Oil-for-Food Lawsuit

The corruption of the United Nation's food-for-oil program in Iraq is described in a new lawsuit as "the largest financial fraud in human history."

A lawsuit filed by the Iraqi government in US federal court in New York alleges that 2,200 companies from 66 countries paid a total of $1.8 billion in kickbacks to Saddam Hussein's regime in exchange for supply deals.

"Its impact on the people of Iraq when far beyond financial loss," the lawsuit states. "The corruption of the OFFP (oil-for-food program) affected the very lives and health of the Iraqi people."

Program corrupted

The $67 billion oil-for-food program was set up to alleviate hardship Iraqis faced after UN sanctions were imposed for invading Kuwait in 1990. The UN program, which ran from 1996 to 2003, allowed Iraq to sell oil in exchange for food and medical aid.

But the system was corrupted by companies paying kickbacks to Iraqi officials in exchange for supply deals, the lawsuit alleges. Billions of dollars which was "supposed to reach the Iraqi people" instead went to Saddam Hussein cronies, the lawsuit alleges.

German companies named

The German car maker Daimler allegedly sold Mercedes trucks and spare parts to the Iraqi government. A UN-sponsored report spearheaded by former US Federal Reserve Chairman Paul Volcker claims that an area manager at Daimler agreed in 2001 to pay a 10 percent kickback on a deal to sell an armored van to Iraq at an inflated price.

Daimler maintained at the time that it did not knowingly pay kickbacks, although media reports said the company suspended several high-ranking managers in 2006 as part of an internal investigation.

Electronics giant Siemens has been accused of paying a six-figure sum as a bribe to the regime to secure energy and medical-equipment contracts.

Germany's privately-held B.Braun Melsungen healthcare company has also been named in the suit. The company has refused to discuss the charges and has denied paying kickbacks.

Texas oilman sent to prison

The lawsuit filed in New York on Monday, June 30, follows criminal convictions in the US of Texas oilmen Oscar Wyatt and David Chalmers, who both admitted to paying millions of dollars to Saddam's regime. Wyatt was sentenced to one year in prison in November. Oil companies, including Chevron, have already agreed to pay $30 million to resolve criminal and civil liabilities, Reuters news agency reported.

The civil lawsuit alleges that defendants had engaged in mail and wire fraud as well as money laundering.