- The Washington Times - Friday, November 12, 2004


The U.S.-led postwar government in Iraq awarded business to two multinational banks fined for violating U.S. sanctions against the country during the regime of Saddam Hussein, records show.

The U.S.-appointed interim Iraqi government awarded one of the first foreign banking licenses to British bank HSBC — the only firm fined twice by the U.S. Treasury Department for transactions with Saddam’s Iraq.

A CIA report last month said Saddam’s regime also stashed illicit oil profits in accounts at an HSBC branch in Jordan. And an Iraqi bank under Saddam was one of five investors in a London bank controlled by HSBC.

HSBC said in a statement its internal reviews have found no evidence of wrongdoing.

JPMorgan Chase & Co., the American bank chosen by U.S. officials to manage the Trade Bank of Iraq, paid a fine four years ago to resolve charges its Chase Manhattan Bank allowed a $50,000 funds transfer involving Saddam’s Iraq.

JPMorgan spokeswoman Kristin Lemkau said the transfer was a mistake. She said a Chase employee improperly allowed the transaction to go through after it had been halted by the bank’s internal controls. The money was destined for an Iraqi soccer association, Miss Lemkau said.

Bids from 58 banks from around the world were considered in selecting the consortium led by JPMorgan. The 13-bank consortium has financed more than $2.5 billion in reconstruction and development work. JPMorgan and HSBC were the only banks on that list that had paid fines for violations involving Saddam’s Iraq.

Sean McCormack, a spokesman for President Bush’s National Security Council, did not respond to questions yesterday about the banking arrangements.

Former U.S. officials with Iraq’s Coalition Provisional Authority, which ran Iraq from Saddam’s ouster until last June, also declined to answer questions about the arrangements.

After the U.S.-led invasion toppled Saddam in April 2003, reviving Iraq’s banking sector was one of the reconstruction jobs taken on by the U.S.-managed CPA and the Iraqi interim government it appointed.

The Iraqi interim government awarded banking licenses in January to HSBC and the National Bank of Kuwait. Neither has opened any branches in Iraq. HSBC got the license despite its recent connections with Saddam’s regime.

HSBC USA, the British bank’s American subsidiary, paid the U.S. Treasury Department’s Office of Foreign Assets Control more than $223,000 in 2000 and 2001 to settle charges it violated trade embargoes against Iraq and other rogue nations. The fines covered a dozen transactions involving Saddam’s Iraq, Libya, Sudan, Cuba and the former Yugoslavia.

Peter McPherson, then head of financial operations for the CPA, said at the time that JPMorgan won the contract because the consortium convinced officials “they could do a cost-effective, quality job.”

Mr. McPherson declined comment through a spokesman.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide