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Friday, October 28, 2005

NYT - Russia defends OFF allegations

NYT: Russia claims forgery in OFF

Evidence Cited in Oil Report Was Forged, Russia Says

By ANDREW KRAMER -- [New York Times]
Published: October 29, 2005

MOSCOW, Oct. 28 - Documents cited as evidence that Russian companies and politicians paid hefty kickbacks to Saddam Hussein in the United Nations oil-for-food program for Iraq are forgeries, Russian officials said Friday.

"Documents that were shown to us were forged on a number of occasions," said Sergey V. Lavrov, the minister of foreign affairs, according to the Interfax news agency. Mr. Lavrov, who said he had not read the report, did not indicate which documents he meant, and a ministry spokesman declined to elaborate.

Mikhail Margelov, a legislator in the upper chamber of Russia's Parliament, said the "fabrications" had "cast a shadow" on the lengthy investigation of corruption in the program. They were responding to a report released Thursday by an independent panel, led by Paul A. Volcker, former chairman of the United States Federal Reserve, that detailed graft by thousands of companies and individuals worldwide. Russia had more companies involved in the program than any other country.

The $64 billion program was established to help ease the effects of United Nations sanctions on Iraqis by supplying food and medicines in exchange for letting the Hussein government export oil. Russia and France, which opposed the sanctions, won preferential treatment under the program, the report said, with Russian companies getting a third of all the oil exported from Iraq.

The report included a detailed chapter on Russian oil companies. A spokesman for Lukoil, Russia's largest private oil company, which is accused of paying kickbacks, said the report's evidence was "unconvincing," and oil industry analysts here noted that it probably would not lead to prosecutions in a country with enough money-laundering and kickback scandals of its own.

Yet so much oil company cash was passing through the Iraqi Embassy in Moscow in the late 1990's that Iraqi officials developed a system to send it to Baghdad in red canvas diplomatic bags, sealed with wax, on chartered flights, the report said. Each bag held $1.5 million in $100 bills. The embassy issued receipts to Russian companies and sent copies to Baghdad, the report said.

Vladimir V. Zhirinovsky, leader of the Liberal Democratic Party of Russia, who was accused in the report of paying an oil surcharge by transferring the title to a Moscow building owned by his son to the government of Iraq, also called the report's supporting documents forged. "These are all fabrications," Interfax quoted him as saying.

In Sweden on Friday, Volvo A.B., whose construction division, based in Brussels, was accused of paying kickbacks, acknowledged making payments through an agent to Iraqi authorities but said it did not consider that bribery, according to The Associated Press, quoting a report by the Swedish news agency TT. The A.P. also reported that Siemens A.G. of Germany said it had found no evidence of kickbacks paid by its French, Turkish and Middle Eastern subsidiaries, as alleged in the report.

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