Friday, September 16, 2005

George Galloway's Senate Testimony

Not sure why the big delay in the official release of the full transcript of the Senate hearing at which British MP George Galloway ripped senators, particularly Norm Coleman, a variety of new ones. But I've managed to dig up an unofficial transcript. Here ya go.

May 17, 2005 Tuesday






SEN. COLEMAN: This hearing of the Permanent Subcommittee on Investigations is called to order.

Good morning. Today the Permanent Subcommittee on Investigations will present evidence delineating how Saddam Hussein exploited the oil-for-food program for his own political purposes. Saddam utilized the same methodology time after time. Over the past week, the subcommittee has released a number of bipartisan reports detailing how the Hussein regime quickly manipulated the use of oil allocations to garner political influence around the globe.

As one Hussein regime official described the scheme, Saddam used oil to his geopolitical and strategic advantage. The plan was simple: rather than granting allocations to traditional oil purchasers, Iraq gave priority to foreign officials, journalists and even terrorist entities. The central purpose of this tactic, according to senior officials of the Hussein regime interviewed by the subcommittee, was to engender international support for the Hussein regime and against the U.N. sanctions.

By allocating the oil to favored people or entities, the regime forced oil purchasers to obtain allocations from those favored few. Those allocation holders essentially became gatekeepers to Iraqi oil. As gatekeepers, they demanded or earned a commission, which typically ranged from three (cents) to 30 cents per barrel. In light of the fact that most allocations consisted of millions of barrels of oil, such commissions were quite lucrative, reaching hundreds of thousands of dollars per allocation.

In an interview with the U.S. Treasury Iraqi Financial Asset Team, a Hussein regime official described how Saddam Hussein devised this plan in simple terms. The source stated that Saddam Hussein began to utilize the memorandum of understanding -- the oil-for-food program -- to sell oil to people who supported him. The source explained that this was done in order to enhance the power of Saddam Hussein. Hussein instructed that the price of oil should be made as low as possible and made beneficial to his supporters. Inside SOMO this system -- the Iraqi marketing oil system -- this was nicknamed the "Saddam bribery system."

Other senior members of the Hussein regime confirmed that the "Saddam bribery system" used oil allocations in an effort to buy political influence around the world. For instance, the vice president of the Hussein regime, Taha Yassin Ramadan, confirmed to the subcommittee that the allocations were indeed, and I quote, "compensation for support." Close quote. The vice president also confirmed that, quote, "I know these people" -- meaning oil allocation grantees -- "get a benefit." Another senior Hussein official confirmed that the allocation scheme was, quote, "buying influence." When asked whether allocation recipients would make a profit from the oil transactions, that official declared: "That's the whole point."

The Hussein regime used these lucrative allocations in its primary political struggle -- ending U.N. sanctions. To that end, it primarily favored those individuals and entities from countries on the U.N. Security Council. Senior Hussein regime officials and numerous Ministry of Oil documents confirm that the regime steered a massive portion of its allocation toward Security Council members that were believed by the Hussein regime to support Iraq in its efforts to lift sanctions -- namely, Russia, France and China.

For example, several Oil Ministry charts expressly separate the allocation recipients by country and specify whether the country is a permanent member of the Security Council. Russia, a permanent member of the Security Council, was consistently the largest recipient of oil allocations and, according to one Hussein regime official, this affinity for Russia resulted from Saddam's desire to show "gratitude" to the Russians for their support at the U.N. Security Council.

The recipients of the allocations were determined by a committee of Saddam Hussein's closest advisors, including Deputy Prime Minister Tariq Aziz and the minister of oil, Amir Muhammad Rashid. The committee was led by the vice president of Iraq, Taha Yassin Ramadan. Every six months, the committee would meet to review the allocations and make decisions concerning allocations in the upcoming phase. The committee would evaluate, quote, "special requests" made by individuals around the world who were soliciting allocations. The principal criterion for granting the "special requests" -- i.e., granting an allocation -- was the individual's support for Iraq. Once the committee determined the allocations for the upcoming phase, the vice oresident would generally discuss the allocations with Saddam Hussein himself. This modus operandi was followed by the Hussein regime again and again.

The bipartisan reports issued last week present evidence establishing that members of the Russian Presidential Council, including the former Chief of Staff the Russian President Vladimir Putin, Mr. Alexander Voloshin, Russian politician Vladimir Zhirinovsky, numerous political entities within Russia, Charles Pasqua, the former French minister of the interior, and George Galloway, a newly-elected member of the British Parliament, were granted substantial oil allocations from the Hussein regime under the oil-for-food program.

In particular, the evidence obtained by the subcommittee shows that the Hussein regime granted Russian Presidential Council allocations for 90 million barrels of oil.

The allocations were given to Voloshin, and his close confidant, Sergey Issakov. The Iraqi Ministry of Oil estimated that the council's allocations, granted from 1999 to 2003, were worth in excess of $16 million. Vice President Ramadan recognized Mr. Voloshin as the head of Russia's presidential administration and stated that the oil allocations that were awarded to him had been approved by Saddam Hussein.

The Hussein regime granted Russian official Vladimir Zhirinovsky and his political party, the LDPR, allocations for 75.8 million barrels of oil -- enough to supply the entire United States for 4 days. The Iraqi Ministry of Oil estimated that Zhirinovsky's allocations were worth $8,679,000.

Saddam Hussein's Vice President, Taha Yassin Ramadan, confirmed to the subcommittee that Zhirinovsky did receive oil allocations from the Hussein regime. Another senior official of the regime that was interviewed by the subcommittee confirmed not only that Zhirinovsky received oil allocations, but that he profited from the transactions, saying: "Of course Zhirinovsky would make a profit. That's the whole point." Among the evidence are 6 letters signed by Zhirinovsky himself that openly discuss the allocations and more than 30 documents of the Iraqi Ministry of Oil that expressly identify Zhirinovsky and his political party, the LDPR, in connection with oil allocations.

The evidence shows that the Hussein regime granted Charles Pasqua allocations for 11 million barrels of oil, and George Galloway was allotted 20 million barrels. Saddam Hussein's vice president, Taha Yassin Ramadan, verified that Pasqua received allocations and that Galloway was granted allocations, and I quote, "because of his opinions about Iraq," close quote, and because he, again quote, "wanted to lift the embargo against Iraq." Among the evidence are documents of the Iraqi Ministry of Oil that expressly identify Pasqua and Galloway in connection with oil allocations. One document shows that Saddam Hussein personally approved an allocation to Pasqua, and also indicates that Pasqua refused to write a letter to the Iraqis about the allocation because he "feared political scandals."

The process of monetizing the Pasqua and Galloway allocations appears to have followed the same pattern as the Zhirinovsky and RPC allocations. The allocation recipient would nominate a purchasing agent to sign contracts for the allocation, that company would sell the oil to an oil company, and the oil company would pay a hefty commission -- typically amounting to hundreds of thousands of dollars -- to the nominal purchasing agent for the benefit of the allocation holder.

In one of Mr. Galloway's transactions, surcharges of more than $300,000 were paid to the Hussein regime. Senior Hussein regime officials informed the subcommittee that the allocation holders -- in this case, Galloway -- were ultimately responsible for the surcharge payment and, therefore, would have known of the illegal, under-the- table payment.

This subcommittee is not a court of law. This subcommittee has a long history of bipartisan, thorough and factual substantive investigations. The reports released over the past week contain 99 pages of text and 452 footnotes that detail compelling evidence describing how Saddam abused the oil-for-food program to garner political influence around the globe.

I want to thank my friend and ranking member of this committee, Senator Levin, for his participating in and supporting this investigation. Senator Levin.

SEN. CARL LEVIN (D-MI): Mr. Chairman, thank you. As you pointed out, the subcommittee has now had three hearings examining issues related to the UN oil-for-food program and sanctions on Iraq.

Because this hearing will focus on the problems associated with the program, it's easy to forget that U.N. sanctions on Iraq achieved their primary objective of preventing Iraq from rearming. Former Secretary of State Powell characterized the sanctions as "successful" because Saddam Hussein was not able to, quote, "rebuild his army" and "has fewer tanks in his inventory today than he had 10 years ago." And going on, Secretary Powell said "we have not seen that capacity for weapons of mass destruction emerge to present a full-fledged threat to us" and concluded that, quote, "credit has to be given" for "putting in place a sanctions regime that has kept him pretty much in check." Close quote.

Now the U.N. oil-for-food was intended to alleviate the humanitarian calamity which resulted from the U.N. trade embargo against Iraq. It was essential to find a way to get Iraq to agree to sell its oil and deposit the proceeds in a U.N.-controlled account from which humanitarian supplies like food and medicine could be purchased. And in fact, over $65 billion was eventually deposited into the U.N. account for that purpose, humanitarian supplies for the people of Iraq such as food and medicine. But Saddam would agree to the oil-for-food program only if he could determine to whom the oil was sold and from whom the supplies would be purchased.

U.N. member countries, including the United States, reluctantly agreed to give Saddam Hussein that control. It is unsurprising that Saddam Hussein later devised multiple ways to abuse this authority, including the awarding of oil allocations to political figures and others to reward their support or curry their favor for efforts to undermine or eliminate United Nations sanctions against Iraq.

It is also unsurprising that when a corrupt Saddam Hussein saw how profitable the oil allocations were, he schemed again to take a cut of the revenue. From September 2000 to September 2002, Iraq demanded that oil allocation holders awarded an oil-for-food contract pay a secret, per-barrel surcharge -- a kickback -- that ranged from 10 to 30 cents per barrel. In two short years, those surcharge payments gave $228 million to Iraq.

U.S. import statistics show that about half of the oil on which those surcharges were paid ended up in the United States. Using Iraqi internal records reviewed by our staffs, we estimate that more than half of all of the surcharges paid to Iraq, about $118 million, was paid on oil sold to U.S. companies. The remaining $110 million in surcharges was paid on oil sent to other countries, including in Europe, Asia and Africa, and there's a chart that shows that division up here to my right.

A U.S. company called Bayoil, headquartered in Houston, Texas, was smack in the middle of it all. When other oil companies around the world were cutting back on business with Iraq due to Saddam's surcharge demands, Bayoil increased its business. During the 2-year period in which surcharges were mandatory to get Iraqi oil, Bayoil became the largest single buyer of Iraqi oil for the U.S. market. Altogether, Bayoil brought in over 200 million barrels to the United States. My staff was able to trace 102 of the U.S. cargoes that Bayoil brought here, and found that the surcharges paid on those cargoes, according to internal Iraqi records, totaled $37 million. Bayoil sold the oil to U.S. oil companies and refineries which, in turn, sold refined petroleum products, like gasoline and heating oil, to American consumers.

Last month Bayoil was indicted for violating U.S. sanctions on Iraq and for committing fraud, including by paying or arranging the payment of "millions of dollars in secret illegal surcharges to the government of Iraq," and that's a quote. That indictment comes two years after the end of the oil-for-food program. But while the program was going on, no one in the U.S. government appears to have paid much attention to Bayoil, despite plenty of red flags.

As soon as Iraq began demanding surcharges, oil companies around the world began complaining. Debate erupted at the United Nations about how to stop the kickbacks, or the surcharges. Opinion split, with the United States and United Kingdom on one side, trying to increase Iraqi oil prices to make surcharges uneconomical, and Russia and China on the other side, supporting lower oil prices. It took two years for the United States and U.K. representatives to find a way, using retroactive pricing, to prevent Iraq from imposing these kickbacks. By the end of 2002, Iraq had given up imposing surcharges because the resulting price was so high no one could buy the oil, pay a surcharge, and still make a profit.

But at the same time, the U.S. joined in efforts to find a way to end such kickbacks, joined in that effort at the United Nations, there was little or no U.S. effort here at home -- in D.C. -- to enforce our own laws against paying illegal oil surcharges or to help the U.N. find a way to stop a U.S. company, Bayoil, from contributing to the surcharge problem. A few general warnings against paying illegal surcharges were sent out, but U.S. government agencies, including the government's primary sanctions enforcer, the Office of Foreign Assets Control or OFAC, never took on the issue, never researched U.S. company involvement in the payment of oil surcharges, and never took a hard look at Bayoil, despite evidence inviting closer scrutiny. While OFAC did investigate other issues, such as preventing the sale to Iraq of prohibited military equipment or dual-use items, the surcharge issue that commanded such attention at the U.N. received virtually no attention here in Washington. Bayoil slipped right by for two years.

When asked why OFAC failed to do more, OFAC told the subcommittee that it considered the oil-for-food program to be a U.N. responsibility, and that it was up to the U.N., not the U.S., to police compliance with sanctions. The problem with this position, however, is that the United Nations has no law enforcement authority. It can't police the nationals of any country. It can't even force a company to answer questions. The U.N. is dependent upon its member states for enforcement, and it didn't get much help from the United States on this matter.

And Bayoil illustrates the point, and the chart that's up to my right summarizes what happened with Bayoil. In 2001, the U.N. became suspicious that Bayoil and a few other companies were using various tactics to make room for surcharge payments. The U.N.'s oil experts asked Bayoil for specific cargo information, but Bayoil refused to provide it. In August 2001, the U.N. appealed to the United States Department of State for help, and the State Department asked OFAC to obtain the information. After hearing nothing for four months, the U.N. sent another request for help in January 2002.

Eight months after the initial inquiry, in April 2002, OFAC finally wrote a letter to Bayoil asking for information about its licensed activity in Iraq, without requesting the information wanted by the United Nations and without directing Bayoil to answer the U.N.'s questions. Despite its booming Iraqi oil import business, Bayoil told OFAC that it no longer conducted licensed activity in Iraq. OFAC made no follow-up inquiry, and never even bothered to send Bayoil's response to the State Department or to the United Nations.

In the end, the United Nations never obtained the information it needed from the U.S. State Department, OFAC or Bayoil. Worse, the U.N.'s inquires about Bayoil never triggered any OFAC review into whether Bayoil was paying illegal surcharges. This lack of interest persisted, even though during the surcharge period Bayoil suddenly expanded its imports to become one of the largest U.S. importers of Iraqi oil. It performed precisely the intermediary role that experts flagged as likely to result in kickbacks or surcharges. And all the while, Bayoil was constantly bombarding U.S., U.N. and Iraqi officials with letters and faxes urging them to set lower prices for Iraqi oil -- prices which would allow more room for the payment of surcharges.

OFAC's failure to investigate Bayoil reflects a major oversight failure and a
fundamental misconception on the part of OFAC about its responsibility to police U.S. nationals to ensure compliance with sanctions on Iraq. OFAC's actions represented an abdication of its responsibility to monitor Bayoil's behavior and an inappropriate attempt to shift OFAC's own obligation to enforce U.S. sanctions on Iraq to the United Nations.

Saddam Hussein's corrupt control of oil allocations and illegal surcharges is a serious concern, even though the Hussein regime obtained far greater illicit income through other schemes, some with the knowledge and tacit approval of the United States and other members of the U.N. Security Council. The illegal surcharges from Saddam Hussein's control of oil allocations netted Iraq about $228 million. But as this chart to my right shows, Iraq's direct oil sales to its neighboring countries -- Jordan, Turkey and Syria -- generated 40 times as much illicit income; over $8 billion. These direct oil sales were in violation of U.N. sanctions and the oil-for-food program that we helped draft at the United Nations, and yet the United States and others looked the other way, simply taking note of them.

On occasion, the United States was not only aware of illegal Iraqi oil sales to its neighbors, the United States actually facilitated those sales as happened in the Khor al-Amaya incident of 2003. This incident involves the largest single illicit sale of oil transported by ship out of Iraq during the sanctions period.

