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US Investigators: Saddam Regime Made $21 Billion In Illegal Oil Money

U.S. congressional investigators say the regime of toppled Iraqi leader Saddam Hussein made more than 21 billion dollars in illegal revenue by circumventing sanctions and the United Nations' oil-for-food program, more than double previous estimates.

U.S. officials told a Senate panel Monday that Saddam Hussein's regime collected the illegal profits from 1991 until the U.S.-led invasion of Iraq last year.

Deputy Assistant Secretary of the Treasury Juan Carlos Zarate, who is in charge of probing Terrorist Financing and Financial Crimes, was among the officials who testified before a Senate Governmental Affairs subcommittee. "The Hussein regime created a system of kickbacks, skimming schemes and smuggling operations to bilk the international sanctions regime of all its potential value and profits," he said. "He used the implements of the state, the central bank, commercial enterprises and his diplomatic and intelligence assets to help skirt international restrictions."

Mr. Zarate said that in some cases, Saddam Hussein used the illicit money to buy weapons and other banned goods in an effort to strengthen his regime.

Charles Duelfer, who is the Central Intelligence Agency's chief advisor on Iraq's weapons programs, agreed with Mr. Zarate during questioning by the panel's chairman, Senator Norm Coleman, a Minnesota Republican. "With the oil-for-food program," he said, "Saddam had achieved a lot of his goals. He had hard currency with kickbacks and surcharges, hard currency that was used for weapons procurement?"

"Absolutely," said Mr. Duelfer.

Mr. Coleman released a number of documents showing that Saddam gave lucrative contracts to buy Iraqi oil to a number of foreign officials and foreign entities.

"Rather than giving allocations to traditional oil purchasers, he gave allocations to foreign officials, journalists and even hostile terrorist entities who then flipped their allocations to traditional companies in exchange for a sizable commission," said Mark Greenblatt, a lawyer for the Senate panel.

Among the terrorist groups cited by Mr. Greenblatt was the Popular Front for the Liberation of Palestine.

Among the foreign officials who allegedly took part in the scheme is Benon Sevan, the head of the U.N. oil-for-food program.

Mr. Sevan denies the allegation. But Mr. Duelfer stood by the evidence, as he did during questioning by Senator Lindsey Graham, a South Carolina Republican. "So basically, you found books that you think show who the Iraqis were paying off, long story short?," he asked.

"Yes," replied Mr. Duelfer.

"One of the groups we are looking at as to who they paid off is the guy running the program," Mr. Graham said.

"That is certainly what it indicates," replied Mr. Duelfer.

Another foreign official allegedly involved in the scheme was Russian ultranationalist Vladimir Zhirinovsky. The Senate panel released a letter signed by Mr. Zhirinovsky to a U.S. oil company to negotiate to buy the oil voucher. The name of the company has not been released because of ongoing investigations.

Mr. Zhirinovsky has denied any wrongdoing.

The United Nations has declined to provide information to the Senate panel for its investigation, a move that does not please Chairman Coleman. "To our dismay, those requests to date have been denied," he said. "In addition, I am angered by the proactive interference by the United Nations with our efforts to question groups contracted by the United Nations to oversee parts of this program. I believe the credibility of the United Nations to monitor any future sanctions programs hangs in the balance unless the corruption and mismanagement to oil-for-food is identified and rooted out."

U.N. spokesman Fred Eckhard said Secretary-General Kofi Annan spoke to Mr. Coleman and the top Democrat on the committee, Senator Carl Levin of Michigan, to assure them that Mr. Annan, as he put it, is not trying to be obstructionist.

The oil-for-food program began December 1996, allowing Iraq to sell oil and buy food and medicine in an effort to ease the impact of sanctions on the Iraqi people. The U.N. Security Council allowed Iraq to draw up its own contracts, a move that congressional investigators say opened the door to abuse of the program.