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3 firms face probe in oil scam

David Leigh and Rob Evans

Kickbacks "enabled Iraqi leader to amass $1.8 billion"

London: The U.K.'s Serious Fraud Office has launched an investigation into allegations that a number of major U.K.-based firms paid bribes to Saddam Hussein's regime in Iraq. The firms being targeted include the drug giants GlaxoSmithKline (GSK), AstraZeneca and Eli Lilly. The international oil traders and U.K. bridge-builders Mabey and Johnson are also to be investigated.

They are on a long list of international companies accused in a U.N. report of paying kickbacks under the discredited oil-for-food sanctions regime, which enabled Saddam Hussein to illicitly amass an estimated $1.8 billion. Ministers have agreed to fund the investigation with £22 million over three years.

The inquiry was ordered last week by SFO director Robert Wardle. The agency confirmed: ``The director of the SFO has opened an investigation centred on alleged breaches of sanctions in respect of the UN oil-for-food programme.''

Under their wide-ranging powers, investigators from the SFO can order companies to disclose documentation and call witnesses for questioning. Ultimately, it could launch criminal prosecutions.

The investigation — the first official inquiry into the oil-for-food scandal — was urged on the British government by Paul Volcker, a former chairman of the U.S. Federal Reserve, who compiled a U.N. report, delivered two years ago, into abuses of the programme after investigating the sanctions regime that enabled Saddam Hussein to survive for so long.

Mr. Volcker said the programme — in which Iraq was only allowed to sell limited amounts of oil abroad to buy food and medicines — had become corrupted as the Saddam regime demanded kickbacks from foreign companies in return for the contracts. He identified French and Russian politicians as the chief culprits.

Mr. Volcker said the kickbacks were disguised by various subterfuges. Contracts were inflated, usually by 10 per cent to cover so-called ``after-sales services'' fees. More than 2,200 companies were listed. The inquiry will draw on Mr. Volcker's evidence. He accused GSK of paying kickbacks worth $1 million to win nine contracts valued at $11.9 million to supply medicines. — © Guardian Newspapers Limited 2006

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