GENEVA -- As Saddam Hussein's Iraq grew rich over the past 20 years, a number of Iraqis with ties to his regime grew rich as well. Saddam's former jeweler, who once ran a little shop near the Baghdad Hotel, is now worth millions of dollars, according to one of his friends. The men who helped Saddam buy weapons are worth millions too.
Richest of all, many Iraqi exiles suspect, may be Saddam's half-brother and former chief of intelligence, Barzan Ibrahim Tikriti, who now lives in splendid exile here in Geneva.
U.S. and British authorities, eager to squeeze Saddam and enforce U.N. sanctions, have been probing whether these wealthy Iraqis were part of a secret financial network that they believe may have invested billions of dollars outside of Iraq for Saddam's regime and his family. So far, the investigators have mostly come up empty-handed. But some officials remain hopeful that they will eventually find a network of hidden assets that is helping to keep Saddam's regime afloat.
"We expect . . . a major breakthrough on a sophisticated, international maze of companies acting on behalf of and under the control of the Iraqi government," said R. Richard Newcomb, the director of the Treasury Department's Office of Foreign Assets Control, in a Feb. 24 speech in Kuwait. He warned that Saddam's agents want "to use Iraq's hidden assets to carry out secretly Iraq's financial activities and rebuild its arms-and-technology infrastructure."
The Treasury Department took a first step in penetrating this maze a year ago, when it began disclosing the names of alleged Iraqi front companies and agents.
The list now includes 48 businesses and 44 individuals, many of them allegedly involved in Iraq's arms-purchasing network.
Among those listed are six members of Saddam's family, who now control key ministries of the government and are said to be running Iraq almost like a feudal kingdom.
Treasury officials expect to add 15 to 20 more names to the list soon, broadening it to include financial and commercial front companies. Their assets could then be frozen under U.N. sanctions.
But after months of digging, some State Department and CIA officials have become skeptical that any large additional cache of assets will be found, beyond the $5.5 billion that has been identified over the past year. "We have tried to run these rumors and reports to ground, and they always disappear in the mist," said one U.S. official who closely monitors Iraq. This official said that although Saddam and his family probably do have assets outside the country, the money will be hard -- perhaps impossible -- to find.
Some Iraqis argue that Saddam is too smart -- and too suspicious -- to have entrusted his money to intermediaries. "Saddam would be stupid to have funds outside the country in the names of other people," argued one Iraqi arms dealer. "He should keep cash in suitcases."
The frustrating hunt for Saddam's treasure was described in recent interviews by U.S. and British officials who have helped supervise the investigation -- and by some of the Iraqis who have been its targets. Clues are strewn from Geneva to Tokyo, from London to Amman. But the trail is hidden by what investigators believe is a thicket of front companies and secret accounts.
The chief detective in the Saddam case ironically has been a private citizen named Jules Kroll, whose New York investigative firm was hired by Kuwait more than a year ago to find the Iraqi leader's hidden assets and expose his front companies. Among the staff of Kroll Associates are some former senior officers from the CIA and British intelligence, and the firm has been a major source of leads for investigators from various agencies, including the Treasury Department and British Inland Revenue.
"Every time we get a lead that has any substance to it, we turn it over to the appropriate U.S. agencies for further action," said Kroll. This arrangement has put Kroll's client, Kuwait, in the unusual position of funding investigative legwork for the U.S. government. But so far, Kroll hasn't hit any jackpots either. The 5 Percent Fund
The search for Saddam's money began immediately after Iraq's Aug. 2, 1990, invasion of Kuwait, when the United Nations approved sanctions freezing Iraqi assets outside the country. Authorities blocked official assets, such as those of Iraq's state-run Rafidain Bank, as well as the accounts of some of the alleged Iraqi agents and front companies listed by the Treasury Department.
The $5.5 billion in Iraqi assets located during the past year could be used to pay war reparations, if the U.N. Security Council adopts a proposal floated this week by the United States.
These frozen assets showed where the Iraqis did their official banking. According to U.S. data, Britain and the United States led the list, with about $1.1 billion each in blocked Iraqi assets, followed by Switzerland, with about $600 million. France, Austria, Belgium and Italy have blocked lesser amounts. Even tiny Luxembourg has frozen $100 million in Iraqi assets.
Investigators had hoped that these identifiable assets would be the tip of the iceberg -- pointing them toward a larger network of submerged holdings by Saddam's agents or by members of his family. They reasoned that the Iraqis would probably have used the same financial centers -- and perhaps the same bankers -- in their covert investments as in their official transactions.
"The places one might look are places where there is a history of doing business," said one Bush administration official familiar with the investigation.
