The following is a transcript of testimony by Senate Homeland Security and Governmental Affairs Committee Permanent Investigations Subcommittee Majority Counsel Mark Greenblatt.

MARK GREENBLATT: Mr. Chairman, Ranking Member Levin, members of the subcommittee, thank you for this opportunity to testify before you today concerning the subcommittee's investigation into the oil-for- food program.

My testimony today will present evidence demonstrating how the Hussein regime rewarded its political allies under the oil-for-food program. In particular, I will introduce evidence establishing that the Hussein regime granted lucrative oil allocations to Vladimir Zhirinovsky, a prominent Russian official.

In short, the evidence reveals that Zhirinovsky was granted allocations of 75 million barrels of oil. The Iraqi Ministry of Oil estimated that profits of $8.6 million were made in connection with Zhirinovsky's allocations, as reflected in exhibit one.

In fact, for some of those allocations the evidence shows that an American oil trader named Bayoil may have paid Zhirinovsky millions of dollars in connection with those transactions.

Finally, I'll present evidence that Zhirinovsky and Bayoil paid illegal, under-the-table surcharges to the Hussein regime totaling $4.7 million.

Senator Coleman, as you described in your opening statement, Hussein regime officials that were interviewed in Iraq by this subcommittee told us that the Iraqis gave preferential treatment to specific foreign officials in the allocation of oil because of their support for the Hussein regime and their opposition to U.N. sanctions on Iraq.

Vladimir Zhirinovsky was one of those officials.

Zhirinovsky has been a longtime member of the Russian Duma and the leader of the ultranationalist Liberal Democratic Party of Russia, commonly called the LDPR. He was popular enough to run for president of Russia three different times.

He was a tireless and outspoken supporter of the Hussein regime, taking roughly 16 trips to Iraq during the seven years of the oil-for- food program and frequently denouncing U.N. sanctions against Iraq.

In addition, Zhirinovsky signed an agreement on, quote, "interparty ties" between his party, the LDPR, and Saddam Hussein's Baath Party. He dispatched a group of supporters called, quote, "the falcons of Zhirinovsky" to Iraq to support the Hussein regime during the first Gulf War.

Zhirinovsky, who wrote a book entitled, "I Spit on the West," was unquestionably a strong supporter of the Hussein regime.

The regime, in turn, rewarded Zhirinovsky with lucrative oil allocations. In total, Zhirinovsky received at least 12 different allocations totalling more than 75 million barrels of oil.

The Iraqi Ministry of Oil estimated profits arising from Zhirinovsky's allocations amounted to $8.6 million.

Subcommittee staff has prepared a thorough and comprehensive report detailing the chronology of events surrounding Zhirinovsky's allocations. Among the voluminous evidence are six letters signed by Zhirinovsky himself and 31 documents from the Ministry of Oil that specifically identify Zhirinovsky or his radical political party.

The report also introduces testimony of senior members of the Hussein regime, including Tariq Aziz and Saddam's former vice president, Taha Yassin Ramadan, each of which independently confirmed that Zhirinovsky received oil allocations.

In fact, one regime official confirmed to this subcommittee, not only that Zhirinovsky received oil allocations but that Zhirinovsky also earned money from the deal. He said, "Of course, Zhirinovsky make a profit. That's the whole point."

I'll present a brief sampling of that evidence today.

The first document is a letter that appears on exhibit two. That exhibit is a letter from Zhirinovsky to the Iraqi ambassador to Russia at the very beginning of the oil-for-food program. In short, this is Zhirinovsky's pitch for oil contracts.

He begins the letter by describing his longtime support for the Hussein regime. He states that he and his political party, quote, "stood firmly against the enforcement of the United Nations economic sanctions against Iraq," and that his political party used its, quote, "influence on the Duma to adopt resolutions that would facilitate economic cooperation between Russia and Iraq." He also stated, quote, "A special resolution to lift the economic sanctions on Iraq was adopted in particular and by virtue of our party's efforts."

