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Saddam's regime siphoned off $10 billion, Congress is told

WASHINGTON—Saddam Hussein and his regime plundered the United Nations Oil for Food program of more than $10 billion, congressional investigators told U.S. lawmakers on Thursday.

The money, if recovered, would go to Iraq's reconstruction. But agents of the General Accounting Office, Congress's watchdog arm, cautioned members of the House Financial Services subcommittee against being "overly optimistic" about that.

According to the GAO, most of the illicit money—$5.7 billion—came from the smuggling and black market sale of Iraqi oil while its sale was restricted under a U.N. embargo. As part of that embargo, which lasted from 1990 until last November, Iraq was permitted to sell a limited amount of oil, on the condition that the proceeds go solely to buy food and medicine.

Saddam's regime also took payoffs worth $4.4 billion from that oil sale and for allowing the distribution of commodities and medicines by U.N. suppliers, the GAO found.

The total—$10.1 billion—is $3.5 billion more than earlier estimates.

The United Nations is investigating corruption allegations in connection with its so-called Oil for Food program. On Wednesday, U.N. officials asked Iraq's Governing Council and the U.S.-led coalition in Iraq to turn over more evidence of payoffs.

Prior to the U.S. invasion, the Oil for Food program provided sustenance for 60 percent of Iraq's estimated 27 million people. The United Nations imposed sanctions on Iraq's oil sales after Saddam's invasion of Kuwait. The United States was the leading proponent of those sanctions.

As part of their effort to recover the money, U.S. Treasury officials on Thursday named 16 relatives of senior officials in the former Iraqi regime and asked that their Iraq-related accounts and other assets be frozen under U.S. and U.N. laws. Among those listed are two of Saddam's wives—Sajida Khairallah Telfah and Samira Shahbandar—as well as 191 companies and agencies that Saddam and other officials are believed to have used as fronts.

"We are learning more about the maze of Hussein's money trail," said Juan Zarate, the deputy assistant Treasury secretary for terrorism finance and financial crimes.

According to the GAO, Saddam's regime may have looted Iraq of as much as $40 billion.

U.N. Security Council Resolution 1483 requires the organization's 191 member nations to freeze assets of designated individuals and companies associated with Saddam's regime. U.N. members also are supposed to turn over the assets to the Development Fund for Iraq, Zarate explained. The fund is a U.N.-sanctioned bank run by the U.S.-led Coalition Provisional Authority in consultation with the Iraqi Governing Council, Iraq's minister of finance and its central bank.

Some countries aren't surrendering frozen Iraqi assets to the fund, GAO investigators told lawmakers. Syria, for example, continues to hold several hundred millions of dollars from Saddam's regime, according to published reports.

Some countries that aren't cooperating must pass new laws before they can do so, investigators said. Others are unwilling to seize assets based on the say-so of U.S. investigators.

The countries have thus far turned over $751 million to Iraq's Development Fund. Another $3.7 billion in assets have been seized but not surrendered. Within Iraq, the U.S. and coalition forces have seized and turned over $926 million of the former regime's assets.


(c) 2004, Knight Ridder/Tribune Information Services.