A tantalizing -- but still unsubstantiated -- hint that tens of billions might be buried in the Swiss banking system came last year from a former Saddam financial adviser named Jawad Hashim, who left Iraq in 1977. He provided the White House with a memo describing how Saddam and two other Iraqi leaders had established a secret account in 1972 into which 5 percent of Iraq's oil revenues would be deposited.
"The money was to be held outside Iraq in Swiss banks," Hashim wrote. He explained that Saddam and the other leaders of the ruling Baath Party "wanted to accumulate sufficient funds, held abroad, to be used to finance their return to power in the event the party was ousted by a coup, or if the country were invaded." Of the three men who initially controlled the account, only one is still alive: Saddam Hussein.
Hashim's memo had investigators salivating at the prospect of a huge slush fund. Based on recorded Iraqi oil sales and prevailing interest rates between 1972 and 1990, Hashim calculated that the 5 percent fund might now total more than $31 billion.
Hashim provided further clues about how to find the money: "Chase Manhattan was, as far as I recall, one of Iraq's correspondent banks in New York," he wrote the White House. "Five percent was regularly . . . transferred to Switzerland via American financial institutions." A Chase Manhattan spokesman said the company could not comment on relations with customers; sources said, however, that the bank has no recollection of any such transactions.
Hashim's memo did not identify any Swiss banks that might have received the money. But a former governor of Iraq's Central Bank named Salah Shaikhly recalled in an interview that during the 1970s, the Iraqi government did much of its banking in Switzerland with two giants: Union des Banques Suisses and Credit Suisse.
Both banks said through spokesmen that under Swiss law, they cannot identify or discuss clients. A spokesman for Credit Suisse said, however, that it was "most unlikely that money of Saddam and his entourage is with Credit Suisse."
The Treasury Department has pursued these leads, according to knowledgeable officials. But so far, no trace of the 5 percent fund has surfaced from the Swiss banking system.
An Iraqi pot of gold was next thought to be in Japan. An Iraqi opposition group heard from one of its sources in Baghdad about a meeting at which one of Saddam's closest advisers, Hussein Kamel, had supposedly confided to friends that "the money is safe in Japan." That set off a new hunt in Tokyo.
But according to Iraqi opposition leader Talib Shibib, "the trail went cold when we got to the Japanese banks."
One U.S. official who monitors Iraq has concluded that the $31 billion fund is a mirage. For all the speculation, he said, "no one has brought us any evidence that it's real." Saddam's Half-Brother
The hunt soon returned to Switzerland, where investigators began to uncover clues about smaller Iraqi investments. The center of Iraqi business activity appeared to be Geneva, a city that has been a kind of financial capital for Arab businessmen ever since OPEC began meeting here during the 1970s. The key player in Geneva, investigators suspected, was Saddam's wealthy half-brother, Barzan Tikriti.
Barzan had established himself in Geneva in the mid-1980s after his brother fired him as chief of Iraqi intelligence. Barzan's sin, according to Iraqi exiles, was that he had been considered too corrupt, allegedly taking commissions on too many big Iraqi arms deals.
During his years as chief of intelligence, Barzan had built a network of intermediaries in Europe to handle money and, on occasion, perform intelligence work. According to Iraqi exiles, the center of this network was a company called Mediterranean Enterprises Development Projects (MEDP), which was established in Lugano, Switzerland, in the early 1980s by two Iraqis named Saeed Mahdi and Hussam Faraz Ali.
The company opened offices in London and various other cities, and, according to one Iraqi source, its annual revenues mushroomed to as much as $2 billion. It also functioned as a covert procurement arm of the Iraqi government, according to Iraqi exiles. The company is not listed in Lugano or London telephone records, and Iraqi sources said it no longer exists.
The MEDP network was broken by greed and suspicion. According to several Iraqi exile sources, Saddam became convinced that some of its operatives were stealing Iraqi government money. The two founders, Mahdi and Ali, were reportedly summoned to Baghdad in 1986, questioned about their financial activities and then executed; a Baghdad contact named Nazir Auchi also was killed. But many of the Iraqi arms dealers and financial operatives in Europe survived.
U.S. and British investigators have been probing whether remnants of this old network are still functioning. One spinoff from MEDP, Iraqi exiles contend, was a London-based arms-purchasing ring headed by Safa Habobi, who was named as an Iraqi agent by the Treasury Department a year ago. Investigators are exploring whether other Iraqis who were involved in arms and commercial deals have any current links with Saddam or Barzan.
A list prepared for investigators by one Iraqi exile group identified 58 possible members of such an Iraqi network, based in Austria, Canada, France, Britain, Saudi Arabia and Switzerland.
