UK fraud office probes Iraq oil-for-food firms

LONDON, Feb 14 (Reuters) Britain's Serious Fraud Office today said it had launched an investigation into alleged breaches of sanctions by British companies which were involved in the United Nations oil-for-food programme for Iraq.

''(Some) 22 million pounds (43 million dollar) has been allocated for the investigation and if it goes to a prosecution we could be looking at three years or more,'' said a spokesman for the Serious Fraud Office (SFO) who declined to name any company being examined.

The SFO has been doing preliminary work for the investigation since October 2005 when a UN-established independent inquiry reported on corruption in the Iraqi oil-for-food humanitarian programme that ran from 1996 to 2003.

The UN investigation was led by former Federal Reserve Chairman Paul Volcker who found that more than half the companies doing business with Iraq wittingly or unwittingly fed Saddam Hussein's need for cash through straight bribes or surcharges on oil sales.

The oil-for-food programme was designed to soften the blow to civilians of UN sanctions against Iraq by allowing Baghdad to sell oil to finance purchases of humanitarian goods. The sanctions were imposed after Iraq invaded Kuwait in 1990.

Saddam Hussein's government raised 1.8 billion dollar through kickbacks and surcharges on the sale of oil in the programme, the report said, adding Saddam probably earned nearly 11 billion dollar more from oil smuggled out of the country outside of the UN programme.

The Guardian newspaper today reported that drug companies AstraZeneca Plc and GlaxoSmithKline Plc were among firms being investigated by the SFO.

''GSK denies any wrongdoing,'' it said in a statement, adding it had operated entirely within guidance from Britain's Department of Trade and Industry (DTI).

AstraZeneca said separately, ''We deny any allegation of unethical behaviour on our part in our trading relationships with Iraq.'' AstraZeneca also said a consignment of medicines requested by the Saddam government had been sent with all relevant United Nations permissions and DTI export licences in place.

''Most of the consignment was delivered after the coalition forces of the United States and UK had taken control of the country,'' it said.

Reuters KD GC1733