Congress to investigate claims of Saddam's oil-for-food bribery

An American congressional panel will begin hearings this week into charges that Saddam Hussein bribed officials around the world with billions of dollars from the United Nations' oil-for-food programme.

An American congressional panel will begin hearings this week into charges that Saddam Hussein bribed officials around the world with billions of dollars from the United Nations' oil-for-food programme.

The timing of the hearing could not be worse for the UN, as the embarrassing charges of laxity will be aired as it prepares to return to Iraq after the 30 June handover to interim Iraqi authorities.

The fraud allegations that have surfaced so far are only the "tip of the iceberg", said Claude Hankes-Drielsma, a British adviser to the Iraq Governing Council, who will testify before Congress on Wednesday.

"A private company in Jordan received a profit of $97m in the month prior to the liberation. Why? Hopefully, the investigation will show," Mr Hankes-Drielsma said.

On Friday the UN secretary general, Kofi Annan, named Paul Volcker, a former US Federal Reserve chairman, to head a UN investigation into the allegations that senior UN officials may have received kickbacks from the Iraqis. Benon Sevan, who ran the oil-for-food programme, is accused of having been allocated 14.2 million barrels of oil. Mr Sevan denies any wrongdoing.

The UN and congressional inquiries into the oil-for-food programme stem from the publication in January of a list of 270 individuals, companies and institutions that allegedly received money from Saddam's regime, in return for their political support. The list included British, Russian and French politicians and business leaders. The Security Council, which was made aware of the accusations, apparently did nothing to stop the corrupt practices.

The oil-for-food programme was launched under the sanctions regime in 1996 to alleviate the plight of the Iraqi people with food and medicine, while ensuring that Iraqi oil money was not spent on weapons that could threaten its neighbours.

The supposedly watertight, UN-controlled scheme established, in effect, a UN trusteeship in Iraq. Revenues from limited oil exports were held in an escrow account. The UN sanctions committee, consisting of all 15 members of the Security Council, had to unanimously approve the contracts, and UN monitors were dispatched to Iraq to ensure the proper distribution of the goods.

However, as a former Iraqi ambassador put it: "No one told us we couldn't cheat." The loophole was Iraq's ability to choose its buyers and suppliers.

A total of $67bn (£37bn) went through the account before the oil-for-food programme was wound up after the war. The US General Accounting Office estimated last month that Saddam raised $5.7bn from oil smuggling and $4.4bn by extracting illicit surcharges and kickbacks through the oil-for-food scheme.

The Iraqis are accused of handing out bribes, in the form of vouchers for millions of barrels of oil, to individuals and organisations for their support of the regime. Illegal surcharges of "no less than 10 per cent"were levied by the Iraqis, while food unfit for human consumption is alleged to have been traded for oil.

"There will be a very clear pattern of countries - including members of the Security Council - which were benefiting significantly," said Mr Hankes-Drielsma, a former chairman of the management committee of PriceWaterhouse & Partners. He singled out France and Russia, two members of the Security Council which opposed the war on Iraq.

But he also recognised that the Americans turned a blind eye to the blatant oil smuggling by Iraq through Turkey - a Nato ally - for political reasons.

¿ The US has sent investigators to Iraq to look into allegations of bribery linked to the awarding of contracts by the Coalition Provisional Authority since the official end of the war.