Senate Tries to Untangle Oil-For-Food
By NICK WADHAMS
The Associated Press
Tuesday, May 17, 2005; 11:21 AM
UNITED NATIONS -- A U.S. Senate subcommittee sought to tie together the complex threads of Saddam Hussein's manipulations under the U.N. oil-for-food program in a hearing Tuesday, detailing how illicit Iraqi oil was sold to peddle influence and made its way to market _ sometimes in the United States.
The daylong hearing in Washington was reviewing three major reports from the subcommittee of the U.S. Committee on Homeland Security and Government Affairs, which studied in great detail how Saddam made billions of dollars in illegal oil sales despite U.N. sanctions imposed in 1991 after Iraq's invasion of Kuwait.
Committee investigators argue that politicians from France, Britain and Russia were involved, as was a Texas-based oil company, Bayoil. And often, the United States and other members of the U.N. Security Council looked the other way.
On the one hand, the United States was at the U.N. trying to stop Iraq from imposing illegal surcharges on oil-for-food contacts, Sen. Carl Levin, D-Mich., said. On the other hand, the U.S. ignored red flags that some U.S. companies might be paying those same illegal surcharges.
Those scheduled to testify Tuesday included George Galloway, the outspoken British lawmaker accused by the subcommittee of taking vouchers under oil-for-food.
In his opening statement at the meeting, subcommittee chairman Sen. Norm Coleman, R-Minn., said more than $300,000 in surcharges were paid to Saddam's regime in allocations involving Galloway.
Senior Hussein regime officials informed the subcommittee that the allocation holders _ in this case, Galloway _ were ultimately responsible for the surcharge payment and, therefore, would have known of the illegal, under-the-table payment, he said.
Speaking to reporters before the hearing began, Galloway said the subcommittee's investigation was intended to take attention away from failed U.S. efforts in Iraq.
It's the mother of all smokescreens, he said.
The oil-for-food program, which ran in 1996-2003, was designed to let Saddam's government sell oil in exchange for humanitarian goods to help the Iraqi people cope with crippling U.N. sanctions.
But Saddam peddled influence by awarding favored politicians, journalists and others vouchers for oil that could then be resold at a profit. He also smuggled oil to Turkey, Jordan and Syria outside the program, often with the explicit approval of the United States and the rest of the Security Council.
Many of the allegations made by Coleman's subcommittee are not new. In April, Bayoil USA owner David Chalmers was indicted in U.S. District Court for allegedly funneling kickbacks to Saddam. Chalmers has denied any wrongdoing.
But rarely had the allegations been spelled out with so much detail or scope. Coleman's investigators have interviewed former top Iraqi officials and businessmen, who provided a behind-the-scenes look at how Saddam's grand scheme worked.
Documents released Monday by the minority Democrats on Coleman's subcommittee studied two issues: Bayoil's involvement and a single instance that saw Saddam's regime smuggle more than 7 million barrels of oil out of the Iraqi port of Khor al-Amaya, apparently with U.S. knowledge, in the weeks before the U.S.-led invasion in 2003.
The report found that Bayoil imported some 200 million barrels over two years starting in September 2000 and sold it to U.S. oil companies. At that time, Saddam was trying to tinker with the price of oil so that when he sold it, companies could be compelled to pay him kickbacks.
The report claimed that Bayoil paid directly or indirectly some $37 million in kickbacks to Saddam even as the United States and other council members realized what the dictator was doing and began ordering price hikes to quash the kickbacks scheme.
Bayoil then sold the crude to U.S. companies, though there is no evidence the companies knew about the kickbacks, the report said.
The committee singled out the U.S. Office of Foreign Assets Control, which the United Nations repeatedly warned about Bayoil's scheme. It cited an apparent misunderstanding in which U.S. authorities assumed the United Nations would monitor individual companies, while U.N. officials believed that was the responsibility of national governments.
The report's focus on the single instance of oil smuggling, through Khor al-Amaya, was meant to illustrate how Saddam sold oil outside oil-for-food.
The committee cited an October report by U.S. arms inspector Charles Duelfer saying that while Saddam pocketed more than $225 million illegally under oil-for-food, he made some $8 billion in illegal oil sales outside the program.
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Associated Press reporter Ken Guggenheim in Washington contributed to this report.
© 2005 The Associated Press