Over several weeks in February and March 2003, Iraq loaded 7.7 million barrels of oil into seven seagoing oil tankers at the port of Khor al-Amaya in southern Iraq. Khor al-Amaya was not authorized as a place for ships to load oil under the oil-for-food program. The oil loaded onto the seven ships was sold to the government of Jordan, which paid Iraq $53 million, which was wired to bank accounts under the control of Saddam. The seven massive oil tankers that carried this oil docked at Khor al-Amaya in plain view of the Maritime Interdiction Force, the MIF, which was then under U.S. command. Internal ship communications show that seven ship captains were directed to contact the U.S. naval officer at Maritime Interdiction Force, the MIF, before loading any oil and give him this message, quote: We are loading crude oil from the terminal at Khor al-Amaya for the Jordanian company acting for Jordan, called Millennium. "Do you have any objection?" After obtaining a response of, quote, "no objection," the ships were directed to go to the port, fill up with oil and leave with their cargo. They then traveled the length of the Persian Gulf with the Maritime Interdiction Force's full knowledge and acquiescence.

When word of the first Khor al-Amaya oil shipment hit the press and an outcry arose about this apparent blatant violation of U.N. sanctions, a U.S. company involved with chartering the ships for the Jordanian government called U.S. authorities to make sure that it was not violating U.S. or U.N. sanctions, or hurting U.S. foreign policy. The company even offered to turn over the oil in the ship's possession to the MIF, if asked. A State Department official responded that the United States, quote, "was aware of the shipments and has decided to take no action," close quote. The U.S. company was then reassured.

Those shipments from Khor al-Amaya sent $53 million into the pockets of Saddam Hussein on the eve of the U.S. invasion. The Department of Defense knew about the shipments, the State Department knew about the shipments, and we looked the other way.

And by the way, we can't get answers from either of those departments to inquiries, questions which the chairman and I sent to them.

There's a pattern here of erratic and inconsistent enforcement of sanctions on Iraq. On the one hand, the United States -- is the U.N., trying to stop Iraq from imposing illegal surcharges on oil-for-food contracts. On the other hand, the U.S. ignored red flags that some U.S. companies might be paying those same illegal surcharges. The U.S. also looked the other way while Iraq sold 40 times as much oil to its neighbors Jordan, Turkey and Syria, totalling $8 billion, 40 times as much as the illegal surcharges. As part of that $8 billion, we even permitted Jordanian chartered ships to load oil illegally and to give them safe passage through the Persian Gulf, past the Maritime Interdiction Force that we were commanding to stop illegal oil ships.

While imperfect, sanctions can be a useful tool. They can stop a country from acquiring armaments, as sanctions did in Iraq. But sanctions can also be undermined by schemes that attempt to corrupt or end-run the program, as Saddam schemed. They can spawn illicit income, damage public confidence and international cooperation, and in the United Nations itself.

To safeguard against such schemes in the future, sanctions programs need to build in stronger anti-corruption measures, including assigning clear responsibilities for detecting and preventing corruption, and for putting greater public pressure on member countries to take appropriate enforcement actions. U.N. member countries, including the United States, will have to stop turning a blind eye to violations.

Here at home, OFAC must carry out its enforcement responsibilities under our laws, which include ensuring compliance with U.N. sanctions, with stronger anti-corruption oversight and active enforcement. And Mr. Chairman, I know, like you, I commend our staffs for their hard work which went into their reports, and I look forward to the testimony today.

SEN. COLEMAN: Thank you, Senator Levin.

Senator Bennett.

SEN. ROBERT BENNETT (R-UT): Thank you very much, Mr. Chairman. I've been unable to attend as many of these hearings as I would like, and I will have to slip out of this one to go to another committee assignment that I have.

I simply want to recall for the committee a personal experience which I hope will add a certain perspective the work of the committee and the activities surrounding this issue.

I was in the Middle East, in a country -- I will not identify it, because it is known as being friendly to the United States, although there are those who might suggest that it is not -- and as happens to a traveling senator, I was exposed to a press conference. In the course of the press conference, the subject immediately came up about the sanctions in Iraq. And the question was posed to me: "Senator, how can you justify America's position that is denying food to children, medicines to the ill, putting tremendous humanitarian pressure on the poor, starving people of Iraq? Your support for sanctions is causing undue hardship in Iraq, and how can America justify these hardships?"

The State Department official who was sitting at my elbow immediately whispered in my ear, "As a senator, you don't have to answer that question. You can defer that to the State Department, and you don't have to respond. That's an inappropriate question for him to ask you when you're here on another purpose, and you can deflect it."

I chose to ignore the State Department admonition and said to the press if the people in Iraq are suffering because of the sanctions, the blame belongs to Saddam Hussein and not to the United States. If the people in Iraq are being deprived of food or medicines, it is because Saddam Hussein himself chooses to use his money to build palaces and take care of his own needs, rather than to take care of them. And I do not apologize under any circumstances for the position of the Western world that this man deserves to be sanctioned.

And there was no story that appeared as a result of that because they did not want to put that particular response in the press in that country.

I think as we go through the details of the scandal relating to oil-for-food, we should pursue them with the kind of diligence that you and the minority staff have exhibited here, but I also think we should put it in greater context. There was a propaganda campaign mounted and maintained over a period of years that said that those people who were opposed to Saddam Hussein and his regime, who used sanctions in an effort to try to bring that regime into some level of civilized behavior, were the bad guys; and that Saddam Hussein and those who, quote, "represented the Iraqi people," unquote, were the good guys.

One of the things we have learned as a result of the administration's actions in response to a 15-to-nothing vote in the Security Council of the United Nations in Iraq has been once again the lesson that tyrants do not change their spots, brutal rulers do not change their attitudes, that there must be pressure, and it must be effective pressure, from those who are truly on the side of the poor and the starving. And the information you are developing in this hearing and in other hearings demonstrates the truth of that once again. And I hope the rest of the world will watch what you are doing here and recognize that the efforts on behalf of the United States to help the people of Iraq have been well placed and should be applauded rather than attacked in the way that they have been.

Thank you, Mr. Chairman, for your diligence and what you're doing.

SEN. COLEMAN: Thank you, Senator Bennett.

Senator Dayton?

SEN. MARK DAYTON (D-MN): Thank you, Mr. Chairman. I want to commend you and the ranking member for your diligence and persistence in this endeavor. I was state auditor for Minnesota, and any time I got involved in any kind of audit or investigation, I was accused of having some motive. And I said, well, you know, everyone has a motive, but ultimately the audit or the investigation will be judged on the facts. And if we have access to the facts, they they'll stand or fall on their own.

I also learned that while it's not determinative, that the behavior of those under investigation was quite instructive as to the validity of some of the initial accusations. I found that those with nothing to hide usually tried to hide nothing; in fact, were most forthcoming. The more that individuals or institutions tried to hide or withhold what was being requested, the more suspicious I became, and more often than not, those suspicions were validated by the findings.

And I must say the recent difficulties you mentioned, Senator Levin, regarding the executive agencies responding to requests, the I think almost unprecedented step taken last week to go to a federal court for a temporary injunction to prevent a former FBI agent from releasing materials in his possession that would be relevant to this investigation, says to me that certain individuals or institutions have a great deal to hide. And it makes your determination and your persistence in pursuit of the truth and all the facts and the money that are involved all the more commendable, both of you.

Thank you.

SEN. COLEMAN: Thank you, Senator Dayton.

I'd like to call the first panel. I'd like to call Mark Greenblatt and Steven Groves, counsels for the majority staff, and Dan Berkovitz, counsel for minority staff, of the Permanent on Investigations.

I appreciate all the staff's hard work on this investigation both majority and minority staff. As I mentioned in my opening statement, today we will present evidence that has been gathered on how Saddam Hussein manipulated the oil-for-food program to peddle influence and reward friends in order to undermine sanctions. In particular, this hearing will present evidence detailing how Saddam rewarded foreign officials with lucrative oil allocations that could be converted into cash.

Mr. Greenblatt will present his findings on allocations granted to a prominent Russian politician named Vladimir Zhirinovsky, to reward him for his outspoken support for Iraq. In addition, Mr. Greenblatt will present evidence of that the former French Minister of the Interior, Charles Pasqua, and George Galloway, the newly reelected member of the British Parliament, were granted substantial oil allocations by the Hussein regime.

Mr. Groves will testify about how Saddam's regime's attempt to influence the Russian government by granting allocations to the Russian Presidential Council. Specifically, oil allocations were given to the head of the Presidential Council, Aleksander Voloshin.

Finally, Mr. Berkovitz will be testifying about issues related to illegal surcharges paid on oil contracts under the OFF program including an American company, Bayoil, as well as illegal oil shipments made from the Iraqi port of Khor al-Amaya.

Before we begin, pursuant to Rule 6, all witnesses who testify before this subcommittee are required to be sworn.

(Witnesses are sworn.)

Thank you, gentlemen. As you are well aware, your written testimony will be
presented in its entirety. You've each allocated 10 minutes for your presentation. Mr. Greenblatt, I understand that you will testify first, followed by Mr. Groves. Mr. Greenblatt will then testify again within the same time parameters and we'll finish up with Mr. Berkovitz.

Mr. Greenblatt, you may proceed.

MR. GREENBLATT: Mr. Chairman, Ranking Member Levin, members of the subcommittee, thank you for this opportunity to testify before you today concerning the subcommittee's investigation into the oil-for- food program. My testimony today will present evidence demonstrating how the Hussein regime rewarded its political allies under the oil- for-food program. In particular, I will introduce evidence establishing that the Hussein regime granted a lucrative oil allocations to Vladimir Zhirinovsky, a prominent Russian official.

In short, the evidence revealed that Zhirinovsky was granted allocations of 75 million barrels of oil. The Iraqi Ministry of Oil estimated that the profits -- that profits of $8.6 million were made in connection with Zhirinovsky allocations, as reflected in Exhibit 1. In fact, for some of those allocations the evidence shows that an American oil trader named Bayoil may have paid Zhirinovsky millions of dollars in connection with those transactions. Finally, I'll present evidence that Zhirinovsky and Bayoil paid illegal, under-the-table surcharges to the Hussein regime totalling $4.7 million.

Senator Coleman, as you described in your opening statement, the Hussein regime officials that were interviewed in Iraq by this subcommittee told us that the Iraqis gave preferential treatment to specific foreign officials in the allocation of oil because of their support for the Hussein regime and their opposition to U.N. sanctions on Iraq.

Vladimir Zhirinovsky was one of those officials. Zhirinovsky has been a long-time member of the Russian Duma and the leader of the ultra-nationalist, Liberal Democratic Party of Russia, commonly called the LDPR. He was popular enough to run for president of Russia three different times. He was a tireless and outspoken supporter of the Hussein regime taking roughly 16 trips to Iraq during the seven years of the oil-for-food program and frequently denouncing U.N. sanctions against Iraq. In addition, Zhirinovsky signed an agreement on, quote, "inter-party ties," between his party, the LDPR, and Saddam Hussein's Ba'ath Party. He dispatched a group of supporters called, quote, "The Falcons of Zhirinovsky," to Iraq to support the Hussein regime during the first Gulf War.

Zhirinovsky, who wrote a book entitled, "I Spit on the West," was unquestionably a strong supporter of the Hussein regime. The regime, in turn, rewarded Zhirinovsky with lucrative oil allocations. In total, Zhirinovsky received at least 12 different allocations totalling more than 75 million barrels of oil. The Iraqi Ministry of Oil estimated the profits arising from Zhirinovsky's allocations amounted to $8.6 million.

The subcommittee staff has prepared a thorough and comprehensive report detailing the chronology of events surrounding Zhirinovsky's allocations. Among the voluminous evidence are six letters signed by Zhirinovsky himself, and 31 documents from the Ministry of Oil that specifically identify Zhirinovsky or his radical political party.

The report also introduces testimony of four senior members of the Hussein regime, including Tariq Aziz and Saddam's former vice president, Taha Yasin Ramadan, each of which independently confirmed that Zhirinovsky received oil allocations. In fact, one regime official confirmed to this subcommittee not only that Zhirinovsky received oil allocations, but that Zhrinovsky also earned money from the deal. He said, "Of course Zhirinovsky will make a profit; that's the whole point." I'll present a brief sampling of that evidence today.

The first document is the letter that appears on Exhibit 2. That exhibit is a letter from Zhirinovsky to the Iraqi ambassador to Russia at the very beginning of the oil-for-food program. In short, this is Zhirinovsky's pitch for oil contracts.

He begins the letter by describing his long-time support for the Hussein regime. He states that he and his political party, quote, "stood firmly against the enforcement of United Nations economic sanctions against Iraq" and that his political party used its, quote, "influence on the Duma to adopt resolutions that will facilitate economic cooperation between Russia and Iraq." He also stated, quote, "a special resolution to lift the economic sanctions on Iraq was adopted in particular and by virtue of our party's efforts."

After brandishing his pro-Hussein credentials, Zhirinovsky states that his party has, quote, "commercial institutions that would like to receive oil contracts under the oil-for-food program."

After Zhirinovsky's letter, there were a series of meetings between his representatives and members of the Hussein regime, including meetings between Zhirinovsky himself and Saddam Hussein and Saddam's right-hand man, Tariq Aziz.

The subcommittee staff report details all of those meetings, which ultimately culminated in an oil allocation to Zhirinovsky in phase two of the program.

The Hussein regime continued to grant oil allocations through the next two phases. Then in phase five, a new player entered the picture. That new player is the American oil trader named Bayoil. In early phases of the oil-for-food program, Bayoil was buying up as much Iraqi oil as possible. They aggressively pursued oil allocations and prided themselves on being one of the largest purchasers of Iraqi oil under the program. In late 1998, Bayoil struck a deal with Zhirinovsky. Zhirinovsky would assign his allocation to Bayoil in exchange for a hefty commission. The evidence suggested the commission was 17 cents a barrel, which would amount to $850,000 for a medium-size allocation, such as 5 million barrels.

When Zhirinovsky informed the Iraqis that his allocation would be assigned to Bayoil, the Iraqis rejected the plan, saying, quote, "Iraq cannot do business with American companies." As a result, Bayoil was forced to engage a Russian company to act as the nominal purchasing agent. Bayoil eventually did so, engaging a Russian company called Nafta Moscow to interface with the Iraqis.

Bayoil then confirmed the deal with Zhirinovsky, in a letter presented on the left-hand side of Exhibit 3. In that letter, Bayoil tells Zhirinovsky that it has engaged Nafta Moscow to act as a purchasing agent and requests that Zhirinovsky confirm the agreement with a letter on LDPR letterhead. Bayoil even drafted the letter for Zhirinovsky, saying, quote, "We, LDPR, confirm that our Iraqi oil allocation of 7 million barrels is assigned to Bayoil. We confirm to -- (inaudible) -- to contract this allocation with company designated by Bayoil upon receiving from you the agreed premium prior to" -- and it inserts a certain date. Signed, Vladimir V. Zhirinovsky. Bayoil then concludes the letter, indicating that it hopes to pay Zhirinovsky's premium earlier than the contractual deadline.

Soon after Bayoil's letter to Zhirinovsky, Bayoil explained the deal to Nafta, its nominal purchasing agent. That letter appears on the right-hand side of Exhibit 3. In that letter, Bayoil gives Nafta instructions on how to negotiate with the Iraqis, such as reminding the Iraqis that the allocation was, quote, "being contracted for and on behalf of Mr. Vladimir Volfovich, the LDPR." It's reasonable to conclude that the name "Vladimir Volfovich," the LDPR, is a reference to Zhirinovsky, because Zhirinovsky's full name is Vladimir Volfovich Zhirinovsky, and the LDPR is his political party.

Nafta was also supposed to remind the Iraqis that Zhirinovsky is, quote, "one of the greatest supporter of the Iraqi cause in the world."

They will also offer a suggestion, quote, "on maximizing the economic result for the LDPR," Zhirinovsky's radical political party.

