Transcript: Did the U.N.'s Oil for Food Program Finance Terror?

This is a partial transcript of The Big Story With John Gibson, March 22, 2004, that has been edited for clarity.

JOHN GIBSON, HOST: Speaking of oil, the U.N.'s 0il for Food program (search) in Iraq may have been more corrupt and crippled by fraud than anybody ever suspected. Heather Nauert is more on the investigation that's been underway for some time.

HEATHER NAUERT, FOX NEWS CORRESPONDENT: That's right. In just seven years, Saddam Hussein stole more than $10 billion from the 0il for Food program. He lavished the money on himself, building palaces, buying jets and paying bribes. But there is also evidence that some of the money may be funding terrorist attacks in Iraq.

Joining me in Washington is Juan Carlos Zarate (search), the deputy assistant secretary for terror financing. And that's today's big question. Did the 0il for Food program finance terrorism?

JUAN CARLOS ZARATE, DEPT. ASST. TREASURY SECRETARY: Hi, Heather. Certainly, one of the things we found over the past year is that Saddam Hussein feasted on the good will of the international community with skimming schemes, kickbacks, and other schemes to get money from the oil- for-food program while his own people starved. And one of the concerns that we have is that in our hunt for his assets, that there may be assets still out there that could be used to kill our soldiers, our coalition partners and innocent Iraqi civilians.

NAUERT: But what evidence are you all now considering that indicates that some of this money may be being used to kill not only our troops but innocent civilians in Iraq?

ZARATE: Well, Heather, one of the things that we've been doing for the past year, pursuant to Secretary Snow's call for a hunt for the Iraqi assets, is trying to uncover through detainee interviews, through review of account records, bank records, etc., looking for information about where Saddam has hidden his money abroad. We've certainly found quite a bit inside Iraq, over $1.3 billion inside Iraq in cash and precious items. And outside of Iraq, we have frozen worldwide over $4.5 billion in assets, returning some $2.5 billion back to the Iraqi people for reconstruction. Part of that we think still is outstanding may be available for use by insurgents.

NAUERT: And there is certainly still a lot of money although you guys have certainly collected quite a bit. But there is a lot left over. I want to ask you about one of Saddam Hussein's top guys who is still on the run. His name is Izzat Ibrahim al-Douri (search). He is the red-headed Iraqi we see a lot of pictures of. There he is. Now, he is believed by U.S. commanders to be a chief financier of attacks on U.S. troops. Now, you just froze more than a dozen people's assets in Iraq, including four of his wives' assets. What about his assets and why have his wives' assets not been frozen earlier?

ZARATE: One of the things we did last week, Heather, was notify to the U.N. a list of 16 family members of key leaders of the Hussein regime. Mr. Al-Douri is certainly one of those leaders. He's number six on the top 55 leaders list that the military has put out. And he is still on the loose. One of the reasons that we've asked the United Nations to freeze the assets of his family members is to make sure we corral any assets that may still exist out there. Mr. Al-Douri may, in fact, be leading the insurgency and may be funneling money for the use against our soldiers.

NAUERT: You have to look at the evidence, though, I would imagine and say, OK, this guy is one of Saddam Hussein's closest allies. He's missing, he's believed by U.S. commanders to be funding some of these attacks. He had to have gotten the money. If you've frozen his wife's assets, what's going on here?

ZARATE: One of the things we're trying to do is certainly collect the money within Iraq that may be available to the insurgents. And on a daily basis our investigators on the ground, our military, are uncovering and unearthing in holes and kennels all around the country cash that could be made available to the insurgents. Around the world, we're working with our allies, like in Switzerland, Liechtenstein, Jordan, to find where other assets may lie. One of the reasons we're asking the international community to take a harder look at the assets of family members is that may be exactly where these people are keeping money.

NAUERT: All right, entire families look like they are involved. Juan, thank you so much.

ZARATE: Thank you, Heather.

NAUERT: Just so everybody knows, the United Nations has begun an international investigation into the 0il for Food program. But the oil- for-food program's head of that program is directly linked to the scandal, too, which means that an external investigation may, in fact, be one of the only ways to get to the truth — John.

GIBSON: Heather Nauert, good job as always. Thank you very much, Heather.

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