U.S. seizes $1.62 billion in Iraqi assets

WASHINGTON -- The Bush administration has seized $1.62 billion in Iraqi assets already frozen in the United States and will use the money to help rebuild the country once Saddam Hussein is ousted, a top Treasury Department official said Thursday.

The department's general counsel, David Aufhauser, provided updated figures that follow up an initiative from President Bush last week.

Aufhauser said the money has been transferred to an account at the Federal Reserve Bank of New York. An additional $77 million is expected to be transferred soon, bringing the total to about $1.69 billion.

The assets, which belong to the Iraqi government, have been frozen since 1990 and have been sitting in accounts at U.S. banks, including Citigroup, Bank of America and Wachovia.

Last week, Treasury officials said they expected roughly $1.4 billion to be transferred to the Fed account.

The revised figure is higher because less money from the frozen accounts had to be set aside to cover legal claims by people who said they were victims of the Iraqi government, Treasury officials said.

It is envisioned that the money in the Fed account would be used to help rebuild Iraq, including providing money for humanitarian purposes, according to the department.

The frozen assets were being held in bank accounts under the names of the government of Iraq, the Central Bank of Iraq, Rafidain Bank, Rasheed Bank and the State Organization for Marketing Oil.

Also Thursday, Aufhauser said that "hundreds of millions of dollars of previously unknown illegal proceeds have been uncovered abroad in a matter of days, and are now subject to seizure."

Aufhauser would not disclose where the money was found. Aufhauser said there is a "strong suspicion" the money came from illegal oil-smuggling schemes.

A General Accounting Office report last year said that Iraq generated $6.6 billion in illegal revenue from smuggling oil and other schemes in the last 12 years.

Last week, Treasury Secretary John Snow said the United States was beginning a worldwide hunt for those and other funds that may have been used to bankroll terrorist activities.

The United States in 1990 issued an order blocking any assets belonging to the government of Iraq and related entities. That order was aimed at cutting the Iraqi president and his government from financial assets that could be used to support terrorist activities. Treasury officials say no personal assets belonging to Hussein have been found in the United States.