BNP admits oil-for-food 'mistakes', not fraud

29th April 2005, Comments 0 comments

WASHINGTON, April 28 (AFP) - A top official with the French bank BNP-Paribas on Thursday admitted mistakes in some payments processed for the scandal-tainted UN oil-for-food programme in Iraq, but insisted there was never an attempt to divert funds from the programme.

WASHINGTON, April 28 (AFP) - A top official with the French bank BNP-Paribas on Thursday admitted mistakes in some payments processed for the scandal-tainted UN oil-for-food programme in Iraq, but insisted there was never an attempt to divert funds from the programme.  

"We have found that in the course of processing assignments and payments, some mistakes were made," said Everett Schenck, chief executive officer of BNP-Paribas' North American operations, in testimony before a congressional hearing on the scandal.  

He added however that "to date, there has been no indication that any so-called 'third party payment' has served as a means to corrupt the oil-for-food programme," Schenk said at the hearing before the House International Relations subcommittee on oversight and investigations.  

The oil-for-food programme has been brought into disrepute by charges that millions of dollars in kickbacks were funnelled to President Saddam Hussein's regime with funds that had been intended for humanitarian relief.  

The programme was intended to allow UN-supervised sales of Iraqi oil to buy medicines and other essential supplies for the Iraqi population to alleviate the impact of international sanctions against the regime.  

Allegations of wrongdoing in the USD 64 billion programme, which was in operation between 1996 and 2003, have led to repeated calls for the resignation of UN Secretary General Kofi Annan.  

Representative Dana Rohrbacher, chairman of the subcommittee, said he hoped BNP would provide answers to new charges about the BNP's role that have arisen since a House hearing in Novemeber.  

"I must say, what we have found out about BNP in the past months is disturbing. It shows the bank's operation of the oil-for-food programme was insufficient," said Rohrbacher.  

Lawmakers were particularly interested in learning more about what Rohrbacher called a "shadowy company" called the East Star trading, the recipient of oil-for-food funds via BNP.  

"According to BNP's contract with the UN, this company was not authorized to receive these payments, as they were not the original party to the transaction. This is a third party being paid for what someone else is doing," Rohrbacher said, adding that there have been dozens of payments to the mysterious company, and at least least 400 suspect payments to other companies.  

"As to what kind of company East Star is, we still do not fully understand," Rohrbacher said.  

In written remarks to the panel, Schenk said that errors such as those that surfaced in the bank's payment "are perhaps inevitable in the context of a programme that required the processing of approximately 54,000 payments ... involving an estimated five million pages of documents."  

He added that an internal investigation is ongoing but said the company has already concluded that better training and oversight of clerical employees hired to process claims made during the programme "could have minimized the incidence of such mistakes."  

BNP-Paribas said in separate statement that "the payments identified to date appear to be consistent with normal trade finance practice even if, in certain instances, not within the special procedures implemented by the bank for the oil-for-food programme.  

"There is no indication that any of these payments were causally linked to any abuses that may have occurred in connection with the oil-for-food programme. We submit, that to our knowledge, no actions or inactions by the bank caused or contributed to any fraud in the programme."

© AFP

Subject: French News

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