Oil-for-Food Benefited Russians, Report Says

By Justin Blum and Colum Lynch
Washington Post Staff Writers
Monday, May 16, 2005

Top Kremlin operatives and a flamboyant Russian politician reaped millions of dollars in profits under the U.N. oil-for-food program by selling oil that Iraqi leader Saddam Hussein allowed them to buy at a deep discount, a Senate investigation has concluded.

The allegations -- which also include descriptions of kickbacks paid to Hussein -- are detailed in hundreds of pages of reports and documents made public last night by the Senate Permanent Subcommittee on Investigations in advance of a hearing tomorrow.

The documents outline a trail of oil and money that leads directly from Iraq to the Kremlin and the former chief of staff to Russian President Vladimir Putin and former president Boris Yeltsin. The report said Iraq sought to influence and reward the Russian government because it sits on the powerful U.N. Security Council that oversaw sanctions against the Hussein government. Russia repeatedly sided with Iraq on issues before the Security Council.

Yevgeniy V. Khorishko, a spokesman for the Russian Embassy in Washington, said it had received the Senate reports but could not yet discuss the findings. "We are looking into them," Khorishko said. "It's too early to give any comment."

A CIA report last year said that Hussein granted top political leaders from around the world the opportunity to buy Iraqi oil at a discount. But the Senate report presents more detailed evidence, alleging that Russian officials took up the offer and profited handsomely under the program.

In addition, the reports allege that Russian politician Vladimir Zhirinovsky, several Russian entities and a Houston-based oil trading company, Bayoil, "paid millions of dollars in illegal, under-the-table surcharges to the Hussein regime in connection with these oil transactions." U.S. officials say Hussein used illicit proceeds from oil sales to buy weapons, among other things.

"This is the way Saddam used oil-for-food: to line his own pocket and curry political favor," said Sen. Norm Coleman (R-Minn.), chairman of the investigations subcommittee that released the reports.

Iraq's U.N. ambassador, Feisal Amin Istrabadi, said Russia was one of dozens of countries that took advantage of Iraq's oil wealth. "There were certainly commercial and political interests involved, and Russia behaved like any other state in looking after itself," he said.

The documents were provided to reporters Friday on the condition that articles about them not be published until today.

These are the latest allegations dealing with the scandal-plagued U.N. program established in December 1996 to provide Iraq a partial exemption from international economic sanctions, allowing it to sell oil to buy food, medicine and humanitarian goods.

The program succeeded in limiting Hussein's acquisition of weapons of mass destruction and improved humanitarian conditions for ordinary Iraqis. But it provided an economic lifeline for Hussein, who siphoned off more than $2 billion in illicit profits by charging kickbacks to companies that traded with Baghdad, U.S. investigators have said. The problems have caused some U.S. lawmakers, including Coleman, to call for the ouster of U.N. Secretary General Kofi Annan.

While the latest disclosures do not directly implicate Annan, they are likely to contribute to the perception that he mismanaged the United Nations' largest humanitarian program.

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