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US under fire on Iraq Oil for Food Scandal
The Standard
Sue Pleming
May 18, 2005

The United States did not do enough to curb corruption by American firms involved in the United Nations' oil-for-food program in Iraq, Democrats on a Senate committee investigating abuses of the program said.

A report by the Democrats said the State Department and the US Treas-ury's Office of Foreign Assets Control had taken ``virtually no steps'' to ensure US firms enforced sanctions against Iraq.

``We have to look in the mirror at ourselves as well as pointing fingers at others,'' said Michigan's Senator Carl Levin, the ranking Democrat on the Senate's permanent subcommittee on investigations.

Levin's report looked at kickback allegations against Texas company Bayoil USA, the first American firm indicted in the probe of the US$67 billion (HK$523 billion) oil-for-food program that allowed Iraq to sell oil to buy civilian goods for its people living under UN sanctions.

Records kept by the Iraqi Oil Ministry's State Oil Marketing Organization showed Iraq collected about US$228 million in surcharges from September 2000 to September 2002.

According to the report, Bayoil ``facilitated'' about US$37 million in illegal surcharges to Saddam and then engaged in intensive lobbying efforts to influence the price of Iraqi oil and to oppose US efforts to stop the surcharges.

``Bayoil engaged in this misconduct for nearly two years, from 2000 to 2002, without attracting meaningful oversight from any US agency,'' the report alleged.

Questions were also raised by UN oil observers about why Bayoil's oil-for-food activities produced no response by the United States.

Bayoil executives pleaded not guilty last month to charges the company was part of a scheme to pay millions of dollars in secret kickbacks to Saddam in exchange for getting oil deals.

The Office of Foreign Assets Control said it had taken very seriously its responsibility of enforcing sanctions against Iraq.

``The OFAC has and will continue to take action against violators of the program,'' said a spokeswoman.

She added her office had carried out more than 300 investigations and audits of US financial institutions and others involving violations of the Iraq sanc-tions regime.

Bayoil, like other trading firms involved in oil-for-food, would buy most of its oil from contract holders who needed assistance in marketing the barrels.

Most of Bayoil's crude was then sold to the United States, which was the biggest destination for Iraqi oil, taking up more than half of exports when the surcharges were paid.

Levin's report also looked at sus-pected abuse outside the oil-for-food program.

These involved direct oil sales from Saddam to Jordan, Turkey, Syria and Egypt, which generated more than US$8 billion for Iraq's then leader.

REUTERS

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