Grand jury probes Rich-Saddam link

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A federal grand-jury investigation of pardoned financier Marc Rich's role in the U.N. oil-for-food scandal has focused on whether he helped Iraqi dictator Saddam Hussein reward the families of Palestinian bombers who carried out suicide attacks in Israel, sources said yesterday.

Law-enforcement authorities and congressional investigators said the grand jury wants to know whether cash funneled to Saddam by oil traders -- including Mr. Rich -- to help arrange multimillion-dollar Iraqi oil deals for political leaders and well-heeled investors was used by the now-deposed dictator to pay the bombers' families.

"Can we legitimately speculate that some of the blood money Saddam paid to kill people in Israel may have originated or at least been touched by Marc Rich through the United Nations' dreadful oil-for-food program?" said a source close to the probe. "We know Saddam Hussein was getting a rake off from the U.N. program and Rich was in the middle of that."

The grand-jury probe centers on questions of whether Mr. Rich, pardoned by President Clinton on his last day in office in a pending $48 million income-tax-evasion case, brokered millions of dollars in deals between Saddam and other traders as part of the oil-for-food scandal, the sources said.

It has focused on concerns that Mr. Rich and others made illegal payments to Iraq to obtain lucrative oil contracts in deals that were intended to circumvent U.N. sanctions against the Iraqi government and whether any of that money was used to pay the families, they said.

Last month, the House International Relations Committee cited documents confirming that Saddam diverted money from the oil-for-food program to pay millions of dollars to families of Palestinian suicide bombers who carried out the Israeli attacks.

The committee said Saddam maintained secret bank accounts in Jordan to reward the families, tapping into bribes from foreign companies and brokers involved in the oil-for-food program, which was established in 1996 to allow Iraq to trade oil for food, medicine and other humanitarian items.

But the committee said Saddam, now in U.S. custody, pocketed $21.3 billion in illegal revenue under the program, adding that Palestinians said he paid more than $35 million to families of Palestinians killed or wounded in the Israel bombings.

Since September 2000, Palestinians have carried out 117 suicide bombings, killing 494 Israelis and others.

The committee said money from illegal oil-for-food deals went to accounts held by the Jordanian branch of the Iraqi government-owned Rafidain Bank and that a former Iraqi ambassador to Jordan, Sabah Yassen, withdrew cash to make payments ranging from $15,000 to $25,000 to the families of Palestinian bombers.