BNP Paribas, the bank that handled all letters of credit (L/Cs) under the UN's oil-for-food programme has refuted allegations made against it in the recently published US inquiry that says several major firms were involved in surcharges and kickbacks related to humanitarian goods shipped to Iraq.

As well as BNP Paribas, firms from Europe and North America criticised in the report include Siemens, Texaco and the Volvo Group.

Kickbacks

The inquiry found that a total of 2,253 firms gave kickbacks to Saddam Hussein's regime.

The report by the inquiry committee, led by former US central bank chief Paul Volcker, cites and supplies copies of signed letters, bank transactions and interviews to back its claims.

Volker's inquiry into what went wrong with the UN oil-for-food programme that ran from 1996 to 2003 took 18 months to complete.

Conflict of interest

BNP Paribas, whose New York branch supervised the escrow account for the programme on behalf of the UN, came in for criticism.

The report said that BNP faced a clear conflict of interest because it was also issuing L/Cs on behalf of private firms purchasing Iraqi oil.

BNP defence

"BNP's loyalties were divided" between ensuring transparency in the UN programme on the one hand and client confidentiality and customers' interests on the other, it said.

The report also said BNP failed to intervene or ask questions when obscure companies deposited and withdrew big sums of money.

BNP has consistently defended its conduct during the oil-for-food programme and refutes the allegations made in the Volker report.

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