All of this correspondence eventually culminated in six different oil transactions, starting in phase five and continuing through phase 10. In connection with those transactions, Bayoil would pay a large commission payment to a seemingly unrelated entity.

For instance, in the phase six deal, Bayoil paid 17 cents to a mysterious entity called Plasco (sp) Shipping. In total, Bayoil paid Plasco (sp) more than $1.3 million.

Similarly, in phase seven, Bayoil paid a massive commission of 31 cents per barrel to another mysterious entity, called Bayvan (sp) Consulting. In one document, a Bayoil employee called those payments, quote, "Russian commission." Those Russian commissions to Bayvan (sp) appear to total more than $1.5 million.

The subcommittee cannot identify any services provided by these companies, Plasco (sp) Shipping or Bayvan (sp) Consulting, in connection with the oil deals. Our exhaustive search of Bayoil's files concerning these deals included a thorough vetting of thousands of pages detailing each and every aspect of the transactions. Nevertheless,the subcommittee could not have identified one piece of correspondence with Plasco (sp) or Bayvan (sp). There is no contract with either of them, no invoices, no indication of any services provided whatsoever.

Moreover, the subcommittee attempted to locate each of those companies and was unable to do so. Therefore, in light of the fact that Bayoil agreed to pay a premium to Zhirinovsky and Bayoil made these massive payments to dubious companies, it seems reasonable -- it is reasonable to conclude that those payments were in fact commissions to Vladimir Zhirinovsky.

Not only did Zhirinovsky profit from this scheme, but Saddam Hussein profited as well. In phase eight of the program, which occurred towards the end of 2000, the Hussein regime started demanding under-the-table payments in connection with oil purchases. These payments were in direct violation of U.N. sanctions and the rules of the oil-for-food program. According to senior members of the Hussein regime, every single recipient of an oil allocation was obligated to make those payments, commonly called surcharges.

Surcharges were imposed over a two-year period, from September 2000 to mid-2002, and during that period, Zhirinovsky received four distinct allocations. As reflected in the documents presented in Exhibit 7, for those four allocations, the Hussein regime received under-the-table payments totalling approximately $4.7 million.

Let's review one such surcharge payment. In phase 10, Zhirinovsky received an allocation of 4 million barrels. Bayoil once again purchased that allocation and engaged Russian oil giant Lukoil to be its agent. Lukoil contracted for the oil on behalf of Bayoil, and the contract was number 10- -- M-1067. In connection with Contract M-1067, Bayoil made payments totaling $1,122,54870 to Plasco (sp) Shipping, the same mysterious entity that we visited previously. Those payments are captured on the left-hand side of Exhibit 4, which presents Bayoil's internal accounting statements reflecting the payments to Plasco (sp) Shipping.

It is crucial that we remember the sum paid to Plasco (sp), $1,122,548.70, because that precise figure appears on a document created by the Ministry of Oil. That document, which is a chart that appears on the right-hand side of Exhibit 4, is a summary of all surcharges paid to the Hussein regime under the oil-for-food program. The entry for Contract M-1067, the Lukoil contract we discussed earlier, indicates that the surcharge owed was precisely $1,122,548.70, the exact amount, to the penny, that Bayoil paid Plasco (sp) Shipping.

Finally, the chart indicates the surcharge was paid in full. Therefore, given this evidence, it's reasonable to conclude that Bayoil's payments to Plasco (sp) Shipping were in fact illegal, under- the-table payments to the Hussein regime.

As displayed in Exhibit 7, $4.7 million was paid in surcharges in connection with Zhirinovsky's allocations. While Zhirinovsky and his agents paid $47 million to the Hussein regime in cash, Zhirinovsky also compensated the regime by literally giving the Iraqis a building in Moscow. In phase eight, Zhirinovsky was apparently having difficulty paying off all the surcharge debt. The vice president of Iraq, Taha Yasin Ramadan, told the subcommittee that he met with Zhirinovsky face to face and actually threatened him, saying, "Pay or get nothing."

In lieu of paying off the surcharge with cash, Zhirinovsky offered to give the Iraqis a building he owned in Moscow. Senior regime officials informed the subcommittee that the building was worth more than $800,000.

In our staff report, we present a letter from Zhirinovsky in which he discusses his proposal. The Iraqis eventually agreed to Zhirinovsky's offer, and the deed was transferred -- it was transferred to the Iraqis at their embassy in Moscow. One senior official told the regime -- I'm sorry, told the subcommittee -- that he observed the transaction, saying -- quote -- "I was there personally." We have learned that the building is being used as an Arabic school.

In conclusion, our staff report establishes that Zhirinovsky received numerous lucrative oil allocations, that Bayoil paid the Russian millions of dollars in exchange for some of those allocations, and that Zhirinovsky, with Bayoil as financing, paid the Hussein regime millions in under-the-table surcharges. With that, I'll close my presentation. I'll be happy to answer your questions.

SEN. COLEMAN: Thank you, Mr. Greenblatt.

Mr. Groves?

MR. GROVES: Good morning, Chairman Coleman, Senator Levin, members of the subcommittee. Thank you for the opportunity to testify today regarding the subcommittee's latest findings relating to our ongoing investigation in to the oil-for-food program.

My testimony today presents evidence gathered by the subcommittee, establishing that the former regime of Saddam Hussein attempted to exert influence at the highest levels of Russian government by awarding lucrative allocations of oil to politically influential officials.

In particular, the Hussein regime assigned the rights to massive quantities of oil to the Russian Presidential Council, which was then headed by a powerful Kremlin insider named Aleksander Voloshin. In April, we traveled to Iraq and interviewed senior officials of the former Hussein regime. The officials told us that oil allocations were awarded to foreign politicians and political parties in order to engender international support for their regime.

Documents reviewed by the subcommittee from the Iraqi Ministry of Oil confirmed that massive allocations of oil were awarded to Security Council members that were sympathetic towards Iraq in its efforts to lift sanctions. Among those members was the Russian Federation. Saddam personally approved the list of allocation recipients along with the committee of his closest advisors, including Deputy Prime Minister Tariq Aziz and Vice President Taha Yasim Ramadan, both of whom were interviewed by the subcommittee.

The Hussein regime gave allocations to Russian individuals, political parties, government industries -- pardon me, government ministries -- and major oil companies due to their good relationship with Iraq and due to their support for the lifting of sanctions. A total of 30 percent of all of the oil allocated during the entire course of the program went to Russia. The state-owned oil company Zarubezhneft was allocated almost 180 million barrels of oil. But the Russian Ministry of Foreign Affairs -- the equivalent of our State Department -- was allocated 155 million barrels.

Individual politicians, such as Mr. Zhirinovsky, and political parties were also given allocations, including 73 million barrels to the Unified Russia Party, now known as the Unity Party, a pro-Kremlin organization associated with Russian President Vladimir Putin.

Tariq Aziz stated that the Unity Party received such a large number of allocations because Russia was taking positions at the Security Council favorable to Iraq. Vice President Ramadan stated that the Unity Party was given massive allocations because it was the governing party, and the party of the president.

The Russian Presidential Council received 9 oil allocations, totaling 90 million barrels. The Presidential Council consisted of advisors appointed by the president, was responsible for devising presidential policy, drafting presidential decrees and coordinating policy among government agencies. The head of the Presidential Council was Aleksander Stalivich (sp) Voloshin, who was widely known to be the power behind the thrown at the Kremlin.

Mr. Voloshin assisted in President Putin's rise to power. He managed his first election campaign and helped to create the Unity Party. He was once referred to as "de facto" after President Vladimir Putin, Russia's most powerful man. Former regime officials interviewed by the subcommittee confirmed the allocations given to Mr. Voloshin were a show of support for him and were granted to him because of his relationships with, quote, "very important characters." Vice President Ramadan told the subcommittee that he knew that Mr. Voloshin was the head of Russia's presidential administration and stated that the oil allocations awarded to him had been approved by Saddam Hussein.

Many of the allocations to the Presidential Council, like the allocations to Mr. Zhirinovsky, were ultimately purchased and shipped by Houston-based, Bayoil. The Presidential Council and Bayoil used a variety of middleman oil-trading companies to execute the actual contracts with Iraq. The transactions involving the allocations granted to the Presidential Council followed the same general pattern. It would start at the beginning of each phase with an oil allocation to the Presidential Council.

If you would turn your attention to Exhibit 19, it's an example of a Ministry of Oil allocation list. The chart indicates that the Russian Presidential Council was allocated 14 million barrels of oil in Phase 8 and that a Mr. Issakov was named as the designated contact person. Mr. Issakov is Sergev Issakov, who is associated with Mr. Voloshin as noted in our report.

As you can see by the handwritten note at the corner of the document, the allocations had been approved at the highest level by the, quote, "the president leader." Once the oil is allocated, a contact person would choose the Russian company to act as the nominal purchaser, the middleman, in exchange for a small commission. A representative of the middleman, often Mr. Issakov himself, then traveled to Baghdad and signed a contract with SOMO that could be forwarded to the U.N. for approval. Once the contract was signed, SOMO would forward that contract to the minister of oil for approval.

And if you could turn your attention to Exhibit 27, this is an example of one such approval for an allocation given to Mr. Voloshin in Phase 12. As you can see, the terms of the official contract with the Russian middleman company called Impexoil, were approved by the minister of oil, and you can see that the ministry kept track of exactly who the allocation holder was, Mr. Voloshin, the head of the Russian Presidential Council.

Other Ministry of Oil documents also kept track of who was the ultimate beneficiary of the oil allocation. For example, Exhibit 29 is a letter from the crude oil marketing department to the financial department outlining the terms of the contract signed during Phase 13 with Impexoil. Again, the letter makes it clear who is benefiting from the allocation; it states, quote, "party benefitting from the allocation, head of the Russian Presidential Council" Now, once the allocation and the contracts have been approved, they middleman company entered into a separate contract with an oil company; in many instances, Bayoil, to actually ship the oil.

After the oil was lifted, Bayoil wired payments, usually hundreds of thousands of dollars each, into certain bank accounts in Cyprus or Switzerland, countries,not exactly known for their transparency in banking practices. The evidence indicates that the money wired to those accounts by Bayoil was ultimately split between the allocation holder and the middleman.

The Russian middlemen used to facilitate this allocations were paid a commission usually amounting to 2 cents per barrel. For example, you can see here in Exhibit 20 that in June of 2000, Bayoil agreed to pay one of these middlemen, a company called Rusnaftaimpex, 2 cents a barrel for a contract in Phase 8.. As you can see, the Russian Presidential Council does not appear in this document. Instead, a company called Haverhill Trading suddenly appears and is somehow engaged in these transactions. This is because even the middlemen in these transactions had middlemen.

As detailed in our report, Cyprus-based Haverhill served as a pass-through for the money that Bayoil paid to the middlemen, to the Russian Presidential Council, and in some instances back to the Hussein regime in the form of surcharges.

We conclude that the allocation holders and the middlemen profited from these transactions, and Saddam profited as well. Millions of dollars wired by Bayoil into Cypriot bank accounts during phase nine and 10 were routed back to the Hussein regime. A letter displayed in exhibit 23 to the executive director of SOMO relates to a phase nine allocation to the Russian Presidential Council, and indicates that the middleman on the transaction, again Rusnaftaimpex, had paid surcharges due to the regime. As you can see, the document notes that Rusnaftaimpex delivered the surcharge payments directly to the Iraqi embassy in Moscow. This was a common practice for the Russian companies who paid surcharges under these oil transactions.

For all of the transactions where Bayoil was involved, Bayoil wired over $9.2 million into different bank accounts in Cyprus, Greece and Switzerland between July of 2000 and January of 2003. As indicated in exhibit 31, we estimate that approximately $609,000 went to the middleman companies, such as Rusnaftaimpex and Impexoil. The contracts connected to the presidential council in phases nine and 10 resulted in surcharge payments back to the Hussein regime, payments that we estimate to be in excess of $5.6 million.

Once the payments to the middlemen and the surcharges to the Hussein regime are deducted from the total payments made by Bayoil, there is a remainder of almost $3 million. That is the amount we conclude went to the allocation holders, specifically Mr. Voloshin and Mr. Issakov, under the auspices of the Russian Presidential Council.

Thank you again for allowing me to summarize our findings, and I look forward to any questions you have on this matter.

SEN. COLEMAN: Thank you, Mr. Groves.

Mr. Greenblatt, are you going to pick it up from here? And then we'll go to Mr. Berkovitz.

MR. GREENBLATT: Thank you. Thank you again for the opportunity to to present additional evidence.

This presentation will introduce evidence that the subcommittee obtained establishing that the Hussein regime granted oil allocations to former French Minister of the Interior Charles Pasqua and recently reelected member of the British Parliament George Galloway. The evidence establishes that Pasqua refused to sign a letter for the Iraqis concerning the allocations because he, quote, "feared political scandals." The evidence also indicates that Galloway appears to have used a children's cancer foundation in at least one transaction.

I'll start with a sampling of evidence concerning the allocations granted to Charles Pasqua.

The first exhibit, Exhibit 8-A, is a handwritten note written by the executive director of SOMO, the State Oil Marketing Organization, that he sent to the minister of oil. The subject line of the note is, quote, "The French personality: Charles Pasqua." In the first line of the letter, SOMO indicates that Saddam Hussein personally approved the allocation to Charles Pasqua, stating, quote, "the president leader has approved the allocation of 3 million barrels to the French personality, Charles Pasqua."

The note goes on to say that the Iraqis requested that Pasqua sign a letter concerning one aspect of the transaction and that he refused to do so. According to the note, Pasqua refused to sign the letter because he feared political scandals.

The next exhibit, which is displayed on Exhibit 8-B, is a letter written by Tariq Aziz's chief assistant.

In that letter, he informs SOMO that the identity of Pasqua's agent -- he informs SOMO of the identity of Pasqua's agent and indicates that the agent, quote, "represents Mr. Pasqua in receiving the oil allocations allotted to the latter."

I should note that Pasqua's agent, Bernard Guillet, was detained two weeks ago for charges relating to oil-for-food transactions.

The last exhibit appears on 8-D. That exhibit is another letter from the executive director of SOMO, in which he informs the oil minister that everyone who received an allocation in Phase 6 of the program requested an increase in their allotment. At the bottom of the letter is a handwritten note indicating that Tariq Aziz, quote, "endorsed" an increase of 1 million barrels to Pasqua's allocation.

Attached to the letter, which appears on the right side of the exhibit, is a chart created by SOMO, reflecting the requests for additional barrels of oil. Under the headings "France" and "special requests," the chart states "Charles Pasqua" and indicates that his purchasing agent had contracted for 3 million barrels of oil. It also indicates that Pasqua requested an additional allotment of, quote, "unspecified volume." These documents are a mere sampling of evidence accumulated by the subcommittee that establishes that Charles Pasqua was granted oil allocations under the program.

Turning to the evidence concerning Mr. Galloway, the evidence indicates that Galloway received allocations in six phases of the oil- for-food program, amounting to a total of 20 million barrels of oil. Saddam Hussein's chief lieutenant, Vice President Taha Yasin Ramadan, confirmed in an interview with the subcommittee that Galloway received allocations. In addition, as reflected in the poster presented now, Ramadan confirmed that Galloway was granted allocations, quote, "because of his opinions about Iraq. He wants to lift embargo against Iraq."

Other Hussein regime officials confirm that Galloway received allocations under the oil-for-food program. In fact, just yesterday the subcommittee re-interviewed a senior member of the Hussein regime to confirm whether Galloway received allocations. The subcommittee asked the following question:

"Did the Iraqis grant any oil allocations to George Galloway, a member of the British Parliament?" His answer? Yes.

