IRAQ: Oil-for-Food Probes Expose Cultural Gulfs

Inside Iraq's State Oil Marketing Organization, the scheme had a nickname: "Saddam Bribery System."

It was a simple plan, really, according to a former top Iraqi petroleum official. Saddam Hussein told them to sell oil to his supporters. The price was to be kept low to maximize their profits.

In return, Iraq received kickbacks from some recipients - and, perhaps more important, gratitude.

"This was done in order to enhance the power of Saddam Hussein," the Iraqi told US investigators last year.

Two years after Mr. Hussein's ouster, revelations about his alleged bribery system have developed into a full-force international financial scandal. The controversy involves both the nature of bribes and the zeal, or lack thereof, of the United Nations reaction.

The UN, overseer of the Hussein-era oil-for-food program, last year launched a probe of the affair. But key members of Congress remain unsatisfied with UN actions, and now both House and Senate committees are digging into roomfuls of documents on their own.

The result, says one expert: a clash of law-enforcement cultures. "This is the clash of an international organization composed of many other countries that do not have US standards of transparency, and of the US Congress, which is determined to make use of its investigative powers," says Robert Pfaltzgraff, security expert at Tufts University's Fletcher School.

As laid out at a Senate hearing on Tuesday, the story of manipulations of the oil-for-food program is one in which there are few heroes. According to a series of congressional reports, officials from France, Britain, and Russia all received oil allocations from Hussein.

"In particular, Iraq identified French and Russian officials in hopes of undermining economic sanctions by creating divisions within the United Nations Security Council," says a memo drafted by staff members of the House Energy and Commerce Committee.

The House memo cites a 2002 letter on Iraqi Intelligence Service letterhead titled "Iraqi-French Relations," which lists a number of influential people that Iraqi agents might conceivably approach, from former French President Valery Giscard d'Estaing to Jacques Delors, former head of the European Commission.

Charles Pasqua, a former French interior minister, did receive oil allocations of 11 million barrels, according to congressional investigators. A Senate report cites a 1999 handwritten note from the executive director of the State Oil Marketing Organization, which implies the personal involvement of Hussein. "The president leader ... has approved the allocation of 3 million barrels to the French personality [Charles Pasqua]," said the note.

Mr. Pasqua has denied any wrongdoing, and linked the congressional charges to an attempt to besmirch France's opposition to the Iraq war. "I never received anything from the Iraqis, in any domain," said Pasqua at a Paris news conference, according to wire service reports.

Russia was consistently the largest recipient of oil allocations, says the Senate report. One former official of the Hussein regime said this was due to his desire to show "gratitude" for Russian support in the UN Security Council.

For instance, Vladimir Zhirinovsky and his Russian Liberal Democratic Party received lucrative oil allowances, according to House staffers. They point to a letter that appears to be signed by Mr. Zhirinovsky on LDP letterhead which confirms that a firm named "NAFTA MOSCOW" was to receive 2.5 million barrels of his oil allocation.

Zhirinovsky has also denied any wrongdoing. "I did not receive a cent from Iraq," he told a Moscow radio station.

The allegations concerning both Pasqua and Zhirinovsky are not new. Last fall, the special report to the director of Central Intelligence on Iraq's weapons of mass destruction mentioned both men as alleged recipients of Iraqi oil. Overall, Russian recipients accounted for 30 percent of Iraq's secret oil allocations, as measured by volume, according to this CIA report. French recipients were second on the list, at 15 percent. Chinese recipients were third, at 6 percent.

But the US was involved as well. According to a report released Monday by Democrats on the Senate Permanent Subcommittee on Investigations, US imports of Iraqi oil helped finance 52 percent of the secret deals made under the oil-for-food program.

The Texas-based firm Bayoil is accused of being the largest importer of Iraqi oil to the US between 2000 and 2002. During that period, Hussein was typically demanding illegal kickbacks from oil allocation recipients.

Bayoil's owners have been indicted by US courts. "On one hand, the United States was at the UN trying to stop Iraq from imposing illegal surcharges on oil-for-food contracts," said Sen. Carl Levin (D) of Michigan at a hearing Tuesday. "On the other hand, the US ignored red flags that some US companies might be paying those same illegal surcharges."

Meanwhile, Congress is involved in a legal tussle with the UN probe into the whole mess, led by Paul Volcker. A federal court Tuesday ordered that the Volcker commission should be allowed to see internal papers one of its own investigators gave to a House committee. Behind this is a struggle over perceived thoroughness, notes Mr. Pfatlzgraff. Some in Congress believe that the UN is soft-pedaling evidence implicating Secretary-General Kofi Annan's son in the oil-for-food scandal.

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