After brandishing his pro-Hussein credentials, Zhirinovsky states that his party has, quote, "commercial institutions that would like to receive oil contracts under the oil-for-food program.

After Zhirinovsky's letter, there were series of meetings between his representatives and members of the Hussein regime, including meetings between Zhirinovsky himself and Saddam Hussein and Saddam's right-hand man, Tariq Aziz.

The subcommittee staff report details of all of those meetings, which ultimately culminated in an oil allocation to Zhirinovsky in phase two of the program.

The Hussein regime continued to grant oil allocations through the next two phases. Then, in phase five, a new player enters the picture. That new player is the American oil trader named Bayoil.

In early phases of the oil-for-food program, Bayoil was buying up as much Iraqi oil as possible. They aggressively pursued oil allocations and prided themselves on being one of the largest purchasers of Iraqi oil under the program.

In late 1998, Bayoil struck a deal with Zhirinovsky. Zhirinovsky would assign his allocation to Bayoil in exchange for a hefty commission. The evidence suggests that the commission was 17 cents a barrel, which would amount to $850,000 for a medium-sized allocation, such as 5 million barrels.

When Zhirinovsky informed the Iraqis that his allocation would be assigned to Bayoil, the Iraqis rejected the plan, saying, quote, "Iraq cannot do business with American companies."

As a result, Bayoil was forced to engage a Russian company to act as the nominal purchasing agent. Bayoil eventually did so, engaging a Russian company called Nafta Moscow to interface with the Iraqis.

Bayoil then confirmed the deal with Zhirinovsky in a letter presented on the left-hand side of exhibit three. In that letter, Bayoil tells Zhirinovsky that it has engaged Nafta Moscow to act as a purchasing agent and requests that Zhirinovsky confirm the agreement with a letter on LDPR letterhead.

Bayoil even drafted the letter for Zhirinovsky, saying, quote, "We, LDPR, confirm that our Iraqi oil allocation of 7 million barrels is assigned to Bayoil. We confirm (inaudible) to contract this allocation with company designated by Bayoil upon receiving from you the agreed premium prior to" -- and it inserts a certain date -- "Signed, Vladimir V. Zhirinovsky."

Bayoil then concludes the letter, indicating that it hopes to pay Zhirinovsky's premium earlier than the contractual deadline.

Soon after Bayoil's letter to Zhirinovsky, Bayoil explained the deal to Nafta, its nominal purchasing agent. That letter appears on the right-hand side of exhibit three.

In that letter, Bayoil gives Nafta instructions on how to negotiate with the Iraqis, such as reminding the Iraqis that the allocation was, quote, "being contracted for and on behalf of Mr. Vladimir Volvovich, the LDPR."

It's reasonable to conclude that the name Vladimir Volvovich of the LDPR is a reference to Zhirinovsky, because Zhirinovsky's full name is Vladimir Volvovich Zhirinovsky, and the LDPR is his political party.

Nafta was also supposed to remind the Iraqis that Zhirinovsky is, quote, "one of the biggest supporters of the Iraqi cause in the world."

Bayoil also offered suggestions, quote, "on maximizing the economic result for the LDPR," Zhirinovsky's radical political party.

All this correspondence eventually culminated in six different oil transactions, starting in phase five and continuing through phase 10. In connection with those transactions, Bayoil will pay a large commission payment to a seemingly unrelated entity.

For instance, in the phase six deal, Bayoil paid 17 cents to a mysterious entity called Plasco (ph) Shipping. In total, Bayoil paid Plasco (ph) more than $1.3 million.

Similarly, in phase seven, Bayoil paid a massive commission of 31 cents per barrel to another mysterious entity called Bayvan (ph) Consulting. In one document, a Bayoil employee called those payments, quote, "Russian commission."

Those Russian commissions to Bayvan (ph) appear to total more than $1.5 million.

