Report Says Treasury Missed Iraq Oil Abuses

U.S. Firm Accused of $37 Million in Kickbacks

The U.S. Treasury Department failed to adequately monitor U.S. companies that violated U.N. sanctions against Iraq, permitting a Houston-based oil company to avoid scrutiny as it paid Saddam Hussein's government more than $37 million in illegal kickbacks, according to a report released yesterday by Democrats investigating abuses in the U.N. oil-for-food program.

Bayoil, a Texas firm indicted by a federal grand jury last month for paying millions of dollars in illegal fees to Iraq, received "minimal attention" from Treasury's Office of Foreign Assets Control (OFAC) as it managed the import of more than 200 million barrels of Iraqi crude into the United States between 2000 and 2002, according to the report released by Sen. Carl M. Levin (Mich.), the ranking Democrat on the Senate Permanent Subcommittee on Investigations.

The $64 billion U.N. oil-for-food program was created in December 1996 to offset the economic hardship brought on by U.N. sanctions imposed on Hussein's government. The program allowed Iraq to sell oil to buy food, medicine and other humanitarian goods. But the Iraqi government siphoned more than $2 billion in illicit proceeds from the program.

Yesterday's report contains documents that bolster previous allegations that the State Department and the U.S.-led naval force may have assisted efforts by a key ally, Jordan, to smuggle $53 million worth of oil from Iraq in seven supertankers in the weeks before the invasion of Iraq.

"The United States not only failed to exert an effort to stop the oil tanker shipments, it appears to have facilitated them, despite widespread recognition that the shipments were a blatant violation of U.N. sanctions," the report states.