October 8, 2004
By Bryan Bender, Globe Staff
WASHINGTON -- The Justice Department is investigating whether American citizens illegally sold prohibited items to Iraq in the years before the US-led invasion and aided Saddam Hussein's efforts to circumvent international sanctions, current and former Bush administration officials said yesterday.
Officials involved in unraveling the financial activities of the secretive former regime said Justice Department attorneys and grand juries are reviewing evidence that Americans may have been among a slew of foreigners involved in illicit trade deals with the Hussein government from the 1990s up to the March 2003 invasion.
The US probe came to light a day after the release of a 1,000-page final report by CIA investigators that determined Iraq had no weapons of mass destruction before the invasion, but that also disclosed an extensive set of foreign companies and people that conducted illegal business with Iraq. The report blacked out the names of US companies and individuals.
The report Wednesday by chief US weapons inspector Charles A. Duelfer outlined a series of ''secret lists" obtained from former officials of the Iraq regime that included companies and individuals accused of engaging in illegal trade. Hussein and his inner circle ''gave prominent vocal supporters and willing influential UN officials lucrative oil allocations" allowing them to buy Iraqi oil, the report said. While Duelfer's report lists a range of companies and individuals -- including Benon Sevan, who formerly oversaw the $60 billion oil-for-food program -- it edited out the names of Americans and their affiliates ''in accordance with the provisions of the Privacy Act."
''There are Americans involved," said David Kay, who oversaw the CIA's search for weapons of mass destruction and investigation of Iraq's black market arms network until last December. ''The cases are undergoing legal review, and it is actionable," he said in an interview yesterday, declining to elaborate.
The Justice Department launched the criminal investigations based on interviews with top officials of the former regime and the review of seized documents outlining Hussein's illicit activities uncovered in the months since the US-led invasion removed Hussein from power. Duelfer's team provided the Justice Department with the information it uncovered in its weapons probe, an intelligence official said.
Bush administration officials who asked not to be identified confirmed that US investigators in Iraq have targeted several American companies and individuals -- none of whom were US government officials at the time -- for allegedly providing Hussein's government with goods prohibited by UN sanctions, which were applied against Iraq after its defeat in the 1991 Persian Gulf War.
The US investigation is being pursued independently of a United Nations inquiry into alleged corruption in the world body's oil-for-food program, which was established in 1996 to allow Iraq to sell oil and use the proceeds expressly for humanitarian goods. That inquiry, led by former Federal Reserve chair Paul Volker, has not made its findings public.
The Justice Department declined to comment on its investigation yesterday. It has previously said it was looking into prewar trade with Iraq, but has not said that Americans are under investigation for criminal conduct.
Separately, a House government reform subcommittee is also investigating the UN oil-for-food program, including the Bush administration's handling of the funds after it set up the Coalition Provisional Authority to oversee the Iraq occupation. The interim Iraqi government, too, is in the midst of its own inquiry.
Some of the goods allegedly provided in violation of the sanctions included missile parts and other military equipment that the UN sanctions were meant to keep out of the hands of the Iraqi dictator. The sanctions barred Hussein from undertaking a wide variety of military activities and importing some commercial goods that could be used for military purposes or weapons of mass destruction.
According to the Duelfer report, companies, business leaders, and government officials from countries including France, China, and Russia dominated the illicit trade, receiving secret oil vouchers allegedly in return for goods and favors. The report said Hussein personally approved many of them to help spread his oil wealth to prominent business executives and politicians as he sought to make end-runs around the UN sanctions, which were meant to thwart his weapons ambitions.
Among the individuals alleged to have received the lucrative vouchers -- some of which were never cashed in, according to the Duelfer report -- are Charles Pasqua, former French interior minister; President Megawati Sukarnoputri of Indonesia; and former Russian presidential candidate Vladimir Zhirinovsky.
The report implicates companies or individuals from several countries, including the Netherlands, Panama, Switzerland, Yemen, Namibia, and the United States.
Duelfer's published allegations about non-US officials and companies prompted swift reaction yesterday from some of America's closest allies that are implicated in possible wrongdoing.
France urged caution against coming to any conclusions about the allegations, while other foreign governments denied the allegations. ''There is no credence to these allegations," said Indonesian Foreign Ministry spokesman Marty Natalegawa.
Zhirinovsky also denied the allegations. Other governments, such as Namibia, called the charges baseless.
But the Duelfer report increased pressure on the Volker panel to speed up its investigation, which Volker has said will not be completed at least until the middle of next year.
''The world cannot wait years for answers to the growing body of evidence implicating senior UN officials in outright corruption," said Representative Henry Hyde, Republican of Illinois, who chairs the House International Relations Committee.
Russian officials also urged Volker to make his investigation public so that they can fully answer the allegations of Russian involvement in illegal trade with Iraq.
Volker declined to comment yesterday on the new allegations.
In Washington yesterday, officials declined to discuss the identities of the US individuals and companies who are the target of the Justice Department.
But an administration official, who asked not to be named, said that no government officials were implicated and that the number of Americans involved is far smaller than the number of other foreigners that had potentially illegal contacts with Hussein's regime.
The Washington Post reported the Bush administration does not plan to take immediate action or pressure foreign governments to act against individuals or companies that may have violated UN sanctions against Hussein because it fears igniting tensions with allies.
The White House is ''taking its time" to go through Duelfer's report is exploring options, spokesman James Wilkinson said.
Bender can be reached at bender@globe.com. Material from the Associated Press was used in this report.
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