Russians Implicated In Oil Scandal

Russian leaders received millions of dollars in Iraqi oil allocations from top representatives in Saddam Hussein's former government in hopes of ending U.N. penalties against Iraq, Senate investigators were told.

Saddam's vice president, Taha Yasin Ramadan, told investigators that the allocations were "compensation for support," according to a report released Monday by the Senate Homeland Security and Governmental Affairs investigations subcommittee.

CBS News Foreign Affairs Analyst Pamela Falk says the documents, released in advance of Senate hearings this week, allege corruption "at the highest level of Russian government in the elaborate U.N. Oil-for-Food kickback scandal."

Falk notes there are also allegations of illicit payments to French and British government officials, which if true, would mean that "Saddam Hussein made billions in a sanctions program designed to restrain him, buying weapons and favors from the illegal surcharges on oil sales under the program."

Russia's foreign ministry declined comment on the report. It said it would be "unethical to make any statements" until a U.N.-appointed commission investigating the oil-for-food program releases its third and likely final report this summer.

The Senate investigators said their interviews and documents from the former Iraqi government add to evidence in previous probes linking Russian officials to abuses in the $64 billion U.N. program. It was designed to permit Saddam to sell some oil and use the proceeds to buy food, medicine and other humanitarian items.

Among the officials implicated are the ultranationalist Russian lawmaker Vladimir Zhirinovsky and Alexander Voloshin, who was chief of staff for former Russian President Boris Yeltsin and current Russian President Vladimir Putin. Voloshin resigned in 2003 over the still continuing scandal over shady deals at the Russian oil company Yukos.

Mikhail Troyansky, deputy chief of Foreign Ministry's information department, said Russia has cooperated with the U.N. commission's investigation, which is led by former Federal Reserve Chairman Paul Volcker.

The release of the Senate panel's findings precedes a hearing Tuesday on Saddam's use of oil vouchers to reward supporters. The vouchers allowed the bearer to buy Iraqi oil at cut-rate prices and could be sold for a profit. Saddam also demanded kickbacks from the oil transactions.

"This is the way Saddam used oil-for-food to line his own pocket and to curry political favor," said subcommittee chairman Norm Coleman, R-Minn.

Documents released by the panel last week claimed former French Interior Minister Charles Pasqua and British politician George Galloway also accepted allocations, charges both men deny.

Galloway has said he would appear at Tuesday's hearing to defend himself, but Coleman said he had yet to contact the panel.

Coleman said he has not reached any conclusion about whether U.N. Secretary-General Kofi Annan should have been aware of the abuses of vouchers, but the senator renewed his call for Annan to resign. "It's a matter of accountability," he said.

The latest report by the subcommittee deals with allocations given to Zhirinovsky, Voloshin and Sergey Issakov, an aide to Voloshin. Investigators said they interviewed 16 former Iraqi officials, but they identified only Ramadan and Tariq Aziz, the former deputy prime minister.

The report said the Russian Presidential Council, led by Voloshin, received allocations worth more than $16 million, according to Iraq's oil ministry.

The subcommittee said Zhirinovsky got allocations worth $8.7 million. On six occasions, investigators said, he sold allotments to the Texas oil company Bayoil, whose owner, David B. Chalmers, has been indicted on charges related to the oil-for-food scandal.

The panel's report said about 30 percent of the oil sold in the oil-for-food program was allocated to Russia, even though Russia is an oil-exporting country.