Lawmakers are questioning whether a French bank failed to comply with U.S. money-laundering laws, possibly helping Saddam Hussein manipulate the $60 billion U.N. oil-for-food program. The bank denies any wrongdoing.
In the latest in a series of congressional investigations of alleged corruption in the oil-for-food program, the House International Relations Committee was homing in on the role of the U.S. branch of BNP-Paribas, which handled most of the oil-for-food money.
The humanitarian program, begun in 1996, allowed Iraq to trade oil for goods to help Iraqis get food, medicine and other necessities that became scarce under strict U.N. economic sanctions imposed after the Gulf War. It was credited with preventing widespread starvation.
Prior to today's hearing, congressional investigators said Saddam diverted money from the U.N. oil-for-food program to pay millions of dollars to families of Palestinian suicide bombers who carried out attacks on Israel.
Investigators who have been following a money trail say the former Iraqi president tapped secret bank accounts in Jordan — where he collected bribes from foreign companies and individuals doing illicit business under the humanitarian program — to reward the families up to $25,000 each.
Committee Chairman Henry Hyde said the panel found evidence that BNP in some cases improperly approved payments of oil-for-food funds to companies that weren't supposed to receive them. The bank may also have allowed payments to companies that were shipping to Iraq goods prohibited by international sanctions.
"There are indications that the bank may have been noncompliant in administering the oil-for-food program," Hyde said in remarks prepared for Wednesday's hearing. "If true, these possible banking lapses may have facilitated Saddam Hussein's manipulation and corruption of the program."
He said he was providing the committee's findings to the House Financial Services Committee, which oversees banking issues.
BNP officials say the bank's role in the program was limited and it had no control over how the money was spent. It acknowledges regulators had raised some issues on compliance with banking laws, but said none of these would have contributed to the oil-for-food abuses.
A series of investigations have found that Saddam, as Iraqi president, used oil smuggling, bribes and kickbacks to generate up to $21.3 billion or more in illegal revenue while under international sanctions from 1991-2003.
Though smuggling accounted for most of that money, the most sensational revelations have involved on the oil-for-food program, with allegations that Saddam and his aides bribed U.N. and foreign officials in an effort to break down the sanctions.
"We all knew that Saddam was doing everything in his power to evade sanctions," the panel's top Democrat, Rep. Tom Lantos said in prepared remarks. "But it is truly infuriating to discover the depth of the contempt and greed displayed by the governments of nations such as France, Russia and Syria who evidently jumped at the chance to participate in Saddam's crimes against the international community."
Hyde said the committee found evidence that Saddam used kickback revenues to make $25,000 payments to families of Palestinian suicide bombers who carried out attacks on Israel.
Lawmakers have clashed with U.N. officials over what documents would be provided to congressional investigators. The United Nations has raised concerns that congressional investigations could interfere with an inquiry by a committee led by former Federal Reserve Chairman Paul Volcker. That committee was appointed by Secretary-General Kofi Annan in April to investigate corruption allegations.
On Tuesday, Volcker told leaders of a Senate subcommittee investigating oil-for-food that the committee won't hand over documents until its own investigative reports are issued starting in January.
Volcker also said he opposed letting U.N. staff or contractors testify before Congress because it could risk their cooperation with his investigation. Volcker was responding to a letter from Sens. Norm Coleman and Carl Levin, respectively chairman and ranking Democrat on the Senate Governmental Affairs Permanent Subcommittee on Investigations.
Coleman said in a statement Wednesday that Volcker assured him in a conversation Tuesday "that any efforts to thwart our investigation, or prevent my staff from interviewing witnesses, would come to an end."
Hyde warned that "if cooperation from those agencies and institutions involved in this program continues to be inadequate, then we will exercise such enforcement remedies as the law makes available to us. This inquiry is just beginning."
Investigators also said they had evidence BNP illegally allowed letters of credit, or payments for import deals, to be transferred to third parties.
BNP has denied the allegations.