House Panel: French Bank Violated Oil-for-Food Contract

A House panel is accusing a French bank of violating its contract under the U.N. Oil-for-Food (search) program by making payments to companies that were not supposed to receive them.

Officials of BNP-Paribas SA (search) were to be questioned about the payments at a hearing Thursday of the House International Relations oversight and investigations subcommittee. Bank officials deny any wrongdoing.

The subcommittee and other panels are examining allegations of mismanagement and corruption in the Oil-for-Food program and in the United Nations (search) in general.

Many lawmakers are urging an overhaul of the United Nations and are considering using U.S. money as leverage to force changes.

The U.S. branch of BNP handled most of the money in the $64 billion Oil-for-Food program, which allowed Saddam Hussein's government to sell oil and use proceeds to buy food and other humanitarian goods while Iraq was under international penalties.

The bank's role came under question at a November hearing by the House committee. Lawmakers said a review of 80 payments of funds for the program found three instances in which payments were made to a third party that did not appear to be involved in the transaction.

The committee later issued subpoenas seeking more details about third-party transactions.

The hearing Thursday was to examine why the bank made such payments "in violation of its contract with the U.N. and identify the circumstances and companies involved in such payments," according to a committee statement.

Lawmakers have questioned whether third-party payments could have helped facilitate kickbacks to Saddam's government or fund illicit arms sales; no such allegations have been made.

In a statement to The Associated Press, bank spokeswoman Michele Sicard said there is no indication that the payments were linked to abuses connected to the Oil-for-Food program.

In another Oil-for-Food matter, a Swiss company targeted in that investigation sent a letter rejecting the probe's conclusion that it tried to mask its relationship to U.N. Secretary-General Kofi Annan's son, Kojo.

Cotecna Inspection S.A. sent a 45-page letter to the Independent Inquiry Committee, led by former Federal Reserve Chairman Paul Volcker, accusing it of making "misleading statements" and painting a "distorted and untrue picture of the company" in a report released in March.

The April 21 letter demanded that the committee retract some statements and denied Cotecna withheld cooperation or sought to mislead the committee. A committee spokesman, Mike Holtzman, said investigators would consider the letter.

The Associated Press obtained a copy of the letter Wednesday. Its contents were first reported by the New York Times.