Democratic Presidential candidate Barack Obama was quick to blame the bankruptcy of Wall Street giant Lehman Brothers on Republicans’ “failed philosophy”. Obama’s September 15 comments were repeated throughout the media--yet reporters have not noted Obama’s glaring conflict of interest—the Lehman debt owed to a bank owned by the financier who loaned millions of dollars to Tony Rezko.

Jockeying among the other debtors seeking repayment under Chapter 11 bankruptcy rules is BNP Paribas, a large French bank. According to the website of Cipaf, an investment vehicle of Nadhmi Auchi’s General Mediterranean Holdings (GMH), Cipaf is “amongst the topmost investors in the enlarged BNP Paribas.” BNP Paribas is owed $250 million by Lehman.*

Nadhmi Auchi is an Iraqi whose Baathist ties go back to 1959. A formerly high-ranking official in Iraq’s Oil Ministry, Auchi left Iraq at the end of the 1970s. His wealth then grew exponentially as a procurer of arms for Saddam Hussein’s government during the Iran–Iraq war. He is now one of the richest men in Britain. Saddam Hussein in 1995 selected BNP, which later merged with Paribas, as the sole conduit bank handling Oil-for-Food transactions. This Clinton-era arrangement was changed in 2001 by the incoming Bush administration.

Auchi was also a key financial backer for Chicago political fixer and dual US-Syrian citizen Tony Rezko. This writer explained the complex web of relationships in an August 24 article titled, “Iraqi Billionaire Threatens Reporters Investigating Rezko Affair”:

A secret $3.5 million loan from an Auchi company to key early-money Barack Obama fundraiser Antoin Rezko was exposed while Rezko was awaiting trial on fraud and money-laundering charges earlier this year. Rezko’s bail was revoked and police showed up banging on the doors of his Wilmette Chicago mansion to drag him off to jail early in the morning of January 28th. Auchi’s loan to Rezko had come on May 23, 2005 but had not been disclosed to the Court as required in his bail agreement. Three weeks later, on June 15, 2005, Rezko’s wife assisted the Obamas in the purchase of their South Chicago mansion by purchasing a next-door undeveloped lot being sold with the house. 

According to the Times of London, “Mr. Rezko’s lawyer said his client had ‘longstanding indebtedness’ to Mr. Auchi’s General Mediterranean Holding (GMH). By June 2007 he owed it $27.9 million. Under a Loan Forgiveness Agreement described in court, M. Auchi lent Mr. Rezko $3.5 million in April 2005 and $11 million in September 2005, as well as $3.5 million transferred in April 2007. That agreement provided for the outstanding loans to be ‘forgiven’ in return for a stake in the 62-acre Riverside Park development.”

Rezko’s relationship with Barack Obama goes back to at least 1990, when Obama’s law firm did work relating to thousands of now-decaying Rezko apartment units in South Chicago. Rezko was a key early-money fundraiser in Obama’s state Senate campaigns and his failed run at the U.S. Congress.

According to The Times of London, “Mr. Auchi first met Mr. Rezko after the 2003 Iraq war and they have a business relationship.” At the time Auchi was facing the possibility of extradition to France. The Times of London explains: “Mr Auchi was convicted of corruption, given a suspended sentence and fined £1.4 million in France in 2003 for his part in the Elf affair, described as the biggest political and corporate scandal in post-war Europe. He, in a statement from his media lawyers, claims he is appealing against the sentence.”

In 2003, Nick Cohen of the UK Guardian wrote:

Allow me to introduce you to Nadhmi Auchi. He was charged in the 1950s with being an accomplice of Saddam Hussein, when the future tyrant was acquiring his taste for blood. He was investigated in the 1980s for his part in alleged bribes to the fabulously corrupt leaders of post-war Italy. In the 1990s, the Belgium Ambassador to Luxembourg claimed that Auchi’s bank held money Saddam and Colonel Gadaffi had stolen from their luckless peoples. In 2002, officers from the Serious Fraud Squad raided the offices of one of Auchi’s drug companies as part of an investigation of what is alleged to be the biggest swindle ever of the (British National Health Service). With allegations, albeit unproven, like these hanging over him, wouldn’t you think that British MPs would have the sense to stay away?

(Under threat of Carter-Ruck litigation in English courts, the Guardian removed this article from its website and issued an apology to Auchi.)

