Germans Accused of Bribery in UN Corruption Scandal

An independent investigation on Thursday linked prominent industrial and oil corporations to the UN oil-for-food scandal, citing evidence of alleged illegal surcharges and kickbacks paid to Iraq.

German companies Siemens and DaimlerChrysler were joined by Texaco, the Volvo Group and BNP Paribas in those named in the damning report that backs up its findings with copies of signed letters, bank transactions and interviews.

Siemens denies involvement

While DaimlerChrysler would not comment on its possible involvement in the scandal, a spokesman for engineering company Siemens Friday called the report's conclusions that the Siemens subsidiaries, Siemens France, Siemens Turkey and Osram Middle-East, paid a total of $1.6 million (1.38 million euros) "premature and unjustified."

"We know of no kick-back payments initiated or tolerated by Siemens to seal contracts related to the oil-for food programme," a Siemens spokesman said. "The committee has not been able to provide any evidence of the alleged kickback payments."

Siemens AG, the company flagship, allegedly paid 48,925 euros ($59,434) in kickbacks for a contract to provide equipment to the ministry of electricity, according to Iraqi government documents submitted for UN approval cited by the inquiry.

The kickbacks from Siemens are also corroborated in records obtained from a bank in Jordan, the inquiry said.

A DaimlerChrysler manager is alleged to have paid bribes of $7,134. There was no evidence that others in the company were aware of the payouts.

Though UN General Secretary Kofi Annan said he hoped the companies listed in the report would be held accountable by local authorities, German prosecutors in Stuttgart and Munich, where Siemens and DaimlerChrysler are respectively based, said they did not have enough information to press charges against the companies.

Saddam manipulated aid program

The international inquiry committee, led by former US Federal Reserve Chairman Paul Volcker, spent 18 months examining what went wrong with the UN oil-for-food program that ran from 1996 to 2003 and was meant to provide relief to ordinary Iraqis suffering under international sanctions by selling a limited amount of Iraqi oil under UN supervision.

The inquiry committee, however, found that Saddam's regime manipulated the program to extract $1.8 billion in surcharges and bribes while an inept UN headquarters failed to exert administrative control. According to the report, 139 companies paid illegal oil surcharges to Baghdad and 2,253 firms gave Saddam's regime kickbacks on humanitarian-related goods shipped to Iraq.

Hansjörg Elshorst, head of the anti-corruption agency Transparency International called the bribes and payments the "biggest scandal in the last decades."

Companies may not have known of payments

While the committee's report raised serious questions about the practices of the companies named, Volcker stopped short of an explicit condemnation or verdict.

"The identification of a particular company in the report does not necessarily mean that that company as opposed to an agent... made, authorized or even knew about illicit payments," Volcker told reporters in New York.

In written responses included in the report, the named corporations said they had no idea such kickbacks were paid out and that such transactions were ever authorized.