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: 08-10-2004
Charles Duelfer: , ,
CIA

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Charles Duelfer, Special Advisor to the Director of Central Intelligence

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Ukraine

Ukraine was one of the first countries involved in
illicit military-related procurement with Iraq after the
fi rst Gulf war. Iraqi delegation visits to Ukraine were
fi rst evident in 1995. These visits were reciprocated
in Iraq from 1998 to 2003. The highest-levels of the
Ukrainian Government were reportedly complicit
in this illicit trade as demonstrated by negotiations
conducted in regard to the sale of a Kolchuga
antiaircraft radar system to Iraq in 2000. In addi-
96

tion, Ukrainian state and private exporting companies
independently facilitated the transfer of prohibited
technologies and equipment, mainly in the missile
fi eld, to the embargoed Regime.
According to IIS memos to the Iraqi Embassy in
Kiev, Ukraine, was an important political ally for
Iraq. After the initial business contacts in the mid-
1990s, the government of Iraq embarked in a diplomatic
exchange with Ukraine in 2001. ISG judges
that Saddams goal with this relationship was to gain
access to Ukraines signifi cant military production
facilities, including a large portion of the former
Soviet space and rocket industry.
The recovered IIS memos further indicated that the
former MIC Director Huwaysh visited Ukraine in
2002 hoping to develop a closer industrial partnership.
By 2001, the commercial exchange between the
two countries reached $140 million. Captured documents
indicate that Iraq strove to make sure that
the Ukrainian share from the oil for food program
[got] bigger to encourage further trade between the
two countries.
ISG has recovered further documentation disclosing
representatives from Ukrainian fi rms visited Iraq
to coordinate the supply of prohibited goods from
the early 1990s until on the onset of OIF. Information
supplied by an Iraqi scientist indicates that Iraqi
delegations visited Ukraine in 1995.
By 1998, the Iraqi Al-Karamah State Establishment
hosted numerous visits from Ukrainian suppliers
seeking contracts assisting Iraq with its missile
program.
Mr. Yuri Orshansky, from the Ukrainian Company
MontElect, led the Ukrainian visits. Orshanskys
relationship with Iraq began in September 1993
when he arrived in Baghdad accompanied by Dr.
Yuri Ayzenberg from the Ukrainian fi rm Khartron,
a known company with missile guidance system
design capability. Within 2 months, an Iraqi delegation
reciprocated the visit to Ukraine.
While in Ukraine, Orshansky, Ayzenberg, and General
Naim (the head of Iraqs Scud missile guidance
program) executed a protocol amounting to an
outline of future cooperation between the parties for
missile-related technologies.

Professor Yuri Orshansky and the MontElect
Company
Yuri Orshansky, a professor of electronics and director
of the Ukrainian MontElect Company, was the key
facilitator between Saddams Regime and Ukraine.
He was a member of the Iraqi Ukrainian Committee
for Economic and Trade Cooperation.
In December 2000, he was made an honorary
consul for Iraq in Kharkov.
For his efforts, Orshansky was awarded 1.5 million
barrels of oil by Taha Yasin Ramadan. From 1998
to 2000, he also received more than 6 million barrels
from Saddam via the secret oil voucher system.
Iraqs State Oil Marketing Organization (SOMO)
estimated that Orshansky earned about $1.85 million
in profi t from these gifts (refer to the Known
Oil Recipients, Annex B).
Between 1993 and 1995 Orshansky traveled to Iraq at
least six times. During this period, Iraq sent at least
four delegations to Ukraine.
Orshansky continued to visit Iraq in 1998 to 2003
and, through his company MontElect, he transferred a
range of equipment and materials to the Al-Karamah
State Establishment including:
Engines for surface-to-air Volga 20DCY missiles in
2001.
300 liquid fuel motors to be used in al Samud I missiles.
According to a former Iraqi government offi cial,
Iraq also signed a contract for Orshansky to design
and build a plant to produce tiethylamine (TEA)
and xlidenethe two components of TEGA-02 (missile
fuel).

97
Regime Finance
and Procurement
The technology included guidance components for
surface-to-air missiles, assistance in the development
of batteries for the latest antiaircraft missiles,
providing equipment for missile research and possibly
assisting in the establishment of a college for
training of missile expertise.
Cooperation was initiated by Iraq requesting quotes
on a test stand for rocket motors, a series of gyroscopes
and accelerometers for missile-guidance
systems and high precision machine tools for manufacturing
missile components.
In 2000, Ukraine-Iraq relationship became publicknowledge
when the Ukrainian Government was
implicated in selling Iraq a Kolchuga antiaircraft
radar system. President Leonid Kuchma was accused
of personally approving the Kolchuga sale, worth
$100 million, via a Jordanian intermediary.

Evidence of Ukrainian Government complicity in
the sale to Iraq was based on a secret 90-second
audio recording made 10 July 2000 by Mykola
Melnychenko
, a former counter-surveillance expert
in a department of the Ukrainian Security Service
(SBU), according to press reports. The recorded
conversation involved President Kuchma, Valery
Malev, the head of Ukspectsexport, a state export
agency, and Leonid Derkach, the former SBU
Chairman. Kuchma allegedly authorized Derkach to
export 4 Kolchuga radar systems to Iraq via Jordan.
Kuchma also gave Malev permission to bypass
export controls for the deal.

Initially, Ukrainian Government denied the allegations
but then changed its position on the issue
several times. First, it denied that the meeting had
ever taken place. Later it admitted that the meeting
had taken place and that President Kuchma had
authorized the sale
, but argued that the sale had not
been completed. (No Kolchugas have been found in
Iraq.)

