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By TIMOTHY L. O'BRIEN
The New York Times
www.nytimes.com
May 15, 2003

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WASHINGTON, May 14 — American Treasury officials announced today that they had recovered $950 million in Iraqi assets that they believe constitutes the bulk of the $1 billion looted by Saddam Hussein's family hours before war began in mid-March.

The money was found inside Iraq within the last week, they said, dispelling a theory proffered earlier by military officials in Baghdad that it might have been whisked into Syria aboard three tractor-trailers.

Separately, the officials said they had frozen $495 million in stolen assets that the Hussein government had secreted in unidentified Lebanese banks.

The officials, who were testifying before the House Financial Services Subcommittee on Oversight and Investigations, said Lebanese authorities have agreed to return the money to Iraq.

The Lebanese money was looted from two sources: Iraq's central bank and its former state-run oil-marketing agency. It is part of $1.2 billion in stolen Iraqi funds that the White House has identified and frozen overseas since March 20.

The Congressional subcommittee hearing was the first convened to examine how effectively stolen Iraqi assets have been traced since March 20, when the White House announced that it was redoubling efforts on that front.

All told, officials say, about $3 billion in looted money has now been found, including some $900 million in cash that the American military discovered last month near a palace in Baghdad. Much of that money appears to have been stolen either shortly before or during the war.

But the tally may account for only a small portion of what federal officials and Western intelligence experts believe Mr. Hussein stole from Iraq. Estimates have ranged wildly in that regard, from a low of about $7 billion to as much as $40 billion, and American officials have expressed concern that money yet to be accounted for may land in terrorist hands.

During the testimony, Representative Michael G. Oxley, an Ohio Republican, asserted that Tariq Aziz — the former deputy prime minister, who is now in American military custody — used his diplomatic status as a cover to help Mr. Hussein move stolen funds around the globe.

After the hearing, an American official supported Mr. Oxley's statements about Mr. Aziz's role.

As described in the hearing today, Mr. Hussein's looting was accomplished through skimming of Iraqi oil profits and kickbacks associated with the country's overseas and regional trade. Those proceeds were channeled into shell companies and offshore bank accounts that have withstood more than a decade of investigative scrutiny.

David Aufhauser, the Treasury Department's general counsel and the person who most nearly approximates the White House's point man in a Byzantine federal structure engineered to track terrorist assets, described speculation on how much the Hussein government looted from Iraq as "wild-eyed guesstimating."

In a written statement submitted as a complement to his testimony, he described the effort to find the money as a "time-consuming, laborious and potentially dangerous task."

He also told the House committee that a trove of financial documentation recently discovered in Iraq had helped federal officials draw useful information from the otherwise "suspect" testimony of "disreputable people" detained in the country by American military authorities.

Mr. Aufhauser said that the $950 million, which has not been finally confirmed as coming from the Iraqi central bank, was found in 191 boxes neatly accounted for in packing slips included inside the boxes by bank employees. He said he and other officials believed the rest of the looted $1 billion was contained in 45 more boxes of cash that have yet to be found.

As for the $495 million he confirmed as frozen, Mr. Aufhauser declined to identify the Lebanese institutions holding the money.

The hearing resulted from concerns voiced by members of Congress and terrorism authorities that the White House's effort against terrorist financing has stalled.

Representative Sue W. Kelly, chairwoman of the House subcommittee, said she was "partially satisfied" with the progress announced at the hearing but reserved full judgment until the panel convenes again with Treasury officials next month. Ms. Kelly, a New York Republican, also said she had asked the General Accounting Office to examine the effectiveness of the federal hunt for terrorist money.

She said she would like to see much tougher measures taken against countries that fail to cooperate with American investigators tracing terrorist assets.

"Our message to the world is straightforward and should be heeded," she said. "The willingness to share cross-border information is now a license required to do business in America."

Under Section 311 of the United States Patriot Act, the government has the power to deny other countries access to the American financial system. So far, money-laundering accusations have caused only the tiny island nation of Nauru and the former Soviet republic of Ukraine to be cut off in that fashion.

Mr. Aufhauser likened the measure today to a "nuclear bomb" in the effort against terrorist financing. He said that although he would like to drop that bomb more frequently, doing so would require public disclosure of information that is typically classified.

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Direct Link:
--http://www.nytimes.com/2003/05/15/international/worldspecial/15FUND.html

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