Global Policy Forum

By William Tinning

A Scottish blue-chip engineering group paid bribes into a secret Swiss bank account as part of a deal to secure contracts with Saddam Hussein's regime in Iraq, US senators were told yesterday. Weir Group's alleged complicity in the scandal surrounding the United Nations' oil-for-food programme was spelled out when the US Senate's permanent sub-committee on investigations' first hearing on how Saddam Hussein exploited the scheme began in Washington.

Delivering a written statement yesterday, Steven Groves, counsel for the sub-committee, said the Glasgow-based group was "not the type of company one would normally associate with shady Iraqi middlemen or with secret Swiss bank accounts. Yet that is what occurred here." Senators were told that the engineering group could have refused to pay any money back to Saddam's regime but chose to "move forward with new Iraqi demands" by paying more than £4.3m ($8m) into a Geneva bank account.

The sub-committee heard that Weir was one of more than 3500 companies worldwide contracted with Iraq under the programme, and that hundreds probably paid kickbacks to Saddam. Kickbacks are a bribe paid by a seller of goods to a purchasing agent to induce the agent to enter into the contract. The investigation found that Saddam's regime reaped more than £11.5bn ($21bn) from kickbacks and smuggling before and during the now-defunct programme, twice as much as previous estimates.

Weir Group has already admitted its contracts signed under the programme may have been exploited to provide funds for Saddam's regime. Having initially rejected suggestions that there was a case to answer about illegal arrangements with Iraq to gain one contract, the group confirmed last July that £4.5m received through the programme had been directed to as yet unknown beneficiaries. Last month, the group, which employs 8000 worldwide, including 1800 in Scotland, announced disciplinary action against a number of executives and the sacking of the company's agent in Dubai over the matter.

Mr Groves told senators the group did more than $80m- worth of business under the programme, the vast majority through two subsidiaries dealing with three Iraqi entities, including Baghdad's mayor. It used an agent in Baghdad to secure contracts on its behalf, to whom it paid a commission of between 17% and 27%. Weir's contracts with the Iraqis followed a standard protocol for seven phases of the programme. This changed in June 2000, when the Iraqis told the agent they would no longer enter into contracts with Weir unless the price was inflated by 10%, with the additional amount paid back to Iraq.

Mr Groves added: "This was the critical moment for Weir. They could have refused to inflate their contracts, they could have refused to pay any money back to the Hussein regime. Unfortunately, they agreed to move forward with the new Iraqi demands." He said for the remainder of programme each of Weir's 15 contracts were inflated by between 11% and 14% and the inflated amount was paid into an account in Geneva.

A statement issued last night by the Weir Group said: "We do not think it would be appropriate for us to comment further on the information we have given to the Senate committee while their inquiries and other inquiries are ongoing." Yesterday's testimony came on the same day George Galloway, MP for Glasgow Kelvin, described allegations he was in the secret pay of Saddam as a "deeply wounding dagger through my political heart". He was giving evidence at the High Court in London on the first day of his libel action against the Daily Telegraph.