Food grants to Iraq were used to buy weapons U.S. knew of dealings months before invasion of Kuwait, report says.

April 27, 1992|By New York Times News Service

For more than two years, the U.S. government has had evidence that Iraq, in the months before it invaded Kuwait in August 1990, diverted food purchased under a $5 billion American aid program and exchanged it for money and arms in the Soviet bloc and in other countries.

Iraq may have used some of the money, one high-level American government official wrote in an Oct. 13, 1989, confidential document, to acquire "sensitive nuclear technologies."

A team of Department of Agriculture investigators confronted high-ranking members of Iraqi President Saddam Hussein's government with some of these accusations that same month.

The team also complained that Iraqi officials were repeatedly demanding bribes from many big American agricultural businesses selling food to Iraq, which was using money lent through the American aid program to buy it. In some instances the Americans paid those bribes, investigators said.

Finally, the team charged that all these undertakings were part of a multibillion-dollar bank fraud in the United States that Iraq was engaged in to help finance the rebuilding of Saddam's military power.

The Iraqis indignantly denied the accusations, and to the astonishment of American law enforcement officials who were investigating the case, the Bush administration expanded the aid program with another half-billion dollars in guaranteed loans.

Direct losses from those loans, which were backed by the Commodity Credit Corp. of the Agriculture Department, ultimately cost American taxpayers at least $400 million.

Documents made available to the New York Times and interviews with law-enforcement officials provide many specific details of the charges that Iraq manipulated the agricultural-aid program.

Newly obtained documents and interviews suggest that Soviet LTC bloc nations, as well as Jordanians and Turks participated in the subversion of the aid program. The documents also suggest that nuclear technology reached Iraq through the aid program.

None of these accounts makes clear how much food may have been converted to cash or arms.

Officials in charge of the Commodity Credit Corp. declined to be interviewed because they say the suspected Iraqi corruption is still under investigation.

The State Department also declined to comment, but it has repeatedly said that aid was provided to Iraq to counterbalance Iran, as a way to stabilize the Middle East.

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