The French bank that managed the letter of credit (L/C) based UN oil-for-food programme in Iraq is defending itself against accusations made by a US congressman that it improperly monitored transactions involving Saddam Hussein's oil sales.

Republican chairman of the House International Relations Committee, Henry Hyde, says the New York branch of BNP Paribas, the only bank administering the US$64 billion programme may not have made adequate checks on whether money was being funnelled to terrorists.

Serious malfeasance

"We have uncovered what appears to be serious malfeasance on an international scale," Hyde told a congressional hearing after investigators for the committee said they had found evidence against BNP Paribas.

According to the investigators the bank had made payments without proof that goods were properly delivered and it had authorised payments to third parties who were not authorised recipients.

Non-compliance

"There are indications that the bank may have been non-compliant in administering the oil-for-food programme. If true, these possible banking lapses may have facilitated Saddam Hussein's manipulation and corruption of the programme," Hyde told one of several hearings currently investigating alleged malpractice in the oil-for-food programme.

Scams in the programme allegedly centred on a 50 cents per barrel premium above market prices that Saddam's regime was allowed to put on its oil sales. Proceeds from these sales were then paid back to his aides by oil purchasers, some of whom appear not to have been authorised recipients under the oil-for-food programme.

Bank denial

A top executive from BNP Paribas, which according to the Washington Post earned more than US$700 million in fees under the oil-for-food programme, has denied the bank handled payments improperly.

Apart from "temporary backlogs" in L/C administration, the bank followed UN directions and acted within US laws and regulations, chief executive officer of BNP Paribas in North America, Everett Schenk, told the committee.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.