Officials Double Saddam's Oil-for-Food Theft

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Saddam Hussein's (search) regime made more than $21.3 billion in illegal revenue by subverting the U.N. Oil-for-Food program and other sanctions — more than double previous estimates, according to congressional investigators.

"This is like an onion — we just keep uncovering more layers and more layers," said Sen. Norm Coleman (search), R-Minn., whose Senate Committee on Government Affairs received the new information at a hearing on Monday.

New figures on Iraq's alleged surcharges, kickbacks — and oil-smuggling dating back to 1991 — are based on troves of new documents obtained by the committee's investigative panel, Coleman told reporters before the hearing. The documents illustrate how Iraqi officials, foreign companies and sometimes politicians allegedly contrived to allow the Iraqi government vast illicit gains.

The findings also reflect a growing understanding by investigators of the intricate schemes Saddam used to buy support abroad for a move to lift U.N. sanctions.

Coleman said the probe is just beginning and that officials aim to discover "how this massive fraud was able to thrive for so long." He said he is angry that the United Nations has not provided documents and access to officials that investigators need to move ahead.

Officials must get to the bottom of the allegations because, among other things, it will help the international community to better design future sanctions programs, some senators said.

"That humanitarian program was corrupted and exploited ... for the most horrible and aggressive purpose" of raising money for Saddam's military, said Sen. Joseph Lieberman, D-Conn.

But the committee's ranking Democrat, Sen. Carl Levin of Michigan, said "for the most part the U.N. sanctions achieved their intended objective of preventing Saddam from rearming and developing weapons of mass destruction."

Saddam's military spending plummeted after sanctions were imposed in 1991 to a fraction of what it had been before, he said, adding that the vast majority of illicit income was from publicly disclosed trade agreements that the world well knew about "but winked at."

"Saddam Hussein attempted to manipulate the typical oil allocation process in order to gain influence throughout the world," Mark L. Greenblatt, a counsel for the Senate panel's permanent subcommittee on investigations, said in prepared testimony obtained by The Associated Press.

"Rather than giving allocations to traditional oil purchasers, Hussein gave oil allocations to foreign officials, journalists, and even terrorist entities, who then sold their allocations to the traditional oil companies in return for a sizable commission."

The reference to terrorist groups referred to evidence that the regime had allocated oil to such organizations as the Popular Front for the Liberation of Palestine, and the Mujahadeen Khalq, a group seeking to overturn the government of Iran, Greenblatt said.

Previous estimates — one from the General Accountability Office and the other by the top U.S. arms inspector Charles Duelfer — concluded that Saddam's government brought in $10 billion illicitly from 1990 to 2003, when sanctions were in place.

But congressional investigators found that vastly more oil — totaling $13.7 billion — was smuggled out of Iraq than previously thought. Investigators also raised the GAO's estimate of $4.4 billion in oil-for-food kickbacks by $200 million, and said the regime made $2.1 billion more through a scheme where foreign companies imported flawed goods at inflated prices.

According to the documents, the Iraqi government signed deals to import rotting food and other damaged goods with the full understanding of the exporting companies, who accepted payments for top quality products while kicking back much of the price difference to the Iraqi regime.

The panel estimated that such substandard goods accounted for 5 percent of all goods imported under the oil-for-food program, which was put in place in 1996 amid concerns that the Iraqi population was suffering from lack of food and medicines under the sanctions. The rough estimate "is drawn from anecdotal information provide by officials of the former Iraq regime, the United Nations, and U.S. government officials," the panel said.

The total estimate of illegal revenue also includes $400 million from interest earned from hiding illicit funds in secret bank accounts. Another $400 million in illicit revenue grew out of pricing irregularities and kickbacks in the Kurdish areas of northern Iraq.

The Senate panel is conducting one of several congressional probes into alleged illegal profiteering in the oil-for-food program after allegations of corruption came to light earlier this year when Saddam was driven from power during the U.S.-led invasion. Former Federal Reserve Chairman Paul Volcker heads a panel that's conducting an independent investigation.