The first series of exhibits reveal that Galloway received an allocation of 3 million barrels of oil in Phase 9 of the program. In the first exhibit, which is reflected in Exhibit 9, we see a letter from SOMO to the minister of oil requesting approval of Contract M/9/23. In identifying the contract, SOMO indicates that the contract was with a French oil company called Aredio, and next to that name the letter states "Fawaz Zureikat, Mariam Appeal." Yesterday the subcommittee verified with that senior member of the Hussein regime that this document was authentic and that the oil minister's signature was genuine. Regime officials interviewed by the subcommittee also confirmed that in these letters to the oil minister, the allocation recipient was identified in parentheses next to the purchaser's name. Accordingly,this document indicates that the recipient of this oil allocation was Mariam Appeal.

The Mariam Appeal is a foundation established by George Galloway, ostensibly to help a 4-year-old girl named Mariam, who was suffering from leukemia. Therefore, it appeals that -- it appears that George Galloway used a children's cancer foundation to conceal his oil transaction.

A different Ministry of Oil document further confirms that Galloway received this allocation. That document, which appears at Exhibit 10, is a chart created by SOMO after the fall of the Hussein regime that lists all oil allocations granted in phase nine of the program. Entry number 23 of that chart indicates that the oil for Contract M/9/23, the Aredio contract that we discussed a moment ago, had been allocated to George Galloway and his agent, Fawaz Zureikat. A senior regime official that was interviewed yesterday confirmed that Zureikat facilitated Galloway's oil transactions. Quote, "It's my understanding that Fawaz Zureikat is oil lifter for Galloway."

The next exhibit, Exhibit 12, is another letter -- another of the SOMO letters requesting approval from -- of the contract -- of a contract from the oil minister. The contract is identified as Contract M/11/04, with Middle East Advanced Semiconductor, and next to the company's name appears -- parentheses -- "George Galloway." Once again, these forms are authenticated by senior Hussein regime officials.

According to those officials, the names in parentheses next to the name of the purchasing company indicates the allocation recipient. For instance, the subcommittee asked one senior regime official the following question concerning this very document. Question: Does the phrase -- parentheses -- Mr. George Galloway -- mean that the allocation for this oil was granted to George Galloway? Answer: Yes.

The allocation -- I'm sorry, the letter -- also indicates that an individual named Fawaz Zureikat was involved in the transaction. Once again, a senior Hussein regime official informed the subcommittee that "Zureikat was the oil-lifter for the benefit of George," close quote.

In the next exhibit, numbered Exhibit 15, we see the same form yet again. A letter from SOMO to the oil minister, requesting approval of an oil contract. In this form, SOMO indicates the contract, M/12/14, was signed, once again, with Middle East Semiconductors -- quote, parentheses, on behalf of Mr. George Galloway, close parentheses -- and requests the oil minister's approval. Once again, we reconfirmed with the senior Iraqi official from the Hussein regime that this letter was indeed genuine, and that the oil minister's signature at the bottom was authentic.

In addition, we confirmed that the form indicated that the oil had been allocated to Galloway. That official was asked -- quote, "Does the phrase" -- quote -- "on behalf of Mr. George Galloway mean that the allocation for this oil was granted to George Galloway?" His answer? Yes.

The subcommittee obtained additional evidence that the oil for this contract had been allocated to Galloway. That evidence is captured in Exhibit 14, a SOMO letter informing the financial department of pending oil contracts. For contract M/12/14, someone notified the financial department of the contract, identifying the contract as contract number M/12/14, with Middle East ASI, parentheses, Mr. Galloway. Middle East ASI was Fawaz Zureikat's company and, according to this document, it bought the oil that had been allocated to Mr. Galloway. This corresponds with the testimony that (sic) senior regime official, who confirmed to the subcommittee for a second time that Fawaz Zureikat is oil-lifter for Galloway.

Subcommittee obtained another example of this form for the last contract involving Galloway. That letter, which is Exhibit 14, is SOMA's notification to the financial department for contract number M/12/14.

MR. : (Off mike.)

MR. GREENBLATT: That is Exhibit 14.

Once again, the document indicates that Galloway received the oil allocation, and that Fawaz Zureikat's company signed the contract for that oil. All told, the subcommittee obtained evidence related to four of Galloway's allocations. That evidence matches parallel evidence presented in the subcommittee's reports on Vladimir Zhirinovsky, the Russian Presidential Council, and Charles Pasqua. In addition, the subcommittee authented (sic) the Galloway evidence with senior regime officials involved in the allocation of oil.

With that, I'll close my presentation; I'll be happy to answer your questions.

SEN. COLEMAN: Thank you, Mr. Greenblatt.

Mr. Berkovitz.

MR. BERKOVITZ: Thank you, Mr. Chairman, Senator Levin. My name is Dan Berkovitz; I'm minority staff counsel to the subcommittee.

The minority staff report compliments the other subcommittee reports discussed today. Whereas those reports focus on allocation holders and purchasers of Iraqi oil, the minority staff report examines what eventually happened to that oil, how so much of that oil got into the United States, and what the United States did to attempt to put an end to the illegal surcharge payments.

Additionally, the minority staff report examines the largest single incident of oil being exported from Iraq by ship in violation of the U.N. sanctions -- what is sometimes referred to as the Khor al-Amaya shipments, in reference to the Iraqi port where these shipments originated.

From September 2000 until late 2002, the Iraqi government demanded that purchasers of Iraqi oil under the oil-for-food program pay a per-barrel surcharge to the Iraqi regime. These surcharges were above the official sales price for Iraqi oil approved by the United Nations and were to be paid into accounts outside the control of the United Nations. These payments violated the U.N. sanctions on Iraq. The surcharge amount varied, from a low of 10 cents per barrel to a high of 30 cents per barrel. Detailed internal records kept by the Iraqi Oil Ministry's State Oil Marketing Organization, or SOMO, show that during this period, Iraq collected about $228 million in illegal surcharges.

During this surcharge period, the United States was one of the largest customers of Iraqi crude oil, importing an average of about 660,000 barrels of oil per day. The U.S. imported a total of about 525 million barrels of Iraqi oil over this period. U.S. companies did not buy this oil directly from Iraq, but rather from oil traders, allocation holders and various other middlemen that were unique to the Iraqi oil trade.

Using SOMO records on surcharge amounts assessed and collected, and U.S. Energy Information Administration data on U.S. oil imports, the minority staff estimates that about $118 million in illegal surcharges were paid on Iraqi barrels of oil sent to the United States. This means that oil imported into the U.S. financed about 52 percent of the illegal surcharges paid to the Hussein regime.

Oil destined for other countries accounted for about $110 million in illegal surcharges, or about 48 percent of the total illegal surcharges paid. This information is depicted in the chart. These percentages roughly correspond to the percentages of Iraqi oil sent to the U.S. and elsewhere during this period.

With one notable exception, the subcommittee minority staff has not seen evidence showing that U.S. companies knowingly purchased oil on which a surcharge had been paid. U.S. companies buying Iraqi oil from traders typically included a clause in their contracts requiring the seller to warrant that no surcharge had been paid. However, other than this one notable exception, the subcommittee ,minority staff did not investigate whether any U.S. companies knowingly purchased oil on which a surcharge had been paid.

The notable exception involves a U.S. company called Bayoil. Bayoil is a privately held company headquartered in Houston, Texas, with affiliates in the Bahamas, Switzerland, and Luxembourg. During the surcharge period, Bayoil was the largest provider of Iraqi oil for the United States. Bayoil provided about 200 million barrels to U.S. oil companies, or almost 40 percent of American imports of Iraqi oil during this period.

Our examination of Bayoil's activities has found extensive evidence that Bayoil paid or financed illegal surcharges on Iraqi oil. Using Bayoil, Iraqi and other documents, we were able to trace the history of 102 cargoes of Iraqi oil that Bayoil purchased and imported into the United States. We found that, together, the illegal surcharges paid on those cargoes totalled at least $37 million.

Documents obtained by the subcommittee also indicate Bayoil knowingly participated in a trade boycott in violation of U.S. law. One of the Bayoil officers signed and notarized a statement attesting, and I quote, "We herewith confirm never to have sold, directly or indirectly, to Israel, and further confirm that this policy will remain permanently in force during the entire validity of our contract." That statement was signed and notarized by the chairman of Bayoil Supply and Trading, Limited.

In interviews with subcommittee staff, senior Hussein-regime officials currently in detention, including former Vice President Taha Yasin Ramadan and former Presidential Secretary Abid Hamid Mahmoud, who was also Saddam Hussein's chief bodyguard, confirmed that Iraq prohibited the purchasers of Iraqi oil from subsequently selling it to Israel.

We also found evidence that Bayoil persistently and openly lobbied U.S. and U.N. officials to influence the pricing of Iraqi oil and opposed U.S. efforts to address the surcharge problem by raising the official sales price. Bayoil also helped Iraq and Russia devise objections to U.S. and U.K. pricing proposals to stop the surcharges, and even on occasion drafted documents for Russian companies to send to U.N. officials protesting pricing policies that set Iraqi oil prices very close to world market rates.

We also found a significant contrast in the efforts of U.S. officials to stop the illegal surcharges. At the United Nations, U.S. and U.K. officials worked aggressively and creatively to develop pricing policies for Iraqi oil to prevent Saddam from imposing surcharges. After two years of effort, the United States and United Kingdom moved the United Nations to a so-called retrospective pricing system, which delayed setting a price on Iraqi crude until after the oil had been loaded onto the ships. This delay allowed the United Nations to set prices which closely reflected actual market prices and made it uneconomical for Iraq to also demand payment of a per-barrel surcharge. By September 2002, this system finally "squeezed out" the surcharges.

In contrast, at the same time the United States was making it harder for Saddam to impose illegal surcharges, the United States took only minimal steps to ensure that U.S. companies were not paying surcharges. In late 2000 and early 2001, the State Department and the Treasury Department's Office of Foreign Assets Control, or OFAC, the office with primary responsibility for enforcing U.S. sanctions, informed U.S. oil companies that it would be illegal to pay any surcharges. Despite the knowledge that Saddam was continuing to impose surcharges on Iraqi oil and that the U.S. was importing very large amounts of Iraqi oil, the State Department and OFAC took no additional steps to ensure that no American companies were paying surcharges, or even to inquire about the nature of the trade in Iraqi oil.

U.S. authorities also failed to respond to requests by United Nations officials for assistance in obtaining information about potential sanctions violations by Bayoil. In early 2001 the U.N.'s oil overseers obtained information that Bayoil may have diverted to Europe shipments of Iraqi oil that the U.N. had approved for sale to North America.

Shortening the final destination in this manner, called transshipment, would have violated the sanctions and Bayoil's U.S. license. It also would have earned Bayoil additional profits, which was of particular concern at that time, in early 2001, because such profits could have been used as a source of funds to pay illegal surcharges. In early June 2001, the U.N. Oil Overseers formally asked Bayoil to provide details about these shipments. Bayoil refused. The U.N. then requested the U.S. Mission to the U.N. to require Bayoil to provide the information, since Bayoil was a U.S. company. In mid August 2001, the State Department formally asked OFAC to obtain the information from Bayoil.

Meanwhile, the U.N. Overseers continued to demand that Bayoil provide them with a complete accounting of the shipments in question. Twice the overseers threatened to inform the Security Council of Bayoil's lack of cooperation Each time Bayoil claimed the U.N. Overseers were prejudiced against them and refused to provide the information. The U.N. again complained to the U.S. Mission to the U.N. In early 2002, the State Department again asked OFAC -- informally it appears -- to get the information from Bayoil. In late April 2002 -- eight months after the State Department's initial request -- OFAC asked Bayoil to report on its licensed activities. In May 2002, Bayoil responded by stating it had not engaged in any licensed activities since 1997. OFAC then telephoned Bayoil to ask permission to release Bayoil's response to the State Department and the U.S. Mission to the U.N.

In July 2002, 11 months after the initial request, Bayoil agreed on the condition that the response not be disclosed to anyone else, which presumably included the United Nations. In the end, OFAC never provided Bayoil's letter -- which was non-responsive to the U.N.'s concerns in any event -- to either the State Department or the United Nations. The U.S. government failed to provide the U.N. with any meaningful assistance, and the U.N. never obtained the requested information. Neither OFAC nor the State Department conducted any further inquiry into Bayoil's role in the Iraqi oil trade. Last month, the Justice Department indicted Bayoil and its three principal officers for various crimes resulting from the payment of illegal surcharges to Iraq.

The minority staff report also examines the Khor al-Amaya shipments. Over several weeks in February and March 2003, Iraq loaded seven large oil tankers with a total of over 7.7 million barrels of oil at the port of Khor al-Amaya in southern Iraq, at the entrance to the Persian Gulf. These were the first loadings at Khor al-Amaya since the port had been damaged during the Iraq-Iran war in 1980. Iraqi oil exports from Khor al-Amaya were not authorized under the oil-for-food program and did not have U.N. approval. They constituted the largest single instances of an illicit oil shipments out of Iraq by ship during the sanctions period.

The oil tankers had been chartered by a Jordanian company acting on behalf of the Jordanian government. In exchange for the 7.7 million barrels oil, the government of Jordan wired over $53 million in hard currency to the government of Iraq. Subcommittee interviews with high-ranking Iraqis currently in detention, again, including former vice president Taha Yasin Ramadan, confirm that these shipments were authorized at the highest levels of the Iraqi government, and the oil proceeds went to bank accounts under the control of the Hussein regime.

Each of the large tankers docked at the Khor al-Amaya terminal, filled its tanks with Iraqi crude oil, and then sailed for the port of Fujairah, in the United Arab Emirates, as shown on the second chart. Other shipping interests in the Persian Gulf who saw the oil tankers characterized the shipments as blatant violations of U.N. sanctions. Press reports asked questions about how the ships were able to travel the Persian Gulf with impunity. U.N. inspectors and oil overseers interviewed by the subcommittee stated they were surprised by the presence of the oil tankers.

One U.N. oil overseer directly contacted the captain of the first ship to dock at Khor al-Amaya and told the ship it was carrying oil in violation of U.N. sanctions.

In contrast, shipping communications obtained by the subcommittee indicate that U.S. personnel appear to have had advance warning of the shipments and allowed them to continue. These communications involve a ship's captain, some shipowners, the Jordanian company that chartered the seven ships, and an American shipbroker which was also involved in some of the charters.

These communications indicate the ships traveled with the full knowledge and acquiescence of the Maritime Interdiction Force -- the MIF -- the naval force patrolling the Persian Gulf to prevent smuggling of oil from Iraq. The MIF was then under the command of a U.S. naval officer. The message indicates, for example, that the Jordanians instructed their ship captains to contact Commander Harry French, a U.S. naval officer then assigned to the MIF, with the following message, quote: "We are loading crude oil from the terminal at Khor al-Amaya for Millenium" -- which was the name of the Jordanian company -- do you have any objection?" Shipping records obtained by the subcommittee and contemporaneous reports indicate the MIF officers never objected to any of these shipments. Instead, the MIF allowed the ships to pick up their cargoes and leave unfettered.

When objections were raised publicly to the Khor al-Amaya loadings, the U.S. company involved in chartering the ships for Jordan became concerned about the legality of the shipments and decided to check with U.S. authorities to ensure that the company was not a party to a transaction that violated U.S. law, U.N. sanctions or U.S. foreign policy. The company called the U.S. Commerce Department to discuss the shipments.

The general counsel of the company, who made the call, was eventually put in touch with an official from the State Department. The general counsel explained to her the circumstances of the shipments. Two hours later, the official, Amy Schedlebauer, called back and said, according to a contemporaneous e-mail from the general counsel describing the conversation, that her office was, quote, "aware of the shipments and has determined not to take action." The general counsel told her there was another shipment on the way, and the State Department officer, in the general counsel's words, quote, "repeated the quoted response and would say no more."

