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2,200 firms paid Saddam

UNITED NATIONS — About half of the 4,500 companies in the U.N. oil-for-food program paid $1.8 billion in kickbacks and illicit surcharges to Saddam Hussein's government, according to a U.N.-backed investigation obtained by The Associated Press.

The report — to be released in full today by the committee probing claims of wrongdoing in the $64 billion program — indicates that about 2,200 companies participated in extensive manipulation of the U.N. oil-for-food program in Iraq.

The investigators reported that companies and individuals from 66 countries paid illegal kickbacks through a variety of devices while those paying illegal oil surcharges came from, or were registered in, 40 countries. The names will be included in today's report but were not in the key findings obtained Wednesday by the AP.

Today's final report of the investigation led by former U.S. Federal Reserve chairman Paul Volcker strongly criticizes the U.N. Secretariat and Security Council for failing to monitor the program and allowing the emergence of front companies and international trading concerns prepared to make illegal payments.

According to the findings, the Banque Nationale de Paris S.A., known as BNP, which held the U.N. oil-for-food escrow account, had a dual role and did not disclose fully to the United Nations the firsthand knowledge it acquired about the financial relationships that fostered the payment of illegal surcharges.

The oil-for-food program was one of the world's largest humanitarian aid operations, running from 1996-2003.

Under the program, Iraq was allowed to sell limited and then unlimited quantities of oil provided most of the money went to buy humanitarian goods. It was launched to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam's 1990 invasion of Kuwait and became a lifeline for 90 percent of the country's population of 26 million.

But Saddam, who could choose the buyers of Iraqi oil and the sellers of humanitarian goods, corrupted the program by awarding contracts to — and getting kickbacks from — favored buyers, mostly parties who supported his regime or opposed the sanctions. He allegedly gave former government officials, journalists and U.N. officials vouchers for Iraqi oil that could then be resold at a profit.

The new report said Iraqi leaders in the late 1990s decided to deny American, British and Japanese companies allocations to purchase oil because of their countries' opposition to lifting sanctions on Iraq. At the same time, it said, Iraq gave preferential treatment to France, Russia and China.

According to the findings, the program was just under three years old when the Iraqi regime began openly demanding illicit payments from its customers. The report said that while U.N. officials and the Security Council were informed, little action was taken.

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