British Lawmaker to Congress: Back Off

The firebrand British member of Parliament who has been accused of accepting oil vouchers as part of the Oil-for-Food (search) scandal told U.S. lawmakers Tuesday he did nothing wrong and accused the United States of diverting attention from their own crimes in Iraq by implicating him.

George Galloway (search) said he met Saddam Hussein "as many times as [Defense Secretary] Donald Rumsfeld met him. The difference is Donald Rumsfeld met him to sell him guns and give him maps.

"I met [Saddam] to try and persuade him to allow U.N. weapons inspectors back in the country, a rather better use of the meetings than your own secretary of defense," Galloway told the Senate Homeland Security and Governmental Affairs Permanent Investigations Subcommittee.

Galloway, who arrived in the United States late Monday night, argued that documents suggesting he got the vouchers are bogus and that the Iraqi officials who ratted him out are lying.

"You have the gall to quote a source without ever having asked me if the allegations were true, that I am the 'owner of a company which has made substantial profits from oil for food,'" Galloway said, noting that he owns no companies besides a media firm in London.

"You had no business to carry a quotation utterly unsubstantiated and falsely implying otherwise," he said. "You've already found me guilty before I have had a chance to come here and defend myself."

Galloway previously told reporters that he feels the accusations are a political setup arranged by the Bush administration and Republicans who strongly supported the president's war in Iraq. He also acknowledged that his relationship with former Iraq Deputy Prime Minister Tariq Aziz (search) was friendly.

Prior to the hearing, Galloway blasted subcommittee chairman Sen. Norm Coleman (search), R-Minn., and his colleagues as being a "group of Christian fundamentalists and Zionist activists under the chairmanship of neo-con George Bush and the right-wing hawks."

Coleman named Galloway as the recipient of payoffs totaling 20 million barrels of oil through the corrupt Oil-for-Food program.

Speaking at the beginning of the hearing, Coleman said Galloway was allotted 20 million barrels of oil to enrich himself in exchange for his support for Saddam Hussein's regime. Majority Counsel for the committee Mark Greenblatt then testified that the barrels came in six phases during the Oil-for-Food program.

"Saddam Hussein's chief lieutenant, Vice President Taha Yassin Ramadan, confirmed in an interview with the subcommittee that Galloway received allocations. In addition ... Ramadan confirmed that Galloway was granted allocations, quote, 'because of his opinions about Iraq. He wants to lift embargo against Iraq.'"

Other Saddam regime officials confirmed that Galloway received allocations, Greenblatt said. He added that one document "indicates that the recipient of this oil allocation was Mariam Appeal (search), the foundation established by George Galloway, ostensibly to help a four-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."

He then said the transactions were conducted through Galloway's agent, Fawaz Zuraiqat, a Jordanian who is president of Middle East Advanced Semiconductor Inc. (search)

Galloway called the accusations a lie.

"This is beyond the realm of the ridiculous," Galloway said, denying additional allegations that Galloway paid $300,000 for surcharges for the transaction through Mariam Appeal.

As he got off the plane in Washington on Monday night, Galloway denied the allegations and said the evidence against him was forged. But in the hearing on Tuesday, when presented with the documents exhibited by Greenblatt, Galloway would not say one way or the other whether he thought the materials were forgeries. He did say the information in them is "fake."

An American Connection

The Oil-for-Food program, which ran from 1996-2003, was designed to let Saddam's government sell oil in exchange for humanitarian goods to help the Iraqi people cope with crippling U.N. sanctions.

But Saddam peddled influence by awarding favored politicians, journalists and others vouchers for oil that could then be resold at a profit.

Coleman's subcommittee has released three reports since Thursday exploring how Saddam made billions in illegal oil sales despite U.N. sanctions imposed in 1991 after Iraq's invasion of Kuwait. Subcommittee's staffers also testified about other illegal transactions committed by Russian, French and American individuals and businessmen who sought to profit from Iraq's oil trade.

In a report released Monday night, investigators alleged that Washington looked the other way as Texas oil company Bayoil (search) bought Iraqi crude and sold it to American refineries. As a member of the U.N. Security Council, the United States allowed Saddam to pocket billions of dollars smuggling oil to Jordan, Turkey and Syria, it said.

Click here to read the report about Iraqi oil allocations to the Russian presidential council (pdf).