It is not clear who instructed the State Department official to convey this information to the U.S. company, or who within the Department of Defense instructed Commander Harry French not to object to the Khor al-Amaya shipments. Despite written requests by the subcommittee chairman and ranking member, and repeated verbal and e- mail requests from both majority and minority staffs for unclassified briefings, neither the State Department nor Defense Departments has provided any information on why the United States permitted these apparent violations of the Iraqi sanctions.

Thank you. Happy to answer questions.

SEN. COLEMAN: Thank you very, very much, Mr. Berkovitz.

We will do seven-minute rounds for this panel.

Mr. Reed (sp), I wonder if we can get Exhibit 13, if someone would put Exhibit 13. (Pause.) In Exhibit 13, at the very bottom, you have Middle East Advanced Semiconductor.

And this, Exhibit 13, relates to -- and I think it's Exhibit 12, this is the Contract M/9/23, I think in Exhibit -- excuse me -- Exhibit 10, I think that Fawaz Zureikat, George Galloway, Aredio Petroleum, and I believe that is the -- in Exhibit 9, this would be the one from Mariam's Appeal. So this is a chart, then, that lays out the surcharge for the allocation to Mariam's Appeal. Is that correct?

MR. GREENBLATT: I think you might be referring to Exhibit 11, is the surcharge chart for that particular transaction.

SEN. COLEMAN: Exhibit 13, then, is what contract?

MR. GREENBLATT: For the next transaction. That's for the Phase 11 transaction; 11/04 is the contract.

SEN. COLEMAN: And that one was to Fawaz Zureikat and George Galloway, is that correct?

MR. GREENBLATT: That's correct.

SEN. COLEMAN: Again, Aredio Petroleum?

MR. GREENBLATT: That was actually Middle East Semiconductor. They used two different companies. The first one, in Phase 9, was Aredio. The Phase 11 contract was with Middle East Semiconductors.

SEN. COLEMAN: And I don't think we can see it in that chart, but I believe in footnotes -- because of where you have Middle East Advanced Semiconductor kind of blown up over there, but that actually covers -- and I have the original here; it would be footnote 94 in the staff report. That also includes a listing for Machino Import, that allocation. And could you explain Machino Import, how that fits into this hearing?

MR. GREENBLATT: The Machino Import entry on these refer to a contract lifted by Machino Import that relate to the Zhirinovsky allocations.

SEN. COLEMAN: So what we have here -- and this chart was prepared after the fall of the Hussein regime, is that correct?

MR. GREENBLATT: That's exactly right.

SEN. COLEMAN: But you have in this chart both Zhirinovsky allocations, is that correct?

MR. GREENBLATT: That's right. That's right.

SEN. COLEMAN: And also Galloway allocations?

MR. GREENBLATT: That's right.

SEN. COLEMAN: So if one was just targeting somebody here, it would be kind of highly unusual that you'd be getting a multitude of companies. But we have checked Zhirinovsky going back, and there's absolutely no question in your mind as to the validity of the numbers of what's in this chart related to Zhirinovsky?

MR. GREENBLATT: That's right. And other numbers on there match documents from other sources. So the amount of oil lifted corresponds -- contract numbers, contract entities, they match with other documents that we have elsewhere that we've obtained from other sources.

SEN. COLEMAN: And what I'm trying to do here is kind of going through the exhibits. And what we see is a pattern, whether it's Zhirinovsky, Voloshin, or Galloway or Pasqua, the same -- the listing on the surcharge charts, the same kind of information, and the validity of those being validated. I believe if I look at Exhibit 9, the letter from -- this is Mariam's Appeal letter --

MR. GREENBLATT: That's right.

SEN. COLEMAN: And this is with a stamp of the Ministry of Oil, is that correct?

MR. GREENBLATT: That's right.

SEN. COLEMAN: And then you'd have the same for Exhibit 12, then at Exhibit 12, again, same form, same letter, same stamp --

MR. GREENBLATT: That's right.

SEN. COLEMAN: -- the name in parentheses being George Galloway.

MR. GREENBLATT: That's right.

SEN. COLEMAN: And Iraqi officials have identified the name in parentheses uniformly as the person who received the allocation, is that correct?

MR. GREENBLATT: That's right.

And they specifically identified this particular -- authenticated this particular document as well.

SEN. COLEMAN: And then, would you have similar documents, then, for Voloshin and Zhirinovsky, again, documents from the Ministry of Oil, same stamp, same parentheses --

MR. GREENBLATT: The identical form with virtually identical information, depending on the specific terms of the contract, yeah.

SEN. COLEMAN: Can you talk to me a little more, then, about how these patterns fit together?

MR. GREENBLATT: Sure. The one thing that emerges from the Zhirinovsky allocation -- report from the -- from -- Russian Presidential Council report is that very pattern of documentation, as you described it, which includes the -- some of the requests for approval from the oil minister. If I were to sit here and list the number of these letters that we have, these forms that we have, we'd be here all night. And for each contract, they -- SOMO would send a request for approval from the minister of Oil. And in each one of those letters they would indicate the name of the person and company, and then indicate in parentheses the name of the allocation recipient.

SEN. COLEMAN: And how do we know that these documents are genuine?

MR. GREENBLATT: They corroborate with other documents related to the contracts that we see. For example, if you would put up Exhibit 6 -- Exhibit 6 is a letter, is two letters. One, on the left-hand side, is a letter from Vladimir Zhirinovsky informing SOMO that Nafta Moscow is the company that's going to sign the contract. That's the purchasing agent we discussed in my testimony. And he's informing SOMO that Nafta Moscow is going to sign the contract. On the right- hand side we have that very SOMO approval letter that they were requesting from the minister of Oil in which they discuss the contract. And that is sort of the culmination of Zhirinovsky's letter on the left-hand side.

SEN. COLEMAN: And reference specifically to the Galloway documents, we've verified the signature of the minister of Oil on these Ministry of Oil letters?

MR. GREENBLATT: That's exactly right.

SEN. COLEMAN: Mr. Groves, in dealing with the Russian companies, we appear to have a number of sham companies that is (sic) simply set up for the purpose of facilitating the punitive surcharge. Is that correct?

MR. GROVES: That's correct.

SEN. COLEMAN: Can you give me a better understanding -- I'd -- I know that we've looked into these -- some of these companies -- I think it was Impexoil, the Russian engineering company, a company in Cyprus that doesn't need -- doesn't appear to exist other than on paper. How were these companies allowed to participate in these transactions?

MR. GROVES: Well, once the contract was signed between the nominal purchaser and SOMO, that was the public face of the dealing. That is the contract that would be sent to the United Nations for review and approval. But the rest of the deal happened completely under the radar. We have access to the key deal documents because of our access to Bayoil documents. It's through those that we found a lot about the guts of these transactions and how they use these pass-through companies in order to effect the surcharges. For the Russian companies, they didn't want to do a lot of wire transactions. This is based on our interviews. And they ultimately would want those surcharges to be paid in cash to the Iraqi embassy in Moscow. That was their preferred method of payment.

SEN. COLEMAN: But let -- with the Russian transactions, because we had Bayoil, an American company, we were able to get those documents. Is that correct?

MR. GROVES: Correct.

SEN. COLEMAN: And as a result of getting those documents, we know exactly how much was paid.

MR. GROVES: That's also correct.

SEN. COLEMAN: And then we were able to break it down to divide what was paid to whom, and what was left over -- the amount left over for the allocation holding?

MR. GROVES: Yes, sir.

SEN. COLEMAN: Which is consistent with the testimony of the regime officials, that the allocation holder got value from passing on those allocations to others?

MR. GROVES: Yes. The regime official said that that's the whole point. The point of the allocation is to create the profit margin that would be split between the allocation holder and the nominal contractor.

SEN. COLEMAN: Mr. Greenblatt, the letters, the charts, the summaries from -- all that we see in the Galloway case is completely consistent what with we see in the Zhirinovsky case, the Voloshin case, and the other case. Is that correct?

MR. GREENBLATT: Absolutely. If you look at Exhibit 45, you'll see another example. And this is the chart on -- that we saw earlier, where it has Galloway listed at Contract number 23, and then later in the chart we see an entry for Zhirinovsky under Contract 10 -- I'm sorry, 9/119. And Zhirinovsky is listed in the same exact manner as Galloway is listed in his Contract 9/23.

SEN. COLEMAN: One last question, Mr. Greenblatt, for this round Several officials identified as allocation recipients have issued categorical denials. I think they said that they have, quote, "have never bought a barrel of oil, never sold a barrel of oil." It's correct to say that the allocation holders, in fact, never did buy a barrel of oil or sell a barrel of oil. Is that correct?

MR. GREENBLATT: That's right. It's -- they're walking a line, where they're saying they never bought a barrel of oil, but that's not the question. The question is whether they traded in the allocations of the oil, the option to buy the oil.

SEN. COLEMAN: Thank you -- (inaudible.)

SEN. LEVIN: I'd like you to track for us again the relationship between Bayoil and the allocation holders. I think you indicated that Bayoil aggressively sought these allocations. Is that, first of all, correct?

MR. GREENBLATT: That's right.

SEN. LEVIN: All right. Then, give us the process. Use Zhirinovsky, for instance.


SEN. LEVIN: How would they contact Zhirinovsky, or vice versa?

MR. GREENBLATT: We do not actually have the actual initial contact between Bayoil and Zhirinovsky. We do have subsequent correspondence between them. What we do have is Bayoil courting the nominal purchaser, in that case, Nafta. We have other situations where they were courting companies, Russian companies named Sidanko. And that is documented in our report, and I'd be happy to show you where they are in the footnotes, if you like. But we have a series of letters. They wrote three letters to one company on one day, hounding them about getting a contract. That same day, they wrote to Nafta Moscow, hounding them to get -- sign up a contract. So they were quite proud of what they were doing.

SEN. LEVIN: All right. Now, we know that the allocation holders were committed to pay surcharges. Is that correct?

MR. GREENBLATT: According to the testimony of the senior Hussein regime officials, yes.

SEN. LEVIN: In addition to the testimony, we have the documents themselves, do we not, which say surcharge? For instance, I don't know what the new number of this one is, but it's old number 152. This is Zhirinovsky -- (pause) -- that's the footnote numbered 152. I don't know what the new document number is. Take exhibit number 9; it's the same thing. This is a Galloway allocation. I think the pattern here is the same.


SEN. LEVIN: Tell me -- okay. Take a look at -- this is a new number, exhibit number 9; it's footnote number 84. Down there where it says number 11 -- well, first of all, it reads, to the Oil minister, approval of exported crude oil contracts based on the approval of Your Excellency, please find below the details of the contract signed with -- then they say, "Zareikat" and "Mariam's (sp) appeal" in parentheses. Then -- read number 11 down there.

MR. GREENBLATT: Surcharge payable within one month of the date of loading each shipment.

SEN. LEVIN: So that this was explicit in this allocation, is that correct?

MR. GREENBLATT: That's right.

SEN. LEVIN: And the other allocations, the Zhirinovsky allocations?

MR. GREENBLATT: That is standard language.

SEN. LEVIN: Standard language as it explicitly states when the surcharge is going to be payable?

MR. GREENBLATT: That's right.

SEN. LEVIN: Now on one of the exhibits, I believe that when the surcharge was not paid -- let's see if I can find this exhibit number. I think it's number 12 or it's one you referred to.

MR. GREENBLATT: Number 12.

SEN. LEVIN: Here, it's exhibit number 12. This is another Galloway letter that refers to Mr. Galloway and Mr. Faroquat. And then, if you read the line relative to surcharge, what does it say there?

MR. GREENBLATT: It says surcharge, as per the instructions of your excellency, meaning the minister of oil, over the phone on December 11th, 2001 of not accepting the companies proposals unless they pay the debt incurred since phase eight.

SEN. LEVIN: In other words, this company, whatever that company was that was assigned the allocation, had not paid the surcharge in an earlier time period, is that correct?

MR. GREENBLATT: That's exactly correct.

SEN. LEVIN: And so explicitly, unless that surcharge which is owing that kickback, might as well use plain English, which is owing, is paid, then it says here that we don't accept the proposal of the company in this time period, is that --


SEN. LEVIN: -- correct?

MR. GREENBLATT: -- right.

SEN. LEVIN: All right. Now these efforts to, which you've described, to obtain surcharges first of all, that would go to the Iraqi regime were an effort to, were a violation of the Oil for Food Program, is that correct?

MR. GREENBLATT: Absolutely.

SEN. LEVIN: They were an assault, an attack on a U.N. program, is that correct?


SEN. LEVIN: They were an effort to undermine another U.N. program, which was the sanctions program, is that correct?

MR. GREENBLATT: All, all of these manipulations, surcharges and the allocations were designed to do that, yes.

SEN. LEVIN: To undermine the U.N. effort?


SEN. LEVIN: So we have in both, both of the, all of the testimony here actually, an effort made to undermine, attack, assault something that the international community had devised in the sanctions program and in the Oil for Food Program, is that a fair statement?


SEN. LEVIN: All right.

Now, my time's, my time's -- I'm still okay I guess. I looked at the wrong red light here.

Mr. Berkovitz, going back to the Khor al-Amaya incident, we wrote I believe the -- we here being the chairman and myself -- wrote to the Department of Defense on February 8th, 2002, a letter requesting certain information in an unclassified answer, is that correct? It's exhibit number 44.

MR. BERKOVITZ: That's correct.

SEN. LEVIN: And has the U.N. -- excuse me, has the Defense Department offered to give us any unclassified response to this letter?

MR. BERKOVITZ: No, Senator.

SEN. LEVIN: All they've offered is a classified briefing, is that correct?

MR. BERKOVITZ: Yes, sir.

SEN. LEVIN: Now how public were the events that are described in the chairman and my letter to the Department of Defense?

MR. BERKOVITZ: The events were reported almost contemporaneously in the oil trade press. There was a Wall Street Journal article about it that shortly followed. There've been renewed press articles about it this year and the State Department spokesman has addressed this in a State Department press conference, so it's out in the public domain.

SEN. LEVIN: All right.

And finally at exhibit number 45, well I guess it's still part of exhibit 44, we also, the chairman and myself wrote to the U.S. representative for U.N. management reform, Mr. Kennedy, on March 9th, thanking him first of all for his testimony in February, but then seeking certain unclassified information from the Department of State, is that correct?


SEN. LEVIN: And have they answered that letter at all?


SEN. LEVIN: All right.

Thank you.

Thank you, Mr. Chairman.

SEN COLEMAN: Thank you Senator Levin.

Senator Bennett.

SEN. BENNETT: Thank you very much to all three of you for the diligence with which you've pursued this.

I want to see from your examination of all of this if there's a pattern of purpose that can be identified here.

Ruling out Bayoil because I'm assuming Saddam Hussein or his ministers did not understand that Bayoil would be involved in this, why were the particular people whom you have identified as recipients of Saddam's largess chosen to be the recipients of Saddam's largess? I've listed three possibilities here from my own perspective, but I'm not into it deeply, nearly as deeply as you are.

One would be political influence. They would go after people who would be helpful to them in either the French, the British, or the Russian governments. We have nationals of those three countries said before us.

One would be we'll deal with anybody as long as he's willing to give us a kickback. We don't care whether he has influence or not, as long as he'll give us money back and it may be coincidence that the people we're talking about happen to be those who held governmental position in those three countries.

Or it may have been friendship.

Mr. Zhirinovsky made a number of trips to Iraq, was very outspoken in his support of Iraq, as we will hear from I believe it's Mr. Redding's (sic) in the next panel, looking at his testimony, he says the Iraqis may not, in Zhirinovsky's case, have made a particularly good investment. He never had that much influence in the Russian government and his trips were not popular with the Russian people as a whole.

Can you add to these three possibilities? They're not exhaustive by any means, I just jotted them down as I listened to you, and give us a sense of what Saddam in his mind, thought he was accomplishing by favoring these particular individuals with the opportunity to participate in this illegal activity.

