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French Bank BNP Paribas 'Ignored Abuses' in Iraq

WASHINGTON (AFP) -- France's BNP Paribas received hundreds of millions of dollars from the scandal-plagued UN Oil-for-Food programme in Iraq, apparently while ignoring rampant abuses in the programme, a top US lawmaker charged Wednesday.

"There are indications that the bank may have been noncompliant in administering the Oil-for-Food programme," said Henry Hyde, chairman of the House of Representatives' International Relations Committee.

"No one seemed to be in charge of watching Saddam Hussein while he and his government were conducting perhaps the largest financial swindle in history," said Hyde, citing findings of a probe by his committee into abuses within the UN programme.

"Evidence seems to indicate that in some cases, payments in the Oil-for-Food programme were made by BNP at times with a lack of full proof of delivery for goods, and other necessary documents contracted for in the Oil-for-Food programme," Hyde said in a written text of remarks to be delivered at the hearing later Wednesday.

A BNP Paribas official said at the hearing that the bank's conduct in the matter was completely above-board.

"The bank believes it properly fulfilled all of its responsibilities ... in accordance with all applicable legal and regulatory requirements," said Everett Schenk, CEO of the bank's North American operations, who added that BNP Paribas' oversight over the funds was limited.

"The bank has had no discretion over how the money has been spent or invested under the Oil-for-Food programme," Schenk testified, noting that other banks also had a role in safeguarding funds for the programme.

The UN aid programme, which ran from December 1996 until November 2003, allowed Saddam Hussein's regime to ease the burden of international sanctions by selling oil to buy humanitarian supplies.

But critics say the Iraqi dictator abused the programme by offering vouchers for oil as bribes to hundreds of officials from different countries, partly in a bid to get the sanctions overturned.

Hyde alleged that funds from the programme were used to buy influence and weapons abroad, among numerous abuses.

"At other times, payments may have been authorised by BNP to third parties, separate from the originally intended recipient of the Letter of Credit," he said.

The Republican chairman added: "If true, these possible banking lapses may have facilitated Saddam Hussein's manipulation and corruption of the program.

Hyde said the scam, which netted Saddam billions of dollars, required the complicity of "scores of accomplices around the world."

"As we understand, BNP received more than USD 700 million in fees over the life of the Oil-for-Food programme," said Hyde.

"This is a lot of money, and it is reasonable to ask if BNP adequately supervised its compliance programmes overseeing the administration of the Oil-for-Food programme, especially in light of the widespread reports in the press of corruption within the programme."

Meanwhile, another House Republican said that a fraud panel appointed by UN Secretary General Kofi Annan has agreed to release documents concerning the Iraqi oil sales program.

Representative Henry Bonilla said at a press conference that panel chief Paul Volcker has agreed to make findings from his inquiry into the now-defunct Oil-for-Food programme available to US lawmakers in January.

"We got a letter from Paul Volcker, and he spoke to me before he sent the letter," the Texas Republican told reporters, saying that the UN has initiated 55 separate audits into the programme.

"He indicated to me ... the 55 audits will be available in January. They just want to get out their initial report. So they'll get it out in January," Bonilla said.

He said US lawmakers remain stymied however in access to UN personnel whom they hope to interview.

"At this point, they're not prepared to do that, so we're still at loggerheads on that issue," Bonilla said.

Meanwhile, a Republican member of the International Relations panel, Jeff Flake, called on the George W. Bush administration to step up pressure on the United Nations.

"The evidence of a scandal is there," said Flake. "However, without action from the US, the UN will continue to drag its feet investigating the matter."

Flake is the author of a proposed bill that would withhold a portion of US funding to the international body until officials in Washington are satisfied with UN cooperation in investigating Oil-for-Food programme abuses.

A companion bill has been introduced in the US Senate by John Ensign, Republican of Nevada.

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