The Daily Telegraph
August 26, 2004
Two European banks were yesterday accused by the US Treasury Department of helping Saddam Hussein launder money stolen from the UN oil-for-food programme.
American authorities aim to cut the Infobank of Belarus and First Merchant Bank of Cyprus out of the financial system by making mainstream institutions aware of the allegations.
The Treasury Department dubbed the banks “primary money laundering concerns” for their failure to combat problems with the oil-for-food scheme.
Stuart Levey, Treasury undersecretary, said: “Today’s designation alerts the global financial community of the threat posed by these entities. It also serves notice to others that there will be significant consequences for institutions that launder tainted money or engage in similar corruption: we will cut you off from the US financial system.”
The US claims Infobank was central to Saddam Hussein’s scheme to divert more than $10 billion from the oil-for-food deal to the Iraq government. It is not claiming that either bank was directly aware of the plot to deceive the UN, however.
The action against Infobank was widely seen as a warning to Belarus president Alexander Lukashenko, who is said to have close ties to the bank.
According to the Treasury department, several other banks and shell corporations were also involved in the laundering, though it did not name these companies. Identifying a bank as an alleged money launderer is one of several tools available under the controversial US Patriot Act, designed to help stamp out terrorism.
Oil-for-food was supposed to reduce the impact of UN sanctions on Iraqis by allowing the country to sell oil on condition that the proceeds be used to provide food and medicine. It began in 1996 but is now under intense scrutiny after allegations that Iraqi officials demanded massive bribes from contractors running the scheme, while the UN took no action.
Congressional committees investigating the allegations have subpoenaed records from several institutions, including French bank BNP Paribas. The bank managed billions of dollars that came from Iraqi oil revenue, though there is no official suggestion that it was involved in wrongdoing.
A BNP Paribas spokesman said: “It is understandable given the publicity surrounding the UN oil-for-food programme, that US authorities would wish to understand details about the programme. As is customary, BNP Paribas will fully co-operate with the authorities. We are not the target of any investigation.”