MR. GREENBLATT: Your first and third ideas are quite close to the mark. Our interviews with the senior, his senior, Hussein regime officials confirmed repeatedly that they, this allocation system was designed to reward friends throughout the world and to undermine U.N. sanctions against Iraq. That was the ultimate goal.

And they gave allocations or they gave priority to those individuals and political parties throughout the world who supported them in that goal, regardless of where they were. With one slight exception: by in large, the regime had a general rule of not dealing with American companies and not dealing with British companies. We have documents to that effect in our report where they expressly say Iraq cannot deal with American companies. Doesn't necessarily mean that American individuals weren't granted allocations. But they were much more limited than those given out to Russians and French.

SEN. BENNETT: Well we have in this hearing a French former interior minister. Was he a friend or did they think he would help undermine U.N. sanctions or both? Zhirinovsky, we've talked about various Russian political leaders and Mr. Galloway a member of Parliament.

Was the assumption that Mr. Galloway or Mr. Pasqua would be able to able to influence their governments or was that primarily friendship on those two?

MR. GREENBLATT: I think it's both, it's six one, half a dozen of the other in the sense that their friends were the ones who supported them and I think there is no direct quid pro quo in terms of you get an allocation if you do this action --


MR. GREENBLATT: -- right now but there was a general sense of support.

SEN. BENNETT: Yes, sir?

MR. GROVES (?): Senator, you asked from the perspective of the Iraqis what was in Saddam's head. We did not interview Saddam but almost uniformly, all the other ministers that were interviewed viewed this as, that they weren't doing something wrong. That they were using or violating the U.N. resolutions in these allocations. They were viewing the process as using trade or using what limited contractual ability they had to give it to the people who they wanted to strengthen their political ties. It wasn't just the Oil for Food contract theater. They were also giving large contracts for the development of the Iraqi oil fields to Russian companies and French companies to encourage Russia and France to end sanctions so that the oil fields could be developed by those, by companies in those countries.

So in the Iraqi's mind, this was an extension of using trade for political benefits, strengthening the ties between the two. So that's what I think was in their mind.

SEN. BENNETT: But I'm assuming that they went to lengths to prevent public disclosure of what they were doing? You're saying in their mind this was an open trade kind of activity but they were at least smart enough to realize that they had to keep anybody from knowing about it?

MR. GROVES: Yes, they were not -- definitely.

SEN. BENNETT: Okay. Well, we've got Mr. Reddings -- or Reddaway, I'm sorry, I apologize, I read it wrong. Mr. Reddaway's comment that in Zhirinovsky they didn't get a very good investment. Off the top of your heads, do you have any sense as to whether or not Charles Pasqua or George Galloway was able to have any influence on the positions of their respective governments?

MR. GREENBLATT: I think it's difficult to say whether there was any specific action taken and how much one individual influenced national policy. I think that was clearly the intent of the Hussein regime, but it's hard to quantify. But they were certainly outspoken supporters of Iraq throughout the -- and opponents of the sanctions regime throughout the entire oil-for-food program.

SEN. BENNETT: Well, just one last observation. They may have done it for political influence and for friendship to reward those that were on their side, but they always made sure they got their kickback or friendship would disappear.

Thank you, Mr. Chairman.

SEN. COLEMAN: Thank you, Senator Bennett. I'm going to do one more five-minute follow-up round. I have just a couple more questions that I'd like to address. If we can put Exhibit 12 up; Exhibit 12, again, is the Ministry of Oil document regarding the Galloway Middle East ASI Company allocations.

And Senator Levin noted, as per the instructions (directed?) over the phone on 12/11/2001, of not accepting the company's proposal unless they paid their debt incurred since phase eight. If we then in Exhibit 13, that shows that the surcharge was, in fact, paid. Is that correct?

MR. GREENBLATT: What it would show is in Exhibit 9 -- I'm sorry, Exhibit 11. Exhibit 11. That will show that the surcharges paid by the previous allocations had been paid. What's interesting is in Exhibit 13, it actually shows that Middle East Semiconductor was delinquent in paying that surcharge. But up until then, it did lift the oil, which indicates that it had paid off the previous surcharges, which amounted to $304,000.

SEN. COLEMAN: Senator Bennett raised a question; I think, Mr. Berkovitz, you responded to that. In fact, the Iraqi former regime officials said that there was purpose and reason for these surcharges; that, in fact, Iraq needed cash and they felt it was certainly justifiable that these surcharges were paid. Is that correct, Mr. Berkovitz?

MR. BERKOVITZ: Saddam felt that the middlemen were making excessive profits off of Iraqi oil and that it was really money that belonged to the Iraqi people. So he wanted to get some of it back. That seems to be what the minister said was in his mind.

SEN. COLEMAN: I really want to get back to the tone of the interviews with the former officials. They were not -- when they were questioned, they were not pointing fingers and looking for leniency by naming names. In fact, when they discussed the allocations to Galloway or to Voloshin or to Zhirnovsky, they felt there was nothing wrong. They thought these folks were -- they were doing exactly the right thing. There was nothing improper about it, that they had perfect right to provide these allocations to folks that were friendly to the regime or that opposed sanctions. Is that correct?

MR. BERKOVITZ: That's correct. They were actually proud of what they were doing with the system.

MR. GREENBLATT: And they felt that they were being quite creative, in many instances, of how to evade the rules.

SEN. COLEMAN: But there wasn't any sense that they were looking for leniency by naming names. Rather, they were clearly affirming, "This is the way we did business. We thought there was a justifiable reason for doing business and there wasn't anything improper about this." Is that a fair statement?

MR. BERKOVITZ: That's correct.

SEN. COLEMAN: The question Senator Bennett asked of whether there was evidence of specific actions regarding the allocation -- I do believe, as I review the record, that in regard to the Russians in particular, the issue of the whole -- the issue of retroactive pricing -- without getting into all the complexities, the U.S. and Britain pushed for a retroactive pricing mechanism which would make it difficult for there to be enough extra cash to pay the surcharge. And is there evidence in the record that, in fact, allocations had an impact on that specific issue?

MR. GROVES: The evidence in the record and from the interviews indicates a broad pattern and a broad strategy to influence all countries on the Security Council, or several countries on the Security Council, including Russia. Their opposition to retroactive pricing, the effort that the U.S. and the UK were trying to stop the surcharges, stop the excessive profits, was thwarted by the Russian members and others.

The closest we have to an event where something that a member state did that resulted in reward came in the spring of 2001, where there was going to be a resolution floated to institute smart sanctions, where they were going to tighten up the sanctions, restrict border trade. And the Russian federation made it known that if any such resolution was introduced, they would veto it.

The word got back to the Hussein regime, and they specifically did rewards to the federation, both in oil allocations and on the humanitarian contracts, because of that action. And I think one of the witnesses on the third panel will be able to address that matter in more detail.

SEN. COLEMAN: Thank you, Mr. Groves. And I just want to make a statement, a statement actually to the benefit of Senator Levin. Mr. Berkovitz, I think it's important to look at American companies involved and whether they paid the surcharges. Your analysis notes that Bayoil was affiliated with several transactions involving $37 million in surcharges. And I want to state, I think it's important that we continue to follow that, that we continue to look at that.

And then the other statement I want to make is I know we have sent two chairman's letters to the State Department and the Department of Defense trying to get additional information on the Khor al-Amaya incident, and I have not been satisfied with the response. And I want to state to the ranking member that I intend to pursue this and we need to follow up on both those issues again.

Senator Levin.

SEN. LEVIN: Thank you for both of those statements, Mr. Chairman.

I'd like you to look at some documents which don't have exhibit numbers. They're part of the staff report, but they weren't given exhibit numbers. So it may be hard for me to do this, but I'm going to give it a try. It's PSI staff reporter's Footnote 117.

MR. GREENBLATT (?): Which report?

SEN. LEVIN: Which report? Oh, on the Russian presidential -- I see what you're saying -- on the Russian presidential council. Is that something you can get at real quickly?

MR. GROVES: Yes, Senator, I can.

SEN. LEVIN: Okay. I'm going to ask you to do the same thing on three other documents. This says, "We've entered into a contract with Rose Impex (ph) Company" -- a long Russian name -- "Mr. Issakov." Now, is he part of the presidential council? Is that Mr. Issakov?

MR. GROVES: No, our information is that he is a close confidant of the head of the Russian presidential council, who is the point man on many of these contracts.

SEN. LEVIN: Gotcha. Okay. What I'm -- I'd like to make this document and a number of similar documents part of this record, although they're part of the staff report already.

SEN. COLEMAN: They'll be entered directly wihtout ovbjectin.

SEN. LEVIN: And it shows a pattern here. I mean, this is the same type of document that we've referred to before that shows, "We've entered into a contract with a company," and then after the company is a parenthesis. It says, "Mr. Issakov." That's a contrast with the company. It says it must be under the oil-for-food program rules. Is that right?

MR. GROVES: That's correct. These documents and all of the documents in this category fall into what, in a courtroom, would be called documents kept in the ordinary course of business.

SEN. LEVIN: All right, but it's a pattern. They name a company which could be a phony company, could be a real one -- either one; could be a real company. Is that correct?

MR. GROVES: That's correct.

SEN. LEVIN: It's an entity other than an individual. Bu then it says says down here on all these documents, "Destination of crude oil." This is Europe and/or America. So that means that the oil minister knew in the internal documents that this could go to America, but they couldn't deal directly to sell to America under their policy. Right?

MR. GROVES: That's correct. They knew that much of their crude was destined for North American markets.

SEN. LEVIN: But they go through the appearance, in their own public statements or their own documents that are filed, that they don't deal with an American company directly but they know that the oil could end up in America.

MR. GROVES: Yes, it was an open secret.

SEN. LEVIN: It's just a charade that they were putting on publicly. Is that correct?

MR. GROVES: That's correct.

SEN. LEVIN: But even their own documents didn't even try to maintain that charade.

MR. GROVES: They did not.

SEN. LEVIN: All right, now, the same thing is true, is it not, with three other documents which I'll give you. These are the documents in the same report. First of all, it's Footnote 152. This is Zhirinovsky, Footnote 152. And I'll just take a minute on three documents which look like they have the same pattern. They are all Zhirinovsky documents, 152, 170 and 181. And if you could -- it's kind of hard to ask you to look at three documents at the same time, but this is what these documents show me: Number one, these are all Zhirinovsky documents, number one; in parentheses, after the name of company. Is that correct?

MR. GROVES: That's right.

SEN. LEVIN: And there are three different companies used here. Is that correct?

MR. GROVES: That's right.

SEN. LEVIN: The Machino (ph) Import is one. Lukhoil (ph) is another. And I take it back. The third one is the same as the first; Machino (ph) Import. So there's two different companies.

MR. GROVES: That's right.

SEN. LEVIN: All right. But Zhirinovsky's name appears in parentheses in all of them.

MR. GROVES: That's right.

SEN. LEVIN: And all of them show that the destination is Europe and/or America. Is that correct?


SEN. LEVIN: Okay, thank you. Thank you, Mr. Chairman.

SEN. COLEMAN: Thank you. This panel will be excused.






SEN. COLEMAN: I'd like to call the second panel: Mr. George Galloway, member of Parliament for Bethnal Green and Bow, Great Britain. Mr. Galloway, I'm pleased to have you before the committee today.

What I'm going to do is briefly summarize the evidence before I give you a chance to give your sworn testimony. The oil-for-food program was used to support those who were favorable to Iraq, former Iraqi Deputy Prime Minister Tariq Aziz and Iraqi Vice President Taha Yasim Ramadan confirmed this. I would think that you would admit that your efforts to oppose the sanction were well-received by the regime. I know it's been quoted to you many, many times, but your, I would say, infamous statement to Saddam Hussein on January 21st, 1994, where you said to Saddam: Your Excellency, Mr. President, I greet you in the name of many thousands of people in Britain who stood against the tide and opposed the war and aggression against Iraq. We continue to oppose the war by economic means, which is aimed to strangle the life out of the great people of Iraq.

You then go on to say he greets you in the name of the Palestinian people. You went on to note that, I thought the president would appreciate knowing that even today, three years after the war, I still meet with families who are calling their newborn son Saddam.

You went on ultimately at the very end to say, sir, I salute your courage, your strength, your indefatigability. And I want you to know we are with you. And I believe it was in Arabic, (Hata el nasa hata el nasa hata el quds ?), which means until victory, until victory in Jerusalem.

And I would also note that you had stated that you deeply regret those comments, and that the comments were not aimed directly at Saddam, but they were aimed at the Iraqi people.

In the fall of 1999 you headed a two-month London-to-Baghdad bus trip to gain support for lifting the sanctions on Iraq. We have your name on Iraqi documents, some prepared before the fall of Saddam, some after, that identify you as one of the allocation holders, that your allocations had been used by Fawaz Zureikat, operating under the name of Aredio Petroleum, and Middle East Advanced Semiconductor to actually lift the oil.

We know, too, based on the statements of former Iraqi officials as well as some documents, and in the cases of Vladimir Zhironovsky and Aleksander Voloshin correspond to documents that allocation holders knew that surcharges or oil allocations were paid to Saddam Hussein, and that allocation holders were aware of this and responsible for the payments.

We have also heard testimony regarding several documents retrieved from the Iraqi Ministry of Oil that demonstrate how Iraq allocated oil to its friends and allies. Exhibit 13, which you've seen, displayed a SOMO chart that demonstrated Vladimir Zhirinovksy's dealing with Mishino (ph) Import in phase 11. That chart also lists contract M1104 with Middle East Advanced Semiconductor.

Footnote 93, your testimony regarding the SOMO commercial invoice dated June 27th, 2002, that shows Middle East Semiconductor loaded 2,360,860 barrels of Iraqi crude oil pursuant to some SOMO's of crude oil sales contract M1104.

Exhibit 12, we heard testimony regarding correspondence from the executive director of SOMO to the Iraqi oil minister providing details of contract M1104 listing your name in parenthesis next to Middle East Advanced Semiconductor and Fawaz Zureikat, who we know listed the oil.

Again, statements of detainees including former Vice President Ramadan confirm that the name in parenthesis, your name, is the allocation holder.

We heard testimony regarding contract M1104 which was signed on December 12th, 2001, between SOMO and Fawaz Zureikat, president of Middle East Advanced Semiconductor. We heard testimony regarding SOMO commercial invoice B13201 that shows Aredio Petroleum lifted 1,014,403 barrels of Iraqi oil pursuant to SOMO crude sales contract M923.

Exhibit 45, we heard testimony regarding SOMO chart entitled crude oil allocations during phase nine of the memorandum of understanding. It indicates contract M923 was executed between SOMO and Mr. Fawaz Zureikat slash George Galloway slash Aredio Petroleum.

Exhibit 9, we also heard testimony regarding a memo from the executive director of SOMO to the oil minister requesting approval of contract M923 The document includes an official ministry of oil stamp dated 1/15/2001, and provides detail of the contract M923, signed with Aredio Petroleum Company, parens, Fawaz Zureikat, dash, Mariam's Appeal, indicated as the allocation recipient for contract M923 was Fawaz Zureikat, Mariam's Appeal.

Mr. Galloway, as I indicated in my opening statement, this is not a court of law. This committee has simply made available information obtained during the investigation from interviews with former Iraqi officials, as well as Iraqi documents that lay out how the oil-for- food program works, how allocations were given to favored friends, allocation holders made substantial commissions from those allocations to oil companies, what Ramadan called compensation for support, what another official in talking about another allocation holder said, of course they made a profit. That's the whole point. Surcharges on oil contracts given back to the Saddam regime were the responsibility of the allocation holder.

The evidence clearly identifies you as an allocation beneficiary to transfer the allocations to Fawaz Zureikat, who became chairman of your organization Mariam's Appeal. Senior Iraqi officials have confirmed that you in fact received oil allocations, and that the documents that identify you as an allocation recipient are valid.

