- The Washington Times - Monday, November 15, 2004

A Senate committee today will hear new details about an investigative team’s suspicions that cash from kickbacks to Iraqi dictator Saddam Hussein — paid by companies doing business with his regime under the U.N. oil-for-food program — is funding the insurgency against U.S. forces there.

Charles A. Duelfer, the CIA official who led the fruitless hunt for weapons of mass destruction after the war, will testify before the Senate Governmental Affairs’ permanent subcommittee on investigations, as will Juan Carlos Zarate, assistant secretary of the Treasury for terrorist financing and financial crimes.

Mr. Zarate’s testimony will focus on how cash from kickbacks that companies paid the regime and from oil smuggled in violation of the United Nations’ sanctions was used “for illicit purposes, including whether monies pilfered from the [oil-for-food] program are being used to fund the Iraqi insurgency or terrorist groups,” according to a committee statement.

Two investigators from the committee staff also will testify about the findings of their seven-month probe.

“They will lay out the nuts and bolts,” said Ray Shepherd, the panel’s staff director, promising “the most detailed and substantive description [of problems surrounding the program] to date.”

Mr. Zarate is expected to testify for the first time about the results of inquiries by a special team of Treasury officials who have been working with the military in Iraq to trace the origins of the cash being used to fund attacks on U.S. forces.

“It’s follow-the-money,” said a U.S. official familiar with the investigation.

Treasury officials say kickbacks and other illicit funds from the scheme were converted into cash and brought back to Iraq, where they were deposited in the central bank. Investigators long have suspected that some of it ended up being used by insurgents in Iraq to buy weapons and pay fighters.

Mr. Duelfer will testify about “how Saddam Hussein manipulated the [oil-for-food] program to erode U.N. sanctions, generate billions of dollars of illicit funds, and procure conventional weapons,” the committee said.

The Government Accountability Office (GAO), Congress’ investigative arm, reported in March that the regime earned more than $4 billion in kickbacks from companies, which were forced to pay a 10 percent surcharge for the right to sell humanitarian goods such as medicine and infant formula in Iraq.

In addition, Saddam and his close associates made more than $5 billion by smuggling oil out of the country through Jordan, Turkey and Syria.

But Mr. Shepherd says the committee will reveal today that the real figures were even higher than that.

“It’s a new number, and it’s bigger,” he said, declining to give details.

The GAO found that the funds were used to buy goods, including luxuries such as a fleet of Mercedes-Benz automobiles, which were banned under the U.N. sanctions.

The Duelfer report, published in September, revealed that cash also was used to fund Iraq’s illegal missile program and to purchase missile guidance, propulsion and fuel processing technology from Chinese, Russian and Indian companies.

Six governments and companies from a dozen other nations — including France and coalition member Poland — were willing to ignore sanctions prohibiting arms sales, the Duelfer report said.

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