Barzan still appears to have important links with Saddam, despite their feuding during the mid-1980s. One sign is that Saddam is sending a new representative to Geneva to help manage intelligence activities here, Iraqi exiles said. The deputy, scheduled to arrive in mid-May, is named Mohammed Duri; his brother, Sabir Duri, is currently chief of Iraqi intelligence. Another sign of Barzan's continuing role is that he was summoned to Baghdad for consultations in early April; it was only his second visit home since the Persian Gulf War, Iraqi sources said.
Barzan has been the target of tight surveillance for the past 18 months by Western intelligence agencies. But so far, investigators have had difficulty unraveling his business affairs. Many doubt that Barzan himself is the financial mastermind -- suggesting instead the likelihood of help from savvy Swiss and Iraqi advisers. Suspected Front Companies
Kroll investigators have pieced together what they suspect is a network of Iraqi front companies. They began a year ago by identifying two companies that they believed were established with Iraqi money and that might have links with Saddam or Barzan; their initial findings were aired in March 1991 on the CBS-TV program "60 Minutes."
One Geneva-based company was called Midco Financial SA. It was created in 1982 with two Iraqi directors, Alla Idin Hussein Alwan and Ohanes Awanes-Artin. Midco's initial capital was 2.1 million Swiss francs, currently worth about $1.3 million; some of this money was deposited with various banks around Europe, including the Vienna branch of Bank of America and the Geneva branch of a French bank, investigators said.
The second Iraqi-controlled company was a Panamanian-registered firm called Montana Management Inc. According to Panamanian documents, the three initial Montana directors were all Iraqis, including one "Alla Idin H. Alwan" -- evidently the same man who was Midco's first president.
With Montana, investigators had at last found some big money. The company owned an 8.4 percent share of the French publishing concern Hachette, worth about $67 million as of a year ago. Intrigued by the possibility that the Iraqis had decided to hide their ownership through the American-sounding name Montana, investigators searched Panamanian corporate records for names of other U.S. states. But they failed to turn up anything useful.
Investigators have recently found new information documenting the links between Midco and Montana. In March 1990, Midco negotiated a credit arrangement with the Geneva office of Credit Suisse, which included a $5 million overdraft facility. The Midco credit line was secured by Montana's assets -- including the Hachette shares.
Midco's Swiss administrator, Bruno Buhler, said in a telephone interview that the company has been dormant for several years. He said there had been no borrowings under the $5 million overdraft facility with Credit Suisse and that this credit arrangement had ended March 31, 1991.
Buhler said that Midco's activities had complied fully with Swiss law and that the company had never been involved in large financial transactions on behalf of Saddam, Barzan or anyone else. "Nobody hides money in an official Swiss company," he said. "It's stupid. It's like if you kill someone, you leave a business card."
New information has emerged about some of the Midco-Montana directors, suggesting links to Saddam and to a wider Iraqi network. U.S. and British investigative agencies have pursued some of these leads.
Investigators have identified one of the original Midco directors, Awanes-Artin, as Saddam's former jeweler -- the man who had the shop near the Baghdad Hotel and is now reportedly worth millions of dollars.
A British official summarized information provided last year by a tipster, explaining how Saddam helped Awanes-Artin become wealthy. "All Iraqi citizens' donations of jewelry and gold during the Iraq-Iran war, running into millions of dollars, were handed over to Ohanes for hoarding abroad in Geneva," the tipster alleged. This account was supported by several Iraqi exiles, including one close friend of Awanes-Artin.
Attempts to reach Awanes-Artin for comment were unsuccessful.
Investigators have also gathered information about Alwan, another of Midco's original directors. An Austrian police dossier compiled in 1990 identified an "Alla Idin Alwan" as one of the partners in a Vienna company called AHA Turn-Key Projects. The dossier named another AHA partner as an Iraqi named Mowafak Abdul Karim; the same man is identified in Panamanian records as a Montana director.
A hint that these companies had links to Iraqi intelligence is found in the 1990 Austrian police dossier. "According to information derived from reliable sources," it said, "Mowafaq Abdul Karim and Alla Idin Alwan are members of the Iraqi intelligence services."
Alwan also surfaces in British corporate records. They list him as vice chairman of a Middle East trading company established in 1982 with four Iraqi officers. Its principal activities are "trading in commodity futures, investment and merchanting," according to documents filed with British authorities. Alwan listed his occupation as "merchant."
Alwan and Abdul Karim could not be reached for comment; both are believed to be in Iraq, which remains without commercial phone service. New Focus on Jordan
The final stop in the Iraqi treasure hunt has been Amman, Jordan, which investigators believe Iraqi sanctions-busters have used as a base of operations.