Counsel for minority staff Dan Berkovitz testified that from September 2000 until late September 2002, the Iraqi government demanded that purchasers of Iraqi oil under the Oil-for-Food program pay a per-barrel surcharge to the Iraqi regime. The surcharges were illegal because they raised the sales price of Iraqi oil that was determined by the United Nations. The surcharges were also paid into accounts outside the control of the United Nations, violating U.N. sanctions, Berkovitz said.

Iraq earned $228 million from the surcharges, including about $4.7 million from U.S. company Bayoil and former Russian official Vladimir Zhirinovsky (search), Greenblatt told the panel. In all, Berkovitz said that the 525 million barrels of Iraqi oil — about 660,000 barrels per day — that ended up in U.S. hands during the two-year surcharge period amounted to $118 million in illegal surcharges paid to Iraq by the United States. He pointed out that U.S. money was not paid directly to Iraq, but to oil traders, allocation holders and various other middlemen that served as conduits for the Iraqi Oil Ministry's State Oil Marketing Organization (SOMO).

"This means that oil imported into the U.S. financed about 52 percent of the illegal surcharges paid to the Hussein regime ... These percentages roughly correspond to the percentages of Iraqi oil sent to the U.S. and elsewhere during this period," Berkovitz said, adding that Bayoil appears to be the only company that knew it was paying the surcharge.

Bayoil was responsible for importing 200 million of the 525 million barrels of oil received by the United States, he said.

The committee singled out the U.S. Office of Foreign Assets Control, which the United Nations repeatedly warned about Bayoil's scheme. It cited an apparent misunderstanding in which U.S. authorities assumed the United Nations would monitor individual companies, while at the United Nations, Oil-for-Food officials thought that was the responsibility of national governments.

The end result was that before the United Nations managed to squeeze out the surcharges imposed by Iraq, the United States failed to stop the illegal payments, Berkovitz said.

"The State Department and OFAC took no additional steps to ensure no American companies were paying surcharges, or even to inquire about the nature of the trade in Iraqi oil. U.S. authorities also failed to respond to requests by United Nations officials for assistance in obtaining information about potential sanctions violations by Bayoil," he said.

In April, Bayoil USA owner David Chalmers (search) and three other executives were indicted in U.S. District Court for allegedly funneling kickbacks to Saddam. Chalmers has denied any wrongdoing.

But Sen. Carl Levin, D-Mich., ranking minority member on the subcommittee, said responsibility for the misdeeds extends far beyond Chalmers and company.

"There's a pattern here of erratic and inconsistent enforcement of sanctions on Iraq. On the one hand, the United States is at the U.N. trying to stop Iraq from imposing illegal surcharges on oil-for-food contracts; on the other hand, the U.S. ignored red flags that some U.S. companies might be paying those same illegal surcharges," Levin said.

Aside from Bayoil's alleged violations, Berkovitz said that a different U.S. company that chartered ships for Jordan called the U.S. Commerce Department when it became concerned that a ship was being used to transport illegally 7.7 million barrels of Iraqi oil destined for Jordan, which paid $53 million in cash for them. The company's general counsel was later told by a State Department official that the department was "aware of the shipments and has determined not to take action."

The Russian and French Connections

As for Zhirinovsky, the ultranationalist former parliamentarian traded on his longtime friendship with Hussein and mutual dislike for the West to win 75 million barrels in oil allocations that resulted in profits to Zhirinovsky and his agents of $8.6 million, according to Greenblatt. Zhirinovsky's distaste for the United States did not stop him from dealing with Bayoil, however, and he assigned his allocation of 5 million barrels "in exchange for a hefty commission" of about $850,000.

In other transactions, Bayoil paid commissions for oil to companies that the committee could not locate or identify. Because Bayoil already had a deal with the Russian and had made payments to dubious companies, "it is reasonable to conclude that those payments were, in fact, commissions to Vladimir Zhirinovsky," Greenblatt said.

Greenblatt also presented documents that showed that former French Interior Minister Charles Pasqua was granted allocations from Iraq, but fearing public scandal, he had his agent, Bernard Guillet, handle the transaction. Guillet was detained two weeks ago for charges relating to Oil-for-Food transactions, he said.

The Associated Press contributed to this report.