Saddam's regime held money in HSBC bank

Saturday, Oct 09, 2004

Saddam Hussein's regime in Iraq held money in an HSBC bank branch in Jordan and used it as part of an elaborate foreign financial network to evade international sanctions, an official US government report has said.

The allegations are contained in this week's report from Charles Duelfer, the chief US weapons inspector in Iraq, which declared that there were no weapons of mass destruction in Iraq at the time of last year's invasion.

The lengthy report contains a section on how the Baghdad regime financed itself and procured foreign goods in contravention of United Nations sanctions.

HSBC said it was surprised and extremely concerned by the allegation, of which it had no advance warning. The bank had been aware of sanctions-busting allegations and had performed periodic reviews of the activities of its branch in Amman that had uncovered no irregularities. It is now investigating these latest concerns "seriously".

HSBC is the largest shareholder of the London-based British Arab Commercial Bank, of which Iraq's Rafidain Bank is also a 5 per cent shareholder.

But the bank said it was unaware of any formal direct relationship between HSBC and Rafidain.

HSBC was embarrassed by disclosures three years ago that it was one of a number of banks that maintained accounts in London for the former Nigerian dictator, Sani Abacha.

According to a senior Iraqi financial official cited in the report, Iraq's central bank established overseas accounts in 24 Lebanese banks, seven Jordanian banks and one in Belarus to deposit cash from kickbacks by foreign suppliers.

The central bank "did not maintain overseas accounts in other countries because senior bank officers feared that such accounts would be frozen by the United States", the report says.

Instructions would never be made by telex or electronic transfer because it was feared they would be detected by the US or UK.

"Instead those wishing to buy oil, or other commodities such as sheep, outside of the Oil-for-Food programme would pay cash to an account at (Iraq's) Rafidain Bank in Amman. Further cash transfers would then be made to other banks, including the Hongkong and Shanghai Banking Corporation (HSBC) in Amman, where regime money remained."

Money was not sent to Europe, the report says, because financial controls made it too difficult.

It says numbered or bridge accounts were opened in Jordan and Lebanon to conceal the fact that foreign companies were making payments to Iraq.

The funds were transferred immediately from these accounts to a central bank account.

By STEPHEN FIDLER