The Jordanian capital has been Iraq's window on the world since the gulf war and in some respects has become its commercial capital. U.S. investigators have gathered evidence of a new Iraqi procurement network that feeds into Amman through Iraqi embassies in remote areas, such as Africa. As was the case before the gulf war, Iraqi diplomats act as purchasing officers -- preparing shopping lists that include a range of products. But these days, vendors are asked to deliver goods to specific front companies in Jordan.
Safa Habobi, the man Treasury officials identified a year ago as leader of an Iraqi arms-procurement network, is said to have visited Amman frequently during the past year, according to Kroll's sources.
Bush administration officials said that although they have not found evidence that strategic weapons have been shipped through Jordan, they have noted a steady flow of banned products across the Jordanian border, in violation of U.N. sanctions.
An example that worries Pentagon officials is the shipment of structural steel from Jordan into Iraq. These steel plates and bars are being used to repair Iraqi bridges, and the U.S. military -- which worked so hard to bomb the bridges during the gulf war -- does not like to see them rebuilt.
Prior to King Hussein's visit to Washington in March, U.S. intelligence analysts prepared a detailed classified study of sanctions violations through Jordan. A sanitized version of this study was given to Jordanian officials, and the Jordanians have promised to deal with specific allegations in the report.
U.S. investigators are continuing to monitor Jordan for possible sanctions violations. "There is still leakage," said a Bush administration official. "We have told them that they may have personnel out there who may be corrupt." Kroll's investigators too continue to focus on Jordan.
Jordan provides a final intriguing clue that Saddam may be running out of cash -- at least in Baghdad -- after 19 months of sanctions. The evidence of this cash shortage is that the Iraqis recently have begun selling off gold bars from their Central Bank reserves to pay for their imports of grain and other products.
"The fact that they are now exporting gold indicates to me that they may be close to the bottom," said a key Bush administration official.
He explained that the Iraqis had hoped to use their gold reserves "for other purposes" and had even proposed to one government that the gold be used as collateral to purchase certain commodities the Iraqis were eager to buy. Instead, they have been forced to use the gold to pay for basic supplies.
Basil Jardaneh, the Jordanian finance minister, said that with U.N. permission, Jordan's second-largest bank, called Housing Bank, had purchased gold bars from Iraq this year. "It's true that Housing Bank acted as agent, buying some gold coming from Iraq, paying U.S. dollars and Jordanian dinars to finance {Iraqi} imports," Jardaneh said.
"I have approved the transaction personally," he said. He added that the Housing Bank gold purchases "could be something like $10 million."
Jardaneh stressed that these official gold sales had been approved by the U.N. sanctions committee. A Bush administration official confirmed that such gold sales to pay for basic commodities have U.N. backing -- and said they are a clear sign that Iraq is facing serious financial problems.
U.S. officials said they are delighted to see Saddam drawing down his gold reserve. Explained the Bush administration official: "Every bar of gold that comes out to buy consumer products is a bar of gold that can't buy weapons."
INVESTIGATORS SEEK HIDDEN FINANCIAL ASSETS
THE PLAYERS
SADDAM HUSSEIN
Does Iraqi leader use intermediaries to handle his wealth?
SADDAM'S WEALTHY FAMILY AND FRIENDS
Treasury Department lists 48 businesses and 44 individuals, including six members of Saddam's family, as alleged Iraqi front companies and agents.
JULES KROLL
New York investigator hired by Kuwait to find Saddam's money. In effect, Kuwait is thus funding legwork useful to the United States.
BARZAN IBRAHIM TIKRITI
Saddam's half-brother in Geneva. Under surveillance, but investigators have had difficulty unraveling his business affairs.
WHERE IS SADDAM'S MONEY?
Investigators have looked at three broad areas to find Saddam's money:
1. FROZEN IRAQI ASSETS
$5.5 billion has been identified around the world, mainly in Britain and the United States, followed by Switzerland and other European banking centers. Investigators reason that the Iraqis could have hidden additional money in these same financial centers.
2. A HIDDEN POT OF GOLD
Switzerland, Japan, Jordan: Tantalizing but unsubstantiated hints indicated that billions might be in Switzerland. Nothing has been proven. Another trail to Japan ran cold. Another financial center is Amman, Jordan, an alleged smuggling point for sanctions-busters.
3. BAGHDAD BANKS
Not likely. Evidence is that Saddam's riches are not close to home. The Iraqis have begun selling off gold bars to Jordan's banks to pay for imports -- a signal that cash is short in Baghdad.