The subcommittee could not identify any services provided by these services, Plasco (ph) Shipping or Bayvan (ph) Consulting, in connection with the oil deals.

Our exhaustive search of Bayoil's files concerning these deals included a thorough vetting of thousands of pages, detailing each and every aspect of the transactions. Nevertheless, the subcommittee could not identify one piece of correspondence with Plasco (ph) or Bayvan (ph). There was no contract with either of them, no invoices, no indication of any services provided whatsoever.

Moreover, the subcommittee attempted to locate each of those companies and was unable to do so.

Therefore, in light of the fact that Bayoil agreed to pay a premium to Zhirinovsky and Bayoil made these massive payments to dubious companies, it is reasonable to conclude that those payments were, in fact, commissions to Vladimir Zhirinovsky.

Not only did Zhirinovsky profit from this scheme, but Saddam Hussein profited as well. In phase eight of the program, which cleared toward the end of 2000, the Hussein regime started demanding under-the-table payments in connection with oil purchases. These payments were in direct violation of U.N. sanctions and the rules of the oil-for-food program.

According to senior members of the Hussein regime, every single recipient of an oil allocation was obligated to make those payments, commonly called surcharges.

Surcharges were imposed over a two-year period, from September 2000 to May 2002. And during that period, Zhirinovsky received four distinct allocations, as reflected in the documents presented in exhibit seven. For those four allocations, the Hussein regime received under-the-table payments totalling approximately $4.7 million.

Let's review one such surcharge payment.

In phase 10, Zhirinovsky received an allocation of 4 million barrels. Bayoil once again purchased that allocation and engaged Russian oil giant Lukoil to be its agent.

Lukoil contracted for the oil on behalf of Bayoil and the contract was number M-1067. In connection with contract with M-1067, Bayoil made payments totalling $1,122,548.70 to Plasco (ph) Shipping, the same mysterious entity that we visited previously.

Both payments are captured on the left-hand side of exhibit four, which presents Bayoil's internal accounting statements reflecting the payments to Plasco (ph) Shipping.

It is crucial that we remember the sum paid to Plasco (ph), $1,122,548.70, because that precise figure appears on a document created by the Ministry of Oil. And that document, which is a chart that appears on the right-hand side of exhibit four, is a summary of all surcharges paid to the Hussein regime under the oil-for-food program. The entry for contract M-1067, the Lukoil contract we discussed earlier, indicates that the surcharge owed was precisely $1,122,548.70; the exact amount to the penny that Bayoil paid Plasco (ph) Shipping.

Finally, the chart indicates the surcharge is paid in full. Therefore, given this evidence, it's reasonable to conclude that Bayoil's payments to Plasco (ph) Shipping were, in fact, illegal, under-the-table payments to the Hussein regime.

As displayed in exhibit seven, $4.7 million was paid in surcharges in connection with Zhirinovsky's allocations.

While Zhirinovsky and his agents paid $4.7 million to the Hussein regime in cash, Zhirinovsky also compensated the regime by literally giving the Iraqis a building in Moscow. In phase eight, Zhirinovsky was apparently having difficulty paying off all the surcharge debt. The vice president of Iraq, Taha Yassin Ramadan, told the subcommittee that he met with Zhirinovsky face to face and actually threatened him, saying, "Pay or get nothing."

In lieu of paying off the surcharge with cash, Zhirinovsky offered to give the Iraqis the building he owned in Moscow. Senior regime officials informed the subcommittee that the building was worth more than $800,000.

In our staff report, we present a letter from Zhirinovsky in which he discusses his proposal.

The Iraqis eventually agreed to Zhirinovsky's offer, and the deed was transferred to the Iraqis at their embassy in Moscow. One senior official told the subcommittee that he observed the transaction, saying, quote, "I was there personally."

We have learned that the building is being used as an Arabic school.

In conclusion, our staff report establishes that Zhirinovsky received numerous lucrative oil allocations, that Bayoil paid the Russians millions of dollars in exchange for some of those allocations and that Zhirinovsky, with Bayoil's financing, paid the Hussein regime millions in under-the-table surcharges.

