Lawmakers are questioning whether a French bank failed to comply with U.S. money-laundering laws, possibly helping Saddam Hussein (search) manipulate the $60 billion U.N. Oil-for-Food program. The bank denies any wrongdoing.

In the latest in a series of congressional investigations of alleged corruption in the Oil-for-Food program, the House International Relations Committee was homing in on the role of the U.S. branch of BNP-Paribas (search), which handled most of the Oil-for-Food money.

The humanitarian program, begun in 1996, allowed Iraq to trade oil for goods to help Iraqis get food, medicine and other necessities that became scarce under strict U.N. economic sanctions imposed after the Gulf War. It was credited with preventing widespread starvation.

Committee Chairman Henry Hyde (search), R-Ill, said the panel found evidence that BNP in some cases improperly approved payments of Oil-for-Food funds to companies that weren't supposed to receive them. The bank may also have allowed payments to companies that were shipping to Iraq goods prohibited by international sanctions.

"There are indications that the bank may have been noncompliant in administering the Oil-for-Food program," Hyde said. "If true, these possible banking lapses may have facilitated Saddam Hussein's manipulation and corruption of the program."

He said he was providing the committee's findings to the House Financial Services Committee, which oversees banking issues.

A BNP official, Everett Schenk, said the bank complied with U.S. laws, adhered to Treasury Department rules and followed U.N. guidelines. He said all contracts were reviewed by a U.N. committee that oversaw the Oil-for-Food program.

"All of the concerns that we are aware of we believe have been satisfactorily resolved," said Schenk, chief executive of the bank's North American corporate and investment banking operations.

But Rep. Ed Royce, R-Calif., said a review of 80 payments found three instances in which payments were made to a third-party that apparently wasn't supposed to be involved in the transactions.

Schenk said he didn't have details of those payments and offered to discuss them with committee staff in the future.

A series of investigations have found that Saddam, as Iraqi president, used oil smuggling, bribes and kickbacks to generate up to $21.3 billion or more in illegal revenue while under international sanctions from 1991-2003.

Though smuggling accounted for most of that money, the most sensational revelations have involved the Oil-for-Food program, with allegations that Saddam and his aides bribed U.N. and foreign officials in an effort to break down the sanctions.

"We all knew that Saddam was doing everything in his power to evade sanctions," said the panel's top Democrat, Rep. Tom Lantos of California. "But it is truly infuriating to discover the depth of the contempt and greed displayed by the governments of nations such as France, Russia and Syria who evidently jumped at the chance to participate in Saddam's crimes against the international community."

Hyde said the committee found evidence that Saddam used kickback revenues to make $25,000 payments to families of Palestinian suicide bombers who carried out attacks on Israel.

Lawmakers have clashed with U.N. officials over what documents would be provided to congressional investigators. The United Nations has raised concerns that congressional investigations could interfere with an inquiry by a committee led by former Federal Reserve Chairman Paul Volcker. That committee was appointed by Secretary-General Kofi Annan in April to investigate corruption allegations.

On Tuesday, Volcker told leaders of a Senate subcommittee investigating Oil-for-Food that the committee won't hand over documents until its own investigative reports are issued starting in January.

Volcker also said he opposed letting U.N. staff or contractors testify before Congress because it could risk their cooperation with his investigation. Volcker was responding to a letter from Sens. Norm Coleman, R-Minn. and Carl Levin, D-Mich., respectively chairman and ranking Democrat on the Senate Governmental Affairs Permanent Subcommittee on Investigations.

Coleman said in a statement Wednesday that Volcker assured him in a conversation Tuesday "that any efforts to thwart our investigation, or prevent my staff from interviewing witnesses, would come to an end."

Hyde warned that "if cooperation from those agencies and institutions involved in this program continues to be inadequate, then we will exercise such enforcement remedies as the law makes available to us. This inquiry is just beginning."