One might think Obama would also stay away, but in truth it is only the US media who are ducking this story. While ideological bias and a predisposition towards inanity might explain some of the media ignorance, the August 24 article cites another cause:

Working for Auchi… attorneys from London law firm Carter-Ruck have for several months been flooding American and British newspapers and websites with letters demanding removal of material they deem “defamatory” to their client. 

In its June 28 edition, British satirical magazine Private Eye explains: “Until Carter-Ruck and Partners and England’s stifling libel laws got to work, the few American journalists not caught up in Obama-mania were turning to the archives of the British press to answer an intriguing question: who is Nadhmi Auchi?”

What is so “stifling” about English libel law? In the U.K., as Carter-Ruck explains on its own website, “A libel claimant does not have to prove that the words are false or to prove that he has in fact suffered any loss. Damage is presumed.”

The Obama campaign recently issued a non-denial denial in response to claims that Obama met with Auchi―contained in Jerome Corsi’s bestseller, The Obama Nation. They cited only two references.  One is, “Mr. Auchi’s lawyer” who told the February 27, 2008 London Evening Standard, “As far as he can remember he has had no direct contact with Mr. Obama.” Another is, “A lawyer for Auchi, Alasdair Pepper” who says, according to the April 16, 2008 Washington Post, “Auchi Had ‘No Recollection’ Of Meeting Obama or Michelle.” Alasdair Pepper is the attorney whose name appears on the Carter-Ruck demand letters.

Here are some questions reporters should be asking Barack Obama:

Senator Obama: Lehman Brothers owes over $250 million to a bank owned in part by Nadhmi Auchi’s holding company. Auchi was a key financial backer of Tony Rezko. Sources indicate you met Auchi twice when he visited Chicago in 2004. If elected, how will your relationship with Rezko and Auchi affect your policy towards Lehman Brothers?

Senator Obama: There are reports that Nadhmi Auchi was in 2004-2005 seeking US residency while appealing his French court conviction in the ELF-Aquitaine case. If elected, would you look favorably on a US residency application from Auchi?

Senator Obama: You stated that the Lehman bankruptcy shows that Americans cannot afford four more years of the Republicans’ “failed philosophy”. Can Americans afford a President whose home was purchased with the assistance of now-convicted-felon Tony Rezko, a man characterized as having “permanent indebtedness” to Nadhmi Auchi?

XXX

* (Update 3-24-09) What is the status of Auchi’s companies’ interest in BNP Paribas? The website of Auchi’s Luxembourg-based "Compagnie Internationale de Participations Bancaires en Financières SA" (CIPAF) boasts, “Until the merger of BNP and Paribas, the Cipaf group was one of the largest independent shareholders of Compagnie Financière de Paribas. Since the merger, it ranks amongst the topmost investors in the enlarged BNP Paribas, now a leading European banking group.”

But Auchi’s lawyers of the London firm Carter-Ruck in a February 10, 2009 letter to this writer claim, “It is untrue that our client is the largest private shareholder in BNP Paribas. Our client had a minority shareholding in Paribas when it was bought by BNP. As a result of the shareholding he then became a minority shareholder in BNP Paribas….Since the merger our client sold his shareholding in the bank.”

The careful reader will note there is no flat statement that Auchi and his companies today own no shares of BNP Paribas. The 2004 Annual Report of CIPAF states: “During the year the directors decided to divest the company of its holdings in BNP Paribas profitably, but continued to deal in options.” Likewise the 2004 Annual Report of Auchi’s holding company GMH asserts, “After many years, the Group has divested itself of all its shareholding in BNP Paribas, but continues to deal in options.”

So why does CIPAF now publicly describe itself--and by extension GMH—as “amongst the topmost investors in the enlarged BNP Paribas….” The GMH website, updated January 2, 2007, describes the activities of CIPAF and Paribas regarding the acquisition and subsequent sale of two Luxembourg banks but mentions nothing about any divestiture of BNP Paribas stock. There is no mention of BNP Paribas in the 2005 and 2006 annual reports of GMH and CIPAF. The 2007 and 2008 Annual Reports are not yet available online for either company.

Has CIPAF/GMH trading in the options market for BNP Paribas stock led to CIPAF again owning BNP Paribas stock? The “Wayback” Internet archive indicates that the CIPAF website was archived with an update on February 8, 2005--about the time the 2004 Annual Report was issued. The site was next archived with an update November 29, 2007. So readers are left with a non-denial denial from Carter-Ruck, contradictory statements from the four year old Annual Reports and the more recent websites, and the absence of the 2007 and 2008 Annual Reports from GMH and CIPAF.