With that, I'll close my presentation. I'd be happy to answer your questions.

GREENBLATT:

Thank you, again, for the opportunity to present additional evidence.

This presentation will introduce evidence that the subcommittee obtained establishing that the Hussein regime granted oil allocations to former French Minister of the Interior Charles Pasqua, and recently reelected member of the British Parliament George Galloway.

The evidence establishes that Pasqua refused to sign a letter for the Iraqis concerning the allocations because he, quote, "feared political scandal."

The evidence also indicates that Galloway appears to have used a children's cancer foundation in at least one transaction.

I'll start with a sampling of evidence concerning the allocations granted to Charles Pasqua.

The first exhibit, exhibit 8A, is a hand-written note written by the executive director of SOMO, the State Oil Marketing Organization, that he sent to the minister of oil. The subject line of the note is, quote, "The French personality Charles Pasqua."

In the first line of the letter, SOMO indicates that Saddam Hussein personally approved the allocation to Charles Pasqua, stating, quote, "the president-leader has approved the allocation of 3 million barrels to the French personality Charles Pasqua."

The note goes on to say that the Iraqis requested that Pasqua sign a letter concerning one aspect of the transaction and that he refused to do so. According to the note, Pasqua refused to sign the letter because he feared political scandal.

The next exhibit, which is displayed on exhibit 8B, is a letter written by Tariq Aziz's chief assistant. In that letter, he informs SOMO of the identity of Pasqua's agent and indicates that the agent, quote, "represents Mr. Pasqua in receiving the oil allocations allotted to the latter."

I should note that Pasqua's agent, Bernard Guillet, was detained two weeks ago for charges relating to oil-for-food transactions.

The last exhibit appears on 8D. That exhibit is another letter from the executive director of SOMO, in which he informs the oil minister that everyone who received an allocation in phase six of the program requested an increase in their allotment.

At the bottom of the letter is a hand-written note indicating that Tariq Aziz, quote, "endorsed" an increase of 1 million barrels to Pasqua's allocation.

Attached to the letter, which appears on the right side of the exhibit, is a chart created by SOMO reflecting the requests for additional barrels of oil.

Under the headings "France" and "Special Requests," the chart states "Charles Pasqua" and indicates that his purchasing agent had contracted for 3 million barrels of oil. It also indicates that Pasqua requested an additional allotment of, quote, "unspecified volume."

These documents are a mere sampling of evidence accumulated by the subcommittee that establishes that Charles Pasqua was granted oil allocations under the program.

Turning to the evidence concerning Mr. Galloway, the evidence indicates that Galloway received allocations in six phases of the oil- for-food program, amounting to a total of 20 million barrels of oil.

Saddam Hussein's chief lieutenant, Vice President Taha Yassin Ramadan, confirmed in an interview with the subcommittee that Galloway received allocations.

In addition, as reflected in the poster presented now, Ramadan confirmed that Galloway was granted allocations, quote, "because of his opinions about Iraq. He wants to lift embargo against Iraq."

Other regime officials confirm that Galloway received allocations under the oil-for-food program.

In fact, just yesterday, the subcommittee reinterviewed a senior member of the Hussein regime to confirm whether Galloway received allocations. The subcommittee asked the following question: "Did the Iraqis grant any oil allocations to George Galloway, a member of the British Parliament?" His answer: "Yes."

The first series of exhibits reveal that Galloway received an allocation of 3 million barrels of oil in phase nine of the program.

In the first exhibit, which is reflected in exhibit 9, we see a letter from SOMO to the minister of oil requesting approval of contract M-923. In identifying the contract, SOMO indicates that the contract is with a French oil company called Irideo (ph), and next to that name, the letter states "Fawaz Zuraiqat, Mariam Appeal."

