The United States did not do enough to curb corruption by U.S. firms involved in the United Nations' defunct oil-for-food program in Iraq, said Democrats on a Senate committee investigating abuses of the program.
A report by the Democrats released late on Monday said the State Department and the U.S. Treasury's Office of Foreign Assets Control had taken "virtually no steps" to ensure U.S. firms enforced sanctions against Iraq.
"We have to look in the mirror at ourselves as well as pointing fingers at others," said Michigan Sen. Carl Levin, ranking Democrat on the Senate's Permanent Subcommittee on Investigations.
The committee is holding a hearing on Tuesday at which British independent MP George Galloway is set to respond to allegations that ousted Iraqi President Saddam Hussein gave him the rights to export 20 million barrels of oil under the oil-for-food program. Galloway has called the allegations "absurd."
Levin's report looked at kickback allegations against Texas company Bayoil USA, the first American firm indicted in the probe of the $67 billion oil-for-food program that allowed Iraq to sell oil to buy civilian goods for its people living under U.N. sanctions.
Records kept by the Iraqi Oil Ministry's State Oil Marketing Organization showed Iraq collected about $228 million in surcharges from September 2000 to September 2002, said the report.
The report alleged Bayoil "facilitated" about $37 million in illegal surcharges to Saddam and then engaged in intensive lobbying efforts to influence the price of Iraqi oil and to oppose U.S. efforts to stop the surcharges.
"Bayoil engaged in this misconduct for nearly two years, from 2000 to 2002 without attracting meaningful oversight from any U.S. agency," said the report.
U.S. RESPONSE QUESTIONED
The report said questions raised by U.N. oil observers about Bayoil's oil-for-food activities produced no U.S. response. Asked about the report, the State Department said it could not comment on a report it had not seen.
Bayoil executives pleaded not guilty last month to charges the company was part of a scheme to pay millions of dollars in secret kickbacks to Saddam in exchange for getting oil deals.
The company's lawyer told Reuters she would respond later to allegations made against Bayoil in the Democrats' report.
The Office of Foreign Assets Control said it had taken very seriously its responsibility of enforcing sanctions against Iraq.
"OFAC has and will continue to take action against violators of the OFF (oil-for-food) program," said a spokeswoman, adding her office had done over 300 investigations and audits of U.S. financial institutions and others involving violations of the Iraq sanctions regime.
In addition, criminal charges had been brought in at least 13 cases involving "unlicensed transactions" with Iraq and the OFAC was working with agents in a number of ongoing cases.
Bayoil, like other trading firms involved in oil-for-food, would buy most of its oil from contract holders who needed assistance in marketing the barrels.
Most of Bayoil's crude was then sold to the United States, which was the biggest destination for Iraqi oil, taking up more than half of exports when the surcharges were paid.
Levin's report also looked at suspected abuse outside the oil-for-food program through direct oil sales from Saddam to Jordan, Turkey, Syria and Egypt, which generated over $8 billion for Iraq's then leader.
Those sales, he said, were known to the United States and other U.N. member countries but little was done to stop them.
"On occasion, the United States actually facilitated the illicit oil sales," said the report, which cited the sale of oil via the port of Khor al-Amaya in southern Iraq over several weeks in February and March 2003.