a contract in force until 2006.
In June of this year, as the procurement scandal broke, and shortly after IHC was sold, the U.N. quietly suspended IHC from its list of approved vendors. But that has only drawn another curtain of secrecy over the issue.
Behind this maze the question still looms: Who during IHC’s seven years doing business with the U.N. was the real beneficial owner of this mysterious company? Liechtenstein figures such as Engelbert Schreiber, Jr. make most of their living by serving as stand-ins for others in one of the world’s most important centers of false-front corporate affairs. In an attempt to discover the real owner, FOX News has queried, among others, various former and current officers of IHC, including Picco, as well as Schreiber and Petra Navigation. None of these has responded.
At the U.N. itself, a spokesman says, “Current practice is that the names of beneficial owners of companies are not requested.” That practice, adds the spokesman, “is now under review.”
Claudia Rosett is journalist-in-residence with The Foundation for the Defense of Democracies. George Russell is executive editor of FOX News.