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Powell: U.S. Concerned on Oil-for-Food Diversions

U.S. administrators in Iraq have frozen records of a U.N. aid program to help investigators looking into possible corruption during the Saddam Hussein era, Secretary of State Colin Powell (search) said Saturday during a stopover in Kuwait.

U.S. congressional investigators have charged that Saddam's regime amassed $10 billion through oil smuggling, illegal surcharges and kickbacks from the United Nations' 1996-2002 oil-for-food program. An Iraqi newspaper has published a list of about 270 former Cabinet officials, legislators, political activists and journalists in about 46 countries suspected of profiting from the scam.

"We are concerned, deeply concerned, that money that was supposed to be going to help the Iraqi people was diverted by Saddam Hussein (search), once again demonstrating the nature of that regime," Powell told reporters.

"That money was not used for food or health care or clean water," he said. "It was used for palaces and debauchery."

Powell said Washington would assist the investigation that U.N. Secretary-General Kofi Annan (search) proposed Friday.

The oil-for-food program, which ended in November, was set up by the U.N. Security Council to enable the Saddam regime to sell oil on condition that the proceeds were used to buy humanitarian goods for the Iraqi people and pay reparations for the 1991 Gulf War.

Powell spoke at the end of his six-day tour of Asian and Middle East nations. He said that after the U.S.-led coalition hands power to Iraqis on June 30, Iraqi and coalition forces would be able to defeat the insurgents and "terrorists from outside the country."

"They will not prevail. They will be defeated," he said. "But while they are still around, they are causing considerable trouble."

Powell arrived Friday from Saudi Arabia, where he said the United States would help Arab countries move toward democracy, but it has no intention of imposing that system.

He reiterated this position in Kuwait, where the government has rejected Washington's Greater Middle East Initiative on the grounds that reform cannot be imposed from outside.

"It wasn't a list of reforms we presented to them and said 'please agree'," Powell said of the initiative.

The United States wanted not to impose, but to "help others achieve" reform, he said.

Powell said he was encouraged that the Arab League is discussing the possibility of adopting a resolution calling for political reform. He said he had contacted many Arab leaders on what a reform resolution might contain.