If you can help provide any evidence that challenges the veracity of these documents or the statements of former Iraqi officials, we would welcome that input.

Mr. Galloway, you are appearing before the subcommittee without asserting any privilege or immunity. Indeed your appearance before the subcommittee is entirely voluntary and on your own accord. No subpoena was issued to secure your appearance.

You are appearing before the subcommittee concerning matters that do not arise out of the performance of any of your official duties as a member of the British Parliament, but instead concern actions taken by you in your capacity as a private citizen.

Before we begin, pursuant to Rule 6, all witnesses who testify before this subcommittee, requires you to be sworn. At this time I would ask you to rise and please raise your right hand.

Do you swear the testimony you are about to give before the subcommittee is the truth, the whole truth and nothing but the truth, so help you god?


SEN. COLEMAN: We will be using a timing system today, Mr. Galloway. You have 10 minutes for an opening statement. If you need more time, we will certainly accommodate that. And you may proceed.

MR. GALLOWAY: Senator, I am not now nor have I ever been an oil trader. And neither has anyone on my behalf. I have never seen a barrel of oil, owned one, bought one, sold one, and neither has anybody on my behalf.

Now I know that standards have slipped over the last few years in Washington. But for a lawyer you're remarkably cavalier with any idea of justice.

I am here today, but last week you already found me guilty. You traduced my name around the world without ever having asked me a single question, without ever having contacted me, without ever having written to me or telephoned me, without any contact with me whatsoever.

And you call that justice.

Now I want to deal with the pages that relate to me in this dossier. And I want to point out areas where there are, let's be charitable and say, errors. And then I want to put this in the context that I believe it ought to be.

On the very first page of your document about me, you assert that I have had many meetings with Saddam Hussein. This is false. I have had two meetings with Saddam Hussein, once in 1994 and once in August of 2002.

By no stretch of the English language can that be described as many meetings with Saddam Hussein. As a matter of fact I've met Saddam Hussein exactly the same number of times as Donald Rumsfeld met him. The difference is, Donald Rumsfeld met him to sell him guns, and to give him maps the better to target those guns.

I met him to try and bring about an end to sanctions, suffering, and war. And on the second of the two occasions I met him to try to persuade him to allow Doctor Hans Blix and the United Nations weapons inspectors back into the country. A rather better use of two meetings with Saddam Hussein than your own secretary of state for defense (sic) made of his.

In the same opening paragraph, you assert that I was an outspoken supporter of the Hussein regime. This is false. I have brought along here a dossier, a dossier for all the members of your committee, of statements by me as late -- as early, rather, as the 15th of March, 1990, in which I condemn the Saddam Hussein dictatorship in the most withering terms -- a stance I have taken since around about the time you were an anti-Vietnam War demonstrator.

I was an opponent of Saddam Hussein when British and American governments and businessmen were selling him guns and gas. I used to demonstrate outside the Iraqi Embassy when British and American officials were going in and out doing commerce.

You will see from the official parliamentary record. (Hence sir ?() from the 15th of March, 1990, onwards, voluminous evidence that I have a rather better record of opposition to Saddam Hussein than you do and than any member of the British or American governments do.

Now you say in this document, you quote a source -- you have the gall to quote a source without ever having asked me if the allegation from the source was true -- that I am, quote, "the owner of a company which has made substantial profits from trading in Iraqi oil."

Senator, I do not own any companies beyond a small company whose entire purpose, whose sole purpose, is to receive the income from my journalistic earnings from my employer, Associated Newspapers, in London.

I do not own a company that's been trading in Iraqi oil. And you had no business to carry a quotation utterly unsubstantiated and false, implying otherwise.

Now you have nothing on me, Senator, except my name on lists of names from Iraq, many of which have been drawn up after the installation of your puppet government in Baghdad.

If you had any of the letters against me that you had against Zhirinovsky and even Pasqua, they would have been up there in your slide show for the members of your committee today.

You have my name on lists provided to you by the Dulfer inquiry, provided to him by the convicted bank robber and fraudster and conman Ahmed Chalabi who many people to their credit in your country now realize played a decisive role in leading your country into the disaster in Iraq.

There were 270 names on that list originally. That somehow been filtered down to the names you chose to deal with in this committee. Some of the names on that committee included the former secretary to his holiness Pope John Paul II, the former head of the African National Congress presidential office, and many others who had one defining characteristic in common. They all stood against the policy of sanctions and war which you've vociferously prosecuted and which has led us to this disaster.

You quote Mr. Taha Yasim Ramadan. Well, you have something on me. I've never met Mr. Taha Yasim Ramadan. Your subcommittee apparently has. But I do know that he's your prisoner. I believe he's in Abu Ghraib prison. I believe he's facing war crimes charges, punishable by death. In these circumstances, knowing what the world knows about how you treat prisoners in Abu Ghraib prison, in Baghram Air Base, in Guantanamo Bay, including, if I may say, British citizens being held in those places. I'm not sure how much credibility anyone would put on anything you manage to get from a prisoner in those circumstances.

But you quote 13 words from Taha Yasim Ramadan, whom I have never met. If he said what he said, then he is wrong. And if you had any evidence that I had ever engaged in any actual oil transaction, if you had any evidence that anybody ever gave me any money, it would be before the public and before this commitment today. Because I agreed with your Mr. Greenblatt. Your Mr. Greenblatt was absolutely correct. What counts is not the names on the paper. What counts is, where's the money, Senator? Who paid me hundreds of thousands of dollars of money? The answer to that is nobody. And if you had anybody who ever paid me a penny, you would've produced them here today.

Now you refer at length to a company named in these documents as Aredio Petroleum. I say to you under oath here today, I have never heard of this company. I have never met anyone from this company. This company has never paid a penny to me. And I'll tell you something else. I can assure you that Aredio Petroleum has never paid a single penny to the Mariam Appeal Campaign. Not a thin dime. I don't know who Aredio Petroleum are, but I daresay if you were to ask them, they would confirm that they have never met me or ever paid me a penny.

Whilst I'm on that subject, who is this senior former regime official that you spoke to yesterday? Don't you think I have a right to know? Don't you think the committee and the public have a right to know who this senior former regime official you were quoting against me, interviewed yesterday actually is?

Now, one of the most serious of the mistakes that you have made in this set of documents is, to be frank, such a schoolboy howler as to make a fool of the efforts that you have made. You assert on page 19, not once but twice, that the documents that you were referring to cover a different period in time from the documents covered by the Daily Telegraph which were the subject of a libel action, won by me in the high court in England late last year. You state that the Daily Telegraph article cited documents from 1992 and 1993, whilst you are dealing with documents dating from 2001.

Senator, the Daily Telegraph's documents date identically to the documents that you are dealing with in your report here. None of the Daily Telegraph's documents dealt with a period of 1992, 1993. I had never set foot in Iraq until late in 1993. Never in my life. there could possibly be no documents relating to oil-for-food matters in 1992-93, for the oil-for-food scheme did not exist at that time. And yet, you've allocated a full section of this document to claiming that you're documents are from a different era to the Daily Telegraph documents, when the opposite is true. Your documents and the Daily Telegraph's documents deal with exactly the same period.

But perhaps you are confusing the Daily Telegraph action with the Christian Science Monitor. The Christian Science Monitor did indeed publish on its front pages a set of allegations against me very similar to the ones that your committee have made. They did indeed rely on documents which started in 1992-1993. These documents were unmasked by the Christian Science Monitor themselves as forgeries.

Now, the neocon websites and newspapers in which you're such a hero, Senator, were all absolutely cacahoop (sp) at the publication of the Christian Science Monitor documents. They were all absolutely convinced of their authenticity. They were all absolutely convinced that these documents showed me receiving $10 million from the Saddam Hussein regime. And they were all lies. In the same week as the Daily Telegraph published their documents against me, the Christian Science Monitor published theirs, which turned out to be forgeries, and the British newspaper Mail on Sunday purchased a third set of documents, which also on forensic examination, turned out to be forgeries.

So there's nothing fanciful about this. Nothing at all fanciful about it. The existence of forged documents implicating me in commercial activities with the Iraqi regime is a proven fact. It's a proven fact that these forged documents existed and were being circulated amongst right-wing newspapers in Baghdad and around the world in the immediate aftermath of the fall of the Iraqi regime.

Now Senator, I gave my heart and soul to oppose the policy that you promoted. I gave my political life's blood to try to stop the mass killing of Iraqis by the sanctions on Iraq, which killed a million Iraqis, most of them children. Most of them died before they even knew that they were Iraqis. But they died for no other reason other than that they were Iraqis, with the misfortune to be born at that time. I gave my heart and soul to stop you committing the disaster that you did commit in invading Iraq. And I told the world that your case for the war was a pack of lies. I told the world that Iraq, contrary to your claims, did not have weapons of mass destruction. I told the world, contrary to your claims, that Iraq had no connection to al Qaeda. I told the world, contrary to your claims, that Iraq had no connection to the atrocity on 9/11, 2001. I told the world, contrary to your claims, that the Iraqi people would resist a British and American invasion of their country and that the fall of Baghdad would not be the beginning of the end, but merely the end of the

Senator, in everything I said about Iraq, I turned out to be right and you turned out to be wrong. And a hundred thousand people have paid with their lives. Sixteen-hundred of them American soldiers sent to their deaths on a pack of lies. Fifteen-thousand of them wounded, many of them disabled forever on a pack of lies. If the world had listened to Kofi Annan, whose dismissal you demanded, if the world had listened to President Chirac, who you want to paint as some kind of corrupt traitor; if the world had listened to me and the anti-war movement in Britain, we would not be in the disaster that we're in today.

Senator, this is the mother of all smokescreens. You are trying to divert attention from the crimes that you supported, from the theft of billions of dollars of Iraq's wealth. Have a look at the real oil- for-food scandal. Have a look at the 14 months you were in charge of Baghdad. The first 14 months, when $8.8 billion of Iraq's wealth went missing on your watch. Have a look at Halliburton and the other American corporations that stole not only Iraq's money, but the money of the American taxpayer. Have a look at the oil that you didn't even meter, that you were shipping out of the country and selling, the proceeds of which went who-knows-where. Have a look at the $800 million you gave to American military commanders to hand out around the country without even counting it or weighing it. Have a look at the real scandal breaking in the newspapers today. Revealed in the earlier testimony in this committee that the biggest sanctions-busters were not me, or Russian politicians, or French politicians. The real sanctions-busters were your own companies with the
connivance of your own government.

SEN. COLEMAN: Thank you, Mr. Galloway. Mr. Galloway, can we start by talking about Fawaz Zureikat? Do you know the individual?

MR. GALLOWAY: I know him very well.

SEN. COLEMAN: In fact, you were best man at his wedding?


SEN. COLEMAN: And at some point in time, he became chair of Mariam's Appeal, is that correct?

MR. GALLOWAY: He did, yeah.

SEN. COLEMAN: And can you tell me when that occurred?

MR. GALLOWAY: I think in late 2000 or early 2001.

SEN. COLEMAN: Before Mr. Zureikat was chair of Mariam's Appeal, who had that position?

MR. GALLOWAY: I was the founding chairman.

SEN. COLEMAN: Was there somebody in between?

MR. GALLOWAY: Mister Hoffard (ph).

SEN. COLEMAN: And do you recall when he had that position?

MR. GALLOWAY: I don't.

SEN. COLEMAN: Mr. Zureikat was a significant contributor to Mariam's Appeal, is that correct?

MR. GALLOWAY: He was the second biggest contributor. The main contributor was Sheikh Zayed, the ruler of the United Arab Emirates, which you've glossed over in your report because it's slightly embarrassing to you. And the third major contributor was the Crown Prince of Saudi Arabia, which you've equally glossed over because it's embarrassing to you. And both of those individuals are your friends.

SEN. COLEMAN: How much did Mr. Zureikat contribute to Mariam's Appeal?

MR. GALLOWAY: Roughly $375,000 English pounds.

SEN. COLEMAN: That's $600,000 American?

MR. GALLOWAY: Well, I don't know the conversion, but it's $375,000 sterling.

SEN. COLEMAN: If you can -- and he was by the way -- Mr. Zureikat was your representative, designated representative for the activity of Mariam's Appeal, is that correct?

MR. GALLOWAY: For the activities of the Mariam Appeal, yes.

SEN. COLEMAN: And when did he get that position?

MR. GALLOWAY: I think late 2000.

SEN. COLEMAN: Late 2000. Looking at Exhibit 9, and I think you have the books in front of you.


SEN. COLEMAN: That appears to be a document from the Ministry of Oil. Testimony has indicated that the signature is an accurate signature. Do you have any reason to believe that document's false?

MR. GALLOWAY: Well, I've told you that I have never heard of Aredio Petroleum, and I've told you that the Mariam Appeal never received a single penny from Aredio Petroleum. So the information at the top of the page, if you've translated accurately, is false.

SEN. COLEMAN: Have you heard of Middle East ASI Company?

MR. GALLOWAY: Yes, that's Mr. Zureikat's company.

SEN. COLEMAN: I turn to Exhibit 12.


SEN. COLEMAN: And that purports to be again a stamp, a seal of the Ministry of Oil, people of Iraq. And this purports to be showing the details of a contract signed with Middle East ASI Company, Mr. George Galloway, then Fawaz Zureikat. So Middle East ASI is Mr. Zureikat's company?

MR. GALLOWAY: Middle East ASI is Mr. Zureikat's company. He may well have signed an oil contract. It had nothing to do with me.

SEN. COLEMAN: Did you -- he was chair of Mariam's Appeal, and in 2000, I take it, you knew him well. Did he ever talk to you about his dealings in oil with Iraq?

MR. GALLOWAY: He did better than that. He talked to everybody. He talked to every English journalist that came through Baghdad who he helped, at our request, to get the interviews and get the places that they wanted and needed to go. He was introduced to everyone as a major benefactor of the Mariam Appeal and as a businessman doing extensive business in Iraq and elsewhere in the Middle East.

SEN. COLEMAN: I'm asking you specifically, in 2001, were you aware that he was doing oil deals with Iraq?

MR. GALLOWAY: I was aware that he was doing extensive business with Iraq. I did not know the details of it. It was not my business.

SEN. COLEMAN: So this is somebody who's the chairman of your committee, that you know well, and you're not able to say that he was --

MR. GALLOWAY: Well, there's a lot of contributors. I've just been checking to your --

SEN. COLEMAN: Not many at that level, Mr. Galloway.

MR. GALLOWAY: Oh, no, let me assure there are. I've checked your website. And there are lots of contributors to your political campaign funds. I don't suppose you ask any of them how they made the money they give you.

SEN. COLEMAN: Certainly not at $600,000 American. But let me again ask because ask because I just -- the record is clear -- you need to be clear on the record that you're not contesting then the validity of Document 12, Exhibit 12. You're indicating that Mr. Zureikat could have had dealings with Iraq. But you're saying that at that point in time, you were not aware that he had oil dealings with Iraq?

MR. GALLOWAY: First of all, I've only seen this document today. And I'm telling you that insofar as my name is in a parenthesis, the information in it is false. I have no reason to believe Mr. Zureikat's company did not do that particular oil deal. But this is your problem in this whole affair. There is nobody arguing that Mr. Zureikat's company did not do oil transactions and many other, much bigger, frankly, business contracts with Iraq. There's nobody contesting that Mr. Zureikat made substantial donations to our campaign against sanctions and war. My point is, you have accused me personally of enriching myself, of taking money from Iraq, and that is false and unjust.

SEN. COLEMAN: Mr. Galloway, do you recall an interview you had with a Jeremy Paxman (ph) on April 23, 2003?

