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Price of doing business in Saddam’s Iraq

It was a slush fund, but often called an "after sales service fee."  NBC News has learned that Iraqis demanded a 10 percent surcharge be added to any transaction — paid to private bank accounts controlled by the Iraqis.   NBC's Lisa Myers has details.

There are new details on how deposed Iraqi President Saddam Hussein got his wealth and how that money is being used now. The United Nations oil-for-food program was supposed to keep food on the table for hungry Iraqis and choke off funds to Saddam. But officials now tell NBC News that kickbacks to Saddam under the U.N. program were even more extensive than rumored. And NBC has learned that money from the scheme may now be helping fund Iraqi insurgents’ attacks on U.S. troops.

A small company outside Paris, Tripette and Renaud, reached a deal in 2002 to sell almost $1 million in laboratory equipment to Iraq. A company official tells NBC News the Iraqis demanded that a 10 percent surcharge be added to the price — which the company agreed to pay to private bank accounts controlled by the Iraqis. 

A French business consultant, who made 50 trips to Iraq, says this company was not alone in agreeing to what amounted to payoffs of Saddam under the oil-for-food program.  Guilles Munier spoke through a translator: “Businessmen from every country had to pay, transfer 10 percent to bank accounts in Jordan and Lebanon.”

It was often called an “after sales service fee.”  According to former U.S. Treasury Department official Jim Gurule, “It’s a very diplomatic way of describing a kickback. This money was a kickback to Saddam Hussein.”

For years, there have been rumors and anecdotal evidence about kickbacks to Saddam.

What’s new is that U.S. officials tell NBC News they now have proof the surcharge was virtually systematic — paid by hundreds of companies worldwide in a violation of U.N. sanctions. Saddam was able to collect billions of dollars, right under the nose of the United Nations.

“While before there was concern, there was smoke, now we see the fire, now we see the picture more clearly.… It’s huge because of the amount of money involved,” Gurule added.

The current Iraqi minister of trade — now allied with the United States — charges there was a conspiracy of silence to overlook Saddam’s slush fund. 

Iraq’s current Trade Minister Ali Allawi said, “I’m surprised that the United Nations claims that it did not know. I mean, they were administering the program.”

But Benon Sevan, who headed the U.N. food program, says all he heard were rumors, adding, “We are not an investigative power.

“I’m not trying to justify it, but even if you take 10 percent of $65 billion, the rest went to the food, the medicine.  Nobody talks about it,” said Sevan.

NBC News has learned that over the last few months, the United States and Iraqis have been renegotiating many contracts and demanding a 10 percent reduction in price.

But where is that money now?  Senior U.S. officials tell NBC News that some of it is helping fund the violent insurgents in Iraq, who are believed to have access to hundreds of millions of dollars.

Lisa Myers is NBC News’ senior investigative correspondent.