Secret interviews reveal how Saddam manipulated oil-for-food

NEW YORK -- Interviews with dozens of former and current Iraqi officials by congressional investigators have produced new evidence that Saddam Hussein micromanaged business deals under the U.N. oil-for-food program to maximize political influence with important foreign governments like Russia and neighboring Arab states.

The Iraqi officials, who were flown outside of Iraq for their own safety during the interviews, provided a list of foreign companies favored by Saddam and his top lieutenants for import contracts under the U.N. program. They also revealed a parallel blacklist of companies that the then-Iraq leader disqualified from getting deals, investigators told The Associated Press.

The precaution of redoubled secrecy comes after an Iraqi official involved in the oil-for-food investigation of corruption died in a car bombing in late June after speaking with investigators from the House International Relations Committee. The official, Ehsan Karim, who headed the Iraqi Finance Ministry's audit board, was interviewed in Amman, Jordan, on May 21.

The Iraqi officials also helped investigators identify Iraqi front companies, which operated abroad to solicit and process alleged bribes from foreign companies and to help facilitate imports for the Iraqi government, including dual-use military goods such as vehicles.

The oil-for-food program, which ran from 1996 to 2003, was created to permit the former Iraqi government to sell limited amounts of oil in exchange for humanitarian goods as an exception to U.N. sanctions imposed after Iraq's 1990 invasion of Kuwait.

One of the documents, known as "the exempt list" and obtained by AP from congressional investigators at the House International Relations Committee chaired by Rep. Henry Hyde, R-Ill., catalogues companies personally approved by Saddam and top lieutenants to circumvent Iraqi regulations to sign deals. The list contains hundreds of names of companies from more than two dozen countries.

No French, Chinese or American companies are on the list, but more than 280 Russian and 100 Saudi companies account for well over half of the list. The investigator who provided the document to AP said Congress might not have the full list.

Earlier this month, the top U.S. arms inspector, Charles Duelfer, published a report that listed foreign companies and individuals who had received vouchers for oil contracts under the U.N. program from the former Iraqi government. The report said Saddam himself approved companies.

Duelfer's report alleged that Saddam's government had used the oil vouchers to both solicit kickbacks and to reward countries and individuals willing to cooperate with Iraq's political goals. Companies and individuals from Russia, France and China dominated the list.

Saddam was able to "subvert" the $60 billion U.N. oil-for-food program to generate an estimated $1.7 billion in revenue outside U.N. control from 1997-2003, the Duelfer report said. In addition to oil-for-food schemes, Iraq brought in over $8 billion in illicit oil deals with Jordan, Syria, Turkey and Egypt through smuggling or illegal pumping through pipelines during the full period that sanctions were in place, the report added.

But the new lists obtained by AP of both companies favored and spurned by the Iraqi government are a more overt illustration of Saddam's manipulation of the program.

One investigator described the exempt list as the equivalent of the list in Duelfer's report of oil voucher recipients, but in this case for goods imported under the U.N. program.

"Until now, it had been thought that only vouchers for oil were handed out, but due to disclosures by Iraqi officials from the Ministry of Trade, we now understand that the practice was spread even further," said the investigator, who spoke on condition of anonymity.

Companies on Saddam's special lists got vouchers giving them priority for deals in humanitarian goods under oil-for-food, or to act as middlemen for companies providing goods.

Some Iraqi officials confirmed the lists were crafted to reward companies from countries supporting Iraqi political goals, especially the lifting of U.N. sanctions, investigators said.

"These lists illustrate how Saddam Hussein cynically manipulated and corrupted the oil-for-food program," said Hyde. "The fact, disclosed in the Duelfer report, that some countries based their Iraq policies on these corrupt practices is shameful."

The exempt list came from an official at the Iraqi Ministry of Trade and was authenticated separately by over a dozen current and former Iraqi officials, investigators said.

The official told investigators in Amman that names could be placed on this list by Saddam through his secretary, Abdel Hamoud, by Iraqi Vice-President Taha Ramadan, or Hussein's sons Oday and Qusay, according to notes of the interviews obtained by AP.

"Many foreign delegations were coming to Baghdad by plane with businessmen and sometimes even artists," the official told investigators, according to other notes that were read to AP. "They broke sanctions laws and spread propaganda then they would go to the ministry of trade. Anyone who could agree to a contract for any item at a set price would get a voucher."

Another official explained that Saddam and others sometimes asked that foreign delegations bring favorite artists with them for entertainment. He alleged that Saddam granted vouchers to a prominent Egyptian actress, called Raghda, whose picture he kept in his bedroom.

Iraqi officials said that as many as 3,000 to 4,500 contracts or about 10 to 15 percent of all deals for importing goods through the U.N. program were granted to companies on the exempt list. The list includes numerous large Russian oil companies -- whose names also appear on the oil vouchers list published in Duelfer's report -- including Gazprom, Lukoil and Tatneft.

In the past, Russian companies have denied any wrongdoing in the oil-for-food program.

A handful of obscure companies from Western countries including Germany, Belgium, Cyprus, Italy and Switzerland appear on the list.

Over 250 companies appear on Saddam's blacklist, obtained from an Iraqi Health Ministry official, according to congressional investigators. The document also details reasons the companies lost favor with the Iraqi government. Dozens of the companies are blasted for "dealing with the Zionist entity," apparently referring to Israel.

One contract in English obtained by AP from investigators required companies given deals with the Iraqi government to sign a pledge that says, "We hereby confirm our commitment and pledge not to deal with Israel."

American companies Johnson & Johnson, Hewlett-Packard Co., and Eli Lilly and Co., make the list for this reason and Agilent Technologies Inc. -- which was spun off from Hewlett-Packard -- is accused by Vice President Ramadan of changing its name from Hewlett-Packard to "enter into Israel," according to the document.

Lukoil, which reportedly clashed with Baghdad after refusing to break sanctions to begin development of an Iraqi oil field, is the only company to make the oil voucher list, the exempt list and the blacklist. Its entry onto the blacklist is dated October 2002. In December 2002, Iraq announced the cancelation of a $3.7 billion contract with Lukoil to develop the oil field.