As the Dow Jones bottomed out below the 10,000 mark, Chinese oil giant Sinopec slipped on its initial public stock offer during trading on the New York Stock Exchange, just as news broke that the second largest Chinese state oil company had also signed an exclusive deal to drill oil in Iraq.

According to a Dow Jones report yesterday, Shengli Petroleum Corp, a unit of Sinopec, has been granted a contract from Iraq to drill 24 oil wells. Sinopec officials stated the contract wouldn't become effective until it is approved by the United Nations, which has imposed sanctions on Iraq for its invasion of Kuwait 10 years ago.

The news that Sinopec was in business with Iraq broke just after Sinopec subsidiary, Zhongyuan Petroleum Corp., had previously come under fire for business ties in war-torn Sudan. According to Sinopec officials, Zhongyuan invested $30 million in the Sudan 6 oilfield, conducting surveys and drilling four wells. In July, Sinopec elected to sell all Zhongyuan's investments in Sudan to the largest Chinese oil company PetroChina in order to clear the way for its stock offering in the United States.

Sudan's support for terrorism and a 12-year-old war that has consumed nearly 2 million lives, led the U.S. government to impose sanctions on the Khartoum regime. However, the sale of Zhongyuan by Sinopec did not deflect protests from American-based human rights groups petitioning the Security and Exchange Commission to delay the Sinopec offering.

"Given the significance of Sudan to many Americans, including American investors, this connection is of considerable material importance in understanding the risks associated with purchase of Sinopec shares," wrote Dr. Charles Jacobs, president of the American Anti-Slavery Organization, in a protest letter to the Security and Exchange Commission.

"In such a context it is imperative that the SEC delay trading of Sinopec, and provide investors a disclosure addendum, outlining precisely the nature of Sinopec's Sudan connections," said Jacobs. "Investors have a right to know the sort of risk posed by a company with connections to Sudan. The SEC has a responsibility to insure that this knowledge is fully available."

The Sinopec offering, underwritten by Morgan Stanley Dean Witter, occurred just as U.S. stocks were bloodied in early trade losses, with the blue-chip Dow industrials index plummeting more than 420 points in the morning, putting it below 10,000.

Morgan Stanley officials were contacted and a spokesman asserted that Sinopec had completely divested itself of its Sudanese holdings. The spokesman also expressed confidence in the Chinese oil stock, but refused to issue any comment for the record.

"Scandalously, the SEC has allowed this trading to start without insisting that Morgan Stanley, underwriters for the Sinopec IPO, reveal fully the nature of these Sudan connections," said human rights activist Eric Reeves.

"The effect is to expose American investors to the potent risks attending any investment, in any oil company, with connections to Sudan. In this case, the SEC has simply ignored or abandoned one of its central functions: to insure that there is full disclosure of all material risks inherent in a pending capital market listing."

Although the Sinopec stock offering fell below expectations, the three largest publicly traded oil companies, Exxon Mobil Corp, BP Amoco Plc and Royal Dutch/Shell Group plan to invest a combined $1.83 billion in the Chinese state-owned oil company. With the backing of Exxon, BP Amoco and other U.S. oil firms, Sinopec remains optimistic about meeting its goal of raising $35 billion inside the American financial market.

"Sinopec shouldn't do too badly," said Frederick Tsang, research director at China Everbright Securities in a Reuters business report.

"A lot of institutional investors are committed to the stock and even if it doesn't do well in the first few days that wouldn't be catastrophic," said Tsang.

Yet, the oil industry does not spend all of its recent profits buying Chinese state-owned oil company stock. According to Citizens for Responsive Politics, a non-profit Washington watchdog group, the U.S. oil industry made over $100 million in political contributions during the last decade.

More recently, Texas-based Exxon, backer of yesterday's Sinopec offering, has made several large donations to George W. Bush. According to records compiled by the Federal Election Commission, Exxon Mobil Corp. donated over $1.5 million dollars directly to the Republican presidential candidate. At the same time, Exxon donated $99,000 to Democrat candidate Vice President Al Gore.

The Exxon connection to Sinopec appears to be a perfect opportunity for Gore to press allegations that big oil companies control Republicans. For example, Federal Election Commission records also show that Exxon spent over $5.6 million dollars lobbying Congress in 1998 alone.

However, the Clinton-Gore administration also has troubling ties to Sinopec and Exxon through its Washington, D.C.-based lobbying firm Cassidy Associates. While Cassidy Associates controls the millions of dollars spent each year by Exxon to lobby Capitol Hill, the small firm has also made hundreds of thousands of dollars in political donations to both parties. According to Federal Election Commission records, Cassidy Associates made a total of over 2,500 political contributions between 1991 and 1998, nearly one donation every two days.

Moreover, Cassidy Associates worked closely with former Commerce Secretary Ron Brown and convicted Chinagate fundraiser John Huang. Cassidy Associates sent Democrat donor Maeley Tom to Indonesia on an August 1994 Ron Brown trade mission to Jakarta, Indonesia. The same mission included convicted Democrat fundraisers Charlie Trie, Pauline Kanchanalak and Nora Lum. Cassidy Associates' Maeley Tom, according to the Cox report, helped Huang stay in touch with his boss, Indonesian billionaire Moctar Riady.

According to the Cox report, "Huang maintained contact with representatives of the Lippo Group while he was at the Department of Commerce during the 18 months that he was at Commerce. Huang called Lippo Bank 232 times, in addition to 29 calls or faxes to Lippo Headquarters in Indonesia. Huang also contacted Lippo consultant Maeley Tom on 61 occasions during the same period."

In addition, John Huang was given information that the Clinton/Gore administration ignored corruption inside an Indonesian energy deal struck with Exxon. According to a Commerce Department briefing document found inside the files of John Huang, the CIA told Huang about corruption involving Indonesian dictator Suharto inside an Exxon Corp. $3.5 billion Natuna Sea Gas project.

According to the document, the CIA told Huang that Suharto "first family involvement" in the Exxon project was "probably pervasive -- they are involved in almost all major sectors."

The document was obtained from the Clinton-Gore administration using the Freedom of Information Act. Immediately after meeting with the CIA, Huang reportedly called the Lippo group.

Huang pleaded guilty in 1999 to federal charges of making illegal political contributions to the Clinton-Gore campaign. Huang took the Fifth Amendment more than 2,000 times when asked under oath if he had ties to Chinese intelligence.

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