The US and Britain are partly to blame for the scandal enveloping the UN oil-for-food
programme, Secretary General Kofi Annan has said.
Former Iraqi leader Saddam Hussein made billions of dollars smuggling oil in
defiance of sanctions policed by the US and Britain, the UN chief said.
Mr Annan was recently criticised over his son's work with the programme.
A UK government minister told the BBC that an interim report had criticised
the UN, not national governments.
The $60bn (£32bn) UN programme allowed Iraq to sell oil in order to buy
civilian goods and ease the impact of UN sanctions.
US Senate investigators have alleged that the Iraqi regime received some $4bn
(£2.13bn) in illegal payments from oil companies involved in the programme.
The BBC's Michael Voss in New York says this figure is dwarfed by the $14bn
(£7.5bn) that allegedly came from "sanctions-busting" - illegally
selling oil to neighbouring states such as Jordan and Turkey.
"The bulk of the money that Saddam [Hussein] made came out of smuggling
outside the oil-for-food programme, and it was on the American and British watch,"
Mr Annan said.
"Possibly they were the ones who knew exactly what was going on, and
that the countries themselves decided to close their eyes to smuggling to Turkey
and Jordan because they were allies."
Oil shipments were openly sent from Iraq to Jordan and Turkey during the 1990s
and were not intercepted, despite the US maintaining forces in the Gulf area.
The overland route from Iraq to Turkey was a very busy oil route, very clearly
officially sanctioned by Turkey, says the BBC's Jonny Dymond in Istanbul.
It is difficult to believe that the large US and UK embassies in Turkey would
not have known that a large quantity of Iraqi oil was being smuggled across
the border, our correspondent adds.
Mr Annan partly excused the smuggling to Jordan and Turkey, accepting that
countries not under sanctions had a right to be compensated for any loss of
Allegations of kickbacks and illegal trading under the oil-for-food programme
are being investigated by an independent committee headed by former US Federal
Reserve chairman Paul Volcker.
In two interim reports, the committee has questioned the ethical conduct of
the programme's head, Benon Sevan, and the involvement of Mr Annan's son, Kojo
Annan, in a company linked to the oil-for-food deals.
UK Foreign Office Minister Bill Rammell said the UK took "vigorous actions"
to ensure that the sanctions regime was not undermined.
Pointing to the criticism of the UN in the two interim reports, he added: "I
think the UN has to learn those lessons.
"I know Kofi Annan wants to do that and we want to work with him to achieve
On Thursday a Texan, a Briton and a Bulgarian were indicted for bribery.
Texan David Chalmers Jr, Bulgarian Ludmil Dionissiev and British oil trader
John Irving are accused of paying bribes to Saddam Hussein's regime.
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