Iraqi citizens file suit alleging oil-for-food fraud

/ Source: The Associated Press

Iraqi citizens filed a $200 million lawsuit Friday against a prominent European bank and an Australian wheat exporter, saying they were cheated out of humanitarian goods when the companies permitted the U.N. oil-for-food program to be corrupted.

The lawsuit, which sought class-action status on behalf of northern Iraqis, said the bank, BNP Paribas, and AWB Limited, the largest humanitarian goods provider under the oil-for-food program, cheated the citizens of Iraq from June 10, 1999, to June 3, 2003.

The suit, filed in U.S. District Court in Manhattan, sought at least $200 million in damages under the federal Racketeer Influenced and Corrupt Organizations Act, the Foreign Corrupt Practices Act and the International Emergency Economic Powers Act.

According to the lawsuit, residents of the Irbil, Dokuk and Sulaimaniyah areas of Iraq claimed they did not receive the full benefits to which they were entitled.

The lawsuit said the companies stole from the Iraqis “by engaging in a brazen kickback scheme” in which money earmarked for the benefit of Iraqis was instead improperly transferred “into the coffers of Saddam Hussein’s corrupt Iraqi regime or used to indemnify goods suppliers, including AWB, for the bribes they had paid Iraq.”

$1.7 billion in kickbacks alleged
The lawsuit said the companies disguised and misrepresented the kickbacks to make them appear to be legitimate costs. It also accused them of knowing or recklessly disregarding that money was being paid illegally to the government of Saddam Hussein.

BNP paid as much as $1.5 billion in kickbacks to Hussein’s government while AWB paid more than $200 million, the lawsuit claims.

BNP is headquartered in Paris, France, but has offices in the United States, including New York. Edwina Frawley, a BNP spokeswoman, said she had no immediate comment Friday.

A government-commissioned report in Australia was released several weeks ago saying AWB paid $220 million in kickbacks to former Iraqi leader Saddam Hussein’s regime from 1999 to 2003 to secure lucrative wheat contracts under the oil-for-food scheme.

Under the oil-for-food program, AWB, which had sold wheat to Iraq since 1948, sold 6.8 million tons to the nation, receiving more than $2.3 billion in payments, the lawsuit said.

AWB did not immediately respond to an e-mail seeking comment Friday, and no one answered a phone call at its Australian headquarters. In response to the government-sponsored report, the company in late November released a statement accepting responsibility for the scandal and announced a corporate restructuring plan.

Iraq no longer permits AWB to send wheat there.

In October 2005, a U.N.-backed investigation said in a report that about 2,200 companies in the oil-for-food program, including corporations in the United States, France, Germany and Russia, paid a total of $1.8 billion in kickbacks and illicit surcharges to Saddam Hussein’s government.