Where the Money Went.

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Author: Hosenball, Mark

OIL-FOR-FOOD

INTRIGUING EVIDENCE IN the U.N. Oil-for-Food scandal shows Saddam Hussein's regime used U.N.-sanctioned oil deals to finance foreign sympathizers. A final report by a U.N. inquiry headed by former U.S. Federal Reserve chief Paul Volcker says questionable Oil-for-Food deals generated money for Saddam fan clubs in Russia, France, Italy and the Vatican.

Some of the most contentious allegations reported by Volcker--and by a parallel new report by a Senate sub-committee chaired by U.N. critic Norm Coleman--involve George Galloway, the British M.P. who became an antiwar icon after he blasted the Bushies at a Senate hearing earlier this year. Investigators working for both Volcker and Coleman said they were told by captured aides to Saddam, including former deputy prime minister Tariq Aziz, that Saddam's regime granted Oil-for-Food deals to a Jordanian businessman to finance a group Galloway created to campaign for lifting U.N. sanctions on Iraq. Coleman's investigators say Aziz told them proceeds from the sale of Iraqi oil allocations "benefited the cause and Mr. Galloway." Emmanuel Ludot, a French lawyer representing Aziz, told NEWSWEEK that Aziz never gave statements to the Senate. But a Coleman spokesman said Senate investigators "did everything but read Aziz his Miranda rights, interviewing him three times for nine hours." In his Senate appearance, Galloway denied receiving a penny of Iraqi oil revenue. The new reports allege his anti-sanctions campaign received hundreds of thousands of pounds from his Jordanian pal, and also that bank accounts held by Galloway's ex-wife received about $270,000 from oil traders who dealt with Iraq. But Galloway spokesman Ron McKay told NEWSWEEK that Galloway acknowledges his Jordanian friend did help finance anti-sanctions campaigning, but denies knowing where the money might have come from. Galloway also e-mailed Volcker an emphatic denial that he or his ex-wife engaged in oil deals with Saddam.

PHOTO (COLOR): GALLOWAY: New questions

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By Mark Hosenball