MR. GALLOWAY: Well, I'm not --

SEN. COLEMAN: Do we have a copy of the transcript of that? I'd like to refresh your memory. Can we get a copy of that. As we get you a copy, I'm going to ask that you'll ask the question, talking about business dealings with Mr. Zureikat and Iraq, and at least the transcript that I have, and I'd like you to let me know if it's incorrect. Your quote is -- I've asked him about business in Iraq, and quote, "Well, I'm trying to reach him," this is in 2003, "I'm trying to reach him to ask him if he's ever been involved in oil deals because I don't know the answer to that." So in 2003, you're saying you don't know the answer whether he's involved in oil deals?

MR. GALLOWAY: Well, I told you in my previous two answers. I knew that Mr. Zureikat was heavily involved in business in Iraq and elsewhere, but that it was none of my business what particular transactions or business he was involved in, any more than you ask the American-Israel Public Affairs Committee when they donate money to you, or pay for your trips to Israel, where they got the money from.

SEN. COLEMAN: So, Mr. Galloway, you would have this committee believe that your designated representative from Mariam Appeal, becomes the chair of the Mariam Appeal, was listed in Iraqi documents as obviously doing business, oil deals with Iraq, that you never had a conversation with him in 2001 on whether he was ever doing oil business with Iraq?

MR. GALLOWAY: No, I'm doing better than that. I'm telling you that I knew that he was doing a vast amount of business with Iraq, much bigger as I said a couple of answers ago than any oil business he did, in the airports. He was the representative of some of the world's biggest companies in Iraq. He was an extremely wealthy businessman doing very extensive business in Iraq. Not only did I know that, but I told everyone about it.

I emblazoned that in our literature, on our website, precisely so that people like you could not later credibly question my bona fides in that regard. So I think that's over now. I never asked him if he was trading in oil. I knew he was a big trader with Iraq, and I told everybody about it.

SEN. COLEMAN: So in 2003 when you said you didn't know whether he was doing oil deals, were you telling the truth at that time?

MR. GALLOWAY: Yes, I was. I've never known until the Telegraph story appeared that he was alleged to be doing oil deals. But his oil deals are about one-tenth of the business that he did in Iraq. So I did better than telling people about his oil deals. I told them he was doing much, much more than that.

SEN. COLEMAN: So Exhibit 14, which purports to be a contract with Middle East Semiconductor, contract end 12/14, Middle East Semiconductor, again, it's Mr. Zureikat's company, is that correct?


SEN. COLEMAN: So do you have any reason to believe that this document is false?

MR. GALLOWAY: Well, the parenthesis, if the parenthesis implies as you've been arguing all morning that it implies, that this was being signed for by Middle East Advanced Semiconductors in order to pass the money on to me, is false.

Mr. Zureikat and Middle East Semiconductors or any other company have never given me any money. And if they had you would have it up here on a board, and in front of the committee here.

SEN. COLEMAN: I take it, Mr. Galloway, that in regard to any surcharges paid to Saddam, I think it's footnote 89 which refers to the surcharge for the contract, focused on Mariam's Appeal, you're saying that that document -- first of all any contract between Iraq and Mariam's Appeal is false?

MR. GALLOWAY: Well, Senator, I've gotten used to the allegation that I was taking money from Saddam Hussein. It's actually surreal to hear in this room this morning that I'm being accused of giving money to Saddam Hussein. This is utterly preposterous -- utterly preposterous -- that I gave $300,000 to Saddam Hussein. This is beyond the realm of the ridiculous.

Now, the Mariam Appeals finances have been investigated by the charity commission on the order of Lord Goldsmith. You will recall him, Senator, he's the attorney general, practically the only lawman in the world that thought your war with Iraq was legal, thought Britain joining your war with Iraq was legal. He ordered the charity commission to investigate the Mariam Appeal.

Using their statutory powers they recovered all money in and all money out ever received or spent by the Mariam Appeal. They found no impropriety, and I can assure you, they found no money from an oil contract from Aredio Petroleum. None whatsoever.

SEN. COLEMAN: And the commission did not look at these documents relating to this contract with Iraq?

MR. GALLOWAY: Yes, but they went better than that, Senator.

SEN. COLEMAN: I'm not asking you that. I'm asking the question whether they looked at these documents.

MR. GALLOWAY: Senator, you're not listening to what I'm saying. They did better than that. They looked at every penny in and every penny out. And they did not find, I can assure you, any trace of a donation from a company called Aredio Petroleum, or frankly a donation from any company other than Mr. Zureikat's company. That's a fact.

SEN. COLEMAN: If I can get back to Mr. Zureikat one more time, do you recall a time when he specifically, when you specifically had a conversation with him about oil dealings in Iraq?

MR. GALLOWAY: I've already answered that question. I can assure you, Mr. Zureikat never gave me a penny from an oil deal, from a cake deal, from a bread deal, or from any deal. He donated money to our campaign, which we publicly brandished on all of our literature along with the other donors to the campaign.

SEN. COLEMAN: Again, Mr. Galloway, a simple question. And I'm looking for either a yes or no, did you ever have a conversation with Mr. Zureikat where he informed you that he had oil dealings with Iraq, yes or no?

MR. GALLOWAY: Not before this Daily Telegraph report, no.

SEN. STEVENS: Senator Levin.

SEN. LEVIN: Thank you.

Thank you, Mr. Galloway. Mr. Galloway, could you take a look at the exhibit, number 12?


SEN. LEVIN: Do you see where your name is in parenthesis after Mr. Zureikat?

MR. GALLOWAY: Before Mr. Zureikat, if I'm looking at the right place.

SEN. LEVIN: I was going to finish my sentence. My question was, where your name is in parenthesis after Mr. Zureikat's companies?

MR. GALLOWAY: I apologize, Senator.

SEN. LEVIN: That's all right. Now that document, assuming it's an accurate translation of the document underneath it, would you -- you're not alleging here today that the document is a forgery, I gather?

MR. GALLOWAY: Well, I have no idea, Senator, if it's a forgery or not.

SEN. LEVIN: But you're not alleging --

MR. GALLOWAY: I'm saying that the information insofar as it relates to me is fake.

SEN. LEVIN: I under -- is wrong?

MR. GALLOWAY: It's wrong.

SEN. LEVIN: But you're not alleging that the document --

MR. GALLOWAY: I have no way of knowing, Senator.

SEN. LEVIN: That's fine. You're not alleging?

MR. GALLOWAY: I have no way of knowing.

SEN. LEVIN: Is it fair to say since you don't know you're not alleging.

MR. GALLOWAY: Well, it would have been nice to have seen it before today.

SEN. LEVIN: Is it fair to say, though, that either because you've not seen it before or because -- otherwise you don't know. You're not alleging the document is a fake; is that fair to say?

MR. GALLOWAY: I haven't had it in my possession long enough to form a view about that.

SEN. LEVIN: Would you let the subcommittee know after you've had it in your possession long enough whether you consider the document a fake?

MR. GALLOWAY: Yeah, although there is an academic quality about it all, Senator Levin, because you've already found me guilty before you actually allowed me to come here and speak for myself.

SEN. LEVIN: Well, in order to attempt to clear your name, would you --

MR. GALLOWAY: Let's be clear about something --

SEN. LEVIN: Well, let me finish my question. Let me be clear about that, first of all. Would you submit to the subcommittee, after you've had a chance to review this document, whether or not in your judgment it is a forgery? Will you do that?

MR. GALLOWAY: Well, if you'll give me the original. This is not -- presumably you wrote this English translation.

SEN. LEVIN: Yes, and there's a copy underneath it of the --

MR. GALLOWAY: Yes, there is a copy of a gray blur.

SEN. LEVIN: It's a copy of the original.

MR. GALLOWAY: If you'll give me the original in a decipherable way, then of course I will.

SEN. LEVIN: That would be fine. We would appreciate that.

Now at the bottom of this document, assuming it's not a forgery for a moment, it says surcharge. Are we together?


SEN. LEVIN: As per the instructions of your Excellency over the phone on 12/11/01 of not accepting the company's proposals unless they pay the debt incurred since phase eight. If in fact -- if in fact Mr. Zureikat's company paid a surcharge or a kickback to the Iraqi government, in order to obtain an allocation of oil, would that trouble you?

MR. GALLOWAY: Well, it turns out from your own testimony that practically everyone in the world and especially the United States was paying kickbacks.

SEN. LEVIN: My question -- it troubles me a great deal. As you've heard from my statement today, I'm very much troubled that we have an oil company that was involved in this, and we're going to go after that oil company.

Now let me ask you, I've expressed my view of Bayoil, so let me ask you about Mr. Zureikat's company. If in fact Mr. Zureikat's company paid a kickback to the Iraqi government in order to obtain this allocation. That's my question.

MR. GALLOWAY: Yeah, it's a good question. Will you allow me to answer it --

SEN. LEVIN: I'd be happy to, yes.

MR. GALLOWAY: -- seriously, not in a yes or no fashion. Because I could give you a glib answer.

SEN. LEVIN: Providing you give us an answer, I'd be delighted to hear it.

MR. GALLOWAY: Here's my answer, and I hope it does delight you.

I opposed the oil-for-food program with all my heart, not for the reasons that you are troubled by it, but because it was a program which saw the death -- I'm talking about the death now, I'm talking about a mass grave -- of a million people, most of them children, in Iraq.

The oil-for-food program gave 30 cents per day per Iraqi, for the period of the oil-for-food program. Thirty cents for all food, all medicine, all clothes, all schools, all hospitals, all public services.

I believe that the United Nations had no right to starve Iraq's people because it had fallen out with Iraq's dictator. David Bonior, your former colleague, Senator, whom I admire very much, a former chief whip here on the hill, described the sanctions policy as infanticide masquerading as politics.

Senator Coleman thinks that's funny, but I think it's the most profound description of that era that I have ever read: Infanticide masquerading as politics.

So I opposed this program with all my heart, not because Saddam was getting kickbacks from it, and I don't know when it's alleged these kickbacks started not because some individuals were getting rich doing business with Iraq under it, but because it was a murderous policy of killing huge numbers of Iraqis. That's what troubles me. That's what troubles me.

Now if you're asking me is Mr. Zureikat in some difficulty like all the other companies that it would appear paid kickbacks to the Iraqi regime, no doubt he is, although it would appear he's quite small beer compared to the American companies who were involved in the same thing.

SEN. LEVIN: That's not my question.

MR. GALLOWAY: I told you what troubles me.

SEN. LEVIN: I'm not asking you -- my question, now that you've given us again your statement about your feelings about the oil-for- food program -- my question is, would you be troubled if you knew that Mr. Zureikat paid a kickback in order to get an allocation of an oil contract. That's a very simple question.

MR. GALLOWAY: That's Mr. Zureikat's problem, not mine.

SEN. LEVIN: It would not trouble you?

MR. GALLOWAY: It's Mr. Zureikat's problem, not mine.

SEN. LEVIN: So that if a kickback which was illegal under international -- you may not agree with the U.N., but that's the international community that you're attacking, which is fine. You're entitled, and I'll defend your right to do it. But you're attacking a U.N. program, which is your right to do, which was aimed at providing humanitarian assistance to try to alleviate the problems that the sanctions provided, which is your right to do.

But my question, which you are so far evading, is, would you be troubled if that U.N. oil-for-food program was being circumvented by the kind of kickbacks which were taking place and being given to Saddam Hussein in order to obtain allocations under that program if Mr. Zureikat participated in that kickback scheme which violated the U.N. sanc -- you may not have agreed with it, but it violated the program.

Would it trouble you if he'd violated that U.N. program in that way? That's my question.

MR. GALLOWAY: Senator, there are many things --

SEN. LEVIN: I know other things trouble you, but can you just give us a straightforward answer? You've given us a long explanation of other things that trouble you, which is your right. Now I'm asking you whether that troubles you?

MR. GALLOWAY: It troubles me that it might put him in difficulty. It troubles me that it might now lead to a prosecution of him. It troubles me that this will be further smoke in the smokescreen.

But I, root and branch, opposed this oil-for-food program.

SEN. LEVIN: I understand. There are a lot of things you oppose, but you don't believe should be circumvented in illegal ways, isn't that --

SEN. LEVIN: Please, Senator. You supported the illegal attack on Iraq. Don't talk to me about illegality.

SEN. LEVIN: Sorry about that, I didn't. But that's beside the point. That's beside the point. You're wrong on your facts.

MR. GALLOWAY: I'm collectively talking about the Senate; not you, personally.

SEN. LEVIN: Well, that's okay. Let me go back to my question. I don't want to get involved -- I don't want to get involved in --

MR. GALLOWAY: Why not? You want to talk about illegality?


MR. GALLOWAY: You launched an illegal war which has killed 100,000 people. You want me to be troubled about -- (inaudible)?

SEN. LEVIN: No, I want you to answer questions which are fairly put and directly put to you.

Now, I'll ask you one last -- two last questions. If -- if -- Mr. Zureikat's contributions to Mariam's Appeal came from the sale of oil, or his share of a sale from oil, which he was able to obtain because he paid a kickback in violation of the U.N. program, would that contribution trouble you? That's my question.

MR. GALLOWAY: Well, Senator --

SEN. LEVIN: If you can, give a short answer.

MR. GALLOWAY: I'll give as short as I can, and I appreciate your fairness in this.

The fundraising for political purposes is seldom pretty, as any American politician could testify. I took the view -- I can be criticized for it; have been criticized for it -- that I would fund raise from the kings of Arabia whose political systems I have opposed all my life in order to raise funds for what I thought was an emergency facing a disaster.

And I did not ask Mr. Zureikat which part of his profits of his entire business empire he was making donations to our campaign from.

SEN. LEVIN: That wasn't my question. My question was, would it trouble you if you found that out? And it's okay. You're not going to answer it, it's clear to me. I want to go to my next question. You're just simply not going to answer.

I will say, American politicians who find a source of money after it's given to them is troubling, they found out something they didn't know afterwards, frequently will -- and hopefully I think always, but at least frequently -- will return that money, will say they disagree with the source of the money. Hopefully all of us will do that, but whether we all live up to that standard, you clearly do not adopt that as a standard for contributions to Mariam's Appeal. You're not going to look at the source of the money. You're just simply going to accept them, and you've made that clear.

I just want to ask you about Tariq Aziz.


SEN. LEVIN: Tariz Aziz, you've indicated who you didn't talk to, and who you did talk to. Did you have conversations with Tariz Aziz about the award of oil allocations? That's my question?


SEN. LEVIN: Thank you. I'm done.

SEN. COLEMAN: Just one follow-up on the Tariz Aziz question. Describe your relationship with Tariz Aziz?

MR. GALLOWAY: Friendly.

SEN. COLEMAN: How often did you meet him?

MR. GALLOWAY: Many times.

SEN. COLEMAN: Can you give an estimate to that?

MR. GALLOWAY: No, many times.

SEN. COLEMAN: More than five?

MR. GALLOWAY: Yes, sir.

SEN. COLEMAN: More than 10?


SEN. COLEMAN: Is it around 15?

MR. GALLOWAY: Well we're getting nearer, but I haven't counted. But many
times. I'm saying to you, many times. And I'm saying to you I was friendly
with him.

SEN. COLEMAN: And you describe him as a very dear friend.

MR. GALLOWAY: I think you've quote me as saying a dear, dear friend. I don't often use the double adjective.

SEN. COLEMAN: I was looking into your heart on that.

MR. GALLOWAY: But friend I have no problem with.

Senator, just before you go on, I hope you will avail yourself of this dossier that I have produced. I'm really speaking through you to Senator Levin. This is what I said about Saddam Hussein.

SEN. COLEMAN: We'll enter that in the record without objection.

I have no further questions of the witness. You're excused, Mr. Galloway.

MR. GALLOWAY: Thank you very much.

SEN. COLEMAN: We have a vote. The hearing will be recessed -- we have one more panel -- the hearing will be recessed for 20 minutes.

(Final panel was postponed.)

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