Yesterday, the subcommittee verified with that senior member of the Hussein regime that this document was authentic and that the oil minister's signature was genuine.

Regime officials interviewed by the subcommittee also confirmed that in these letters to the oil minister, the allocation recipient was identified in parentheses next to the purchaser's name. Accordingly, this document indicates that the recipient of this oil allocation was Mariam Appeal, the foundation established by George Galloway, ostensibly to help a 4-year-old Iraqi girl named Mariam who was suffering from leukemia.

Therefore, it appears that George Galloway used a children's cancer foundation to conceal his oil transaction.

A different Ministry of Oil document further confirms that Galloway received an allocation. That document, which appears at exhibit 10, is a chart created by SOMO after the fall of Hussein regime, that lifts all oil allocations granted in phase nine of the program.

Entry number 23 of that chart indicates that the oil for contract M-923, the Irideo (ph) contract that we discussed a moment ago, had been allocated to George Galloway and his agent, Fawaz Zuraiqat.

A single regime official that was interviewed yesterday confirmed that Zuraiqat facilitated Galloway's (ph) oil transactions. Quote, "It's my understanding that Fawaz Zuraiqat is oil lifter for Galloway."

The next exhibit, exhibit 12, is another of the SOMO letters requesting approval of a contract from the oil minister. The contract is identified as contract M-1104, with Middle East Advance Semiconductor. And next to the company's name appears "(George Galloway)."

Once again, these forms were authenticated by senior Hussein regime officials. According to those officials, the names in parentheses next to the name of the purchasing company indicates the allocation recipient.

For instance, the subcommittee asked one senior regime official the following questions concerning this very document.

Question: "Does the phrase (Mr. George Galloway) mean that the allocation for this oil was granted to George Galloway?" Answer: "Yes."

The letter also indicates that an individual named Fawaz Zuraiqat was involved in the transaction. Once again, a senior Hussein regime official informed the subcommittee that, "Zuraiqat was the oil lifter for the benefit of George," close quote.

In the next exhibit, numbered exhibit 15, we see the same form yet again, a letter from SOMO to the oil minister requesting approval of an oil contract. In this form, SOMO indicates that contract M-1214 was signed, once again, with Middle East semiconductors, quote, "(on behalf of Mr. George Galloway) and requests the oil minister's approval."

Once again, we reconfirmed with the senior Iraqi official from the Hussein regime that this letter was indeed genuine and that the oil minister's signature at the bottom was authentic.

In addition, we confirmed that the form indicated that the oil had been allocated to Galloway. That official was asked, quote, "Does the phrase, quote, 'on behalf of Mr. George Galloway' mean that the allocation for this oil was granted to George Galloway?"

His answer: "Yes."

The subcommittee obtained additional evidence that the oil for this contract had been allocated to Galloway. That evidence is captured in exhibit 14, a SOMO letter informing the financial department of pending oil contracts. For contract M-1214, SOMO notified the financial department of the contract, identifying the contract as "contract number M-1214, with Middle East ASI (Mr. Galloway)."

Middle East ASI was Fawaz Zuraiqat's company and according to this document, it bought the oil that had been allocated to Mr. Galloway. This corresponds with the testimony of the senior regime official who confirmed to the subcommittee for a second time that Fawaz Zuraiqat is oil lifter for Galloway.

The subcommittee obtained another example of this form for the last contract involving Galloway. That letter, which is exhibit 14, is SOMO's notification to the financial department for contract number M-1348.

Once again, the document indicates that Galloway received the oil allocation and that Fawaz Zuraiqat's company signed to contract for that oil.

All told, the subcommittee obtained evidence related to four of Galloway's allocations. That evidence matches parallel evidence presented to the subcommittee's reports on Vladimir Zhirinovsky, the Russian Presidential Council and Charles Pasqua.

In addition, the subcommittee authenticated the Galloway evidence with senior regime officials involved in the allocation of oil.

With that, I'll close my presentation. I'll be happy to answer your questions.