It is interesting to note that the Government of
Ukraine lifted export restrictions on Kolchuga
radars four days after Kuchma authorized the sale
to Iraq. After this deal, Ukraine and Iraq signed a
trade and technical cooperation agreement in October
2000. Ukraine parliament ratifi ed the agreement
in November 2001.

The Iraqi IIS, MIC, and the associated MIC front
companies also acquired military-related goods from
Ukraine. According to information obtained in an
interview with the former MIC Director Abd al-
Tawab Mullah Huwaysh:

In 2001, the IIS purchased fi ve motors for
unmanned aerial vehicles (UAVs) from the Ukrainian
company Orliss for the MIC and Ibn Fernas.
The Orliss company representative was by a female
physician named Olga Vladimirovna. The motors
were allegedly transported from Ukraine to Iraqi
via Iraqi diplomatic pouch.

In another instance an Olga (most likely Ms.
Vladimirovna from Orliss) was known to have
assisted the MIC with a carbon fi ber fi lament winding
and insulating material project. She was also the
point of contact, in late 2002, for a contract with an
unspecifi ed Ukrainian supplier for missile engines
and gyroscopes, but none of these items were ever
delivered. The MIC only received some models of
the gyroscopes.
Figures 55 and 56 further illustrate the activity
between the MIC, and the MIC front companies such
as ARMOS, and Ukrainian military supply companies
in 2002.

In addition to gyroscopes and motors, Iraq sought
missile fuel from private Ukrainian companies.
Huwaysh stated that Iraq approached Ukraine for
diethylene triamine (DETA) and AZ-11 (a mixture
of 89 percent DETA and 11 percent UDMH). The
MIC intended to use the fuel for the HY-2 missile
system. Iraq reportedly had approximately 40 HY-2
missiles but only had suffi cient fuel for 15 of them.
Iraq, however, never received either the AZ-11 or its
components.


By 2003, recovered documents and intelligence
indicate that the ARMOS Trading Company was playing
a greater role an intermediary between Iraq and
Ukraine. ARMOS was a joint venture with a Russian
company established by MIC to import technology
and assist in the acquisition of materials and equipment
for MIC and other Iraqi ministries.
98

Figure 55. A document, dated April 2002, showing trade
between ARMOS Trading and MontElect, signed by
Sergey Semenov from MontElect.
99

...

Regime Finance
and Procurement
Figure 56. A recovered document signed by Semenov
(tied to MontElect in Figure 55) discussing the Syrian
Protocol with ARMOS in August 2002.

ARMOS specialized in bringing both Russian and
Ukrainian experts into Iraq and represented Russia
and Ukraine during business transactions, mainly
for the fi nancing of military goods transactions (See
the MIC Front Company section for further details
on ARMOS).
Documents indicate that ARMOS and MontElect
were involved in offers of military equipment for
Al-Karamah in January 2003. Signatures on the
recovered documents implicate ARMOS, Al-Karamah,
Saad General Company, the Trade Offi ce of
the MIC, and Dr. Sergey Semenov of MontElect.
The documents also revealed the use of Syrian
transportation companies and use of the Iraqi-
Syrian Protocol to facilitate the transaction. Iraq
made two payments of $405,000 for the equipment.



...


Possible Breaches of UN Sanctions by Ukrainian
Companies
Summary of Ukrainian involvement 1995-2003:
Documents obtained by ISG indicate that Iraqi delegations
visited Ukraine in 1995, and Ukrainian groups
visited Iraq between 1998 and 2003. During these
visits, both parties discussed missile deals. Another
source indicates that in 2001 and 2002 Ukrainian
delegates provided Unmanned Aerial Vehicle (UAV)
components to Iraq. In addition, ISG recovered papers
that indicate Ukrainen companies had offered to
supply other military equipment to Iraq.
1995-2003: Ukrainian and Iraqi Delegation Visits
Information supplied by an Iraqi scientist, indicates
that Iraqis visited Ukraine in 1995 and that the Al-
Karamah State Establishment hosted many visits from
Ukrainian suppliers who were negotiating for contracts
from 1998 to 2003.
An Iraqi scientist stated that Ukrainian suppliers
were the most frequent visitor to Iraq assisting Iraq
with its missile program. The Ukrainians visited
many times led by a Mr. Orshansky. Orshansky
usually brought 50 to 60 people from multiple
Ukrainian companies dealing with a range of issues
including civil power projects as well as missile and
other military technologies. The Ukrainians wanted
to sign a contract to supply theory, design, and
equipment, but the deal was never completed due to
the defection of Husayn Kamil from Iraq in 1995.
2001-2002: Ukrainian Company May Have
Supplied Military Goods to Iraq
A source indicates that a Ukrainian company supplied
components for UAV.
In 2001 and 2002, the Ukrainian company, Orliss,
provided UAV components, such as engines and
gyroscopes, to the Iraqi Government. The individual
from Orliss who handled these transactions
was Olga Vladimirovna, Director of the Orliss
Company. Vladimirovna provided her business card
to several individuals at the Ibn Firnas Company.
2003: Papers Indicate Ukraine Company Supplied
Military Goods
Recovered papers indicate that a Ukrainian company
was offering to supply military equipment in early
2003.
Recovered documents indicate that the Al-Karamah
State Establishment purchased equipment through
ARMOS Trading Company in Baghdad from the
Mont Elect Company, Ukraine before January
2003. Two payments were made of $405,000.00
for the equipment. Signatures on the document
included representatives from: ARMOS; Al-Karamah
State Establishment; Saad General Company;
Al-Karamah; Dr. Sergei Semonov, for the Montelect
Establishment, and the Trade Offi ce of the
MIC.


, ( 10-15% )

Oleg Papirshnoy,
Professor Yuri Orshaniskiy, Director of MontElect
Olga Kodriavitsev

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