14 May 2003
U.S. Asking Countries to Repatriate Iraq Funds
(Funds would be used for rebuilding country) (3460)
The United States wants other countries to identify assets Saddam
Hussein and members of his regime removed from Iraq and repatriate
them to a fund for rebuilding the country, a senior State Department
official says.
Testifying May 14 before a House of Representatives Financial Services
subcommittee, E. Anthony Wayne, assistant secretary of State for
economic and business affairs, said the United States is proposing
that the fund be held by the Iraqi Central Bank and have an
international advisory board. The proposal is in a United Nations
Security Council resolution submitted May 9 by the United States, the
United Kingdom and Spain to lift economic sanctions on Iraq, Wayne
said.
The resolution would allow Iraq to resume exports, provided the
proceeds are deposited in the Iraqi Central Bank and used for imports
of goods that would benefit the Iraqi people, Wayne said.
The assistant secretary said a strong interagency effort -- involving
the departments of State, Treasury, Justice and Defense as well as law
enforcement and intelligence agencies -- is identifying funds that can
be made available for the Iraqi people.
"Overall, foreign governments are cooperating in confirming previously
frozen Iraqi state assets and are actively looking for assets that can
be traced to Saddam Hussein and his fallen regime," he said.
Wayne said the United States is "working closely" with such countries
as Switzerland and the United Kingdom to investigate accounts that may
be linked to the Saddam Hussein regime, including an underground
network that funneled proceeds from U.N. Oil-for-Food program sales.
The United States also is discussing with Iraq's neighbors including
Jordan, Turkey, Lebanon, Syria, Bahrain and the United Arab Emirates
efforts to locate previously frozen Iraqi state assets, he said.
"Our sustained effort in this area is paying dividends through greater
information sharing, stronger laws and institutional infrastructure
worldwide," said Wayne. The USA PATRIOT Act also has been helpful to
the administration, he added.
The United States already controls $1,700 million Iraqi state assets
that President Bush has authorized the Treasury Department to allocate
and disburse for the benefit of the Iraqi people. The U.S. Armed
Forces control state assets that are in Iraq, Wayne said.
Urgent needs for the funds include paying the salaries of Iraqis
helping to rebuild the country; providing health services, sanitation,
water and food; and supporting an Iraqi currency, he said.
"We believe that our use of Iraqi assets should be transparent,
publicly explainable, accountable and for the benefit of Iraqis in
Iraq," Wayne said.
David Afhauser, Treasury general counsel and Lawrence Lanzilotta,
undersecretary of defense for management reform, also testified about
repatriation efforts.
Following is the text of Wayne's prepared remarks:
(begin text)
Statement of the Honorable E. Anthony Wayne
Assistant Secretary for Economic and Business Affairs
U.S. Department of State
Testimony before the House Committee on Financial Services
Subcommittee on Oversight and Investigations
May 14, 2003
Madame Chair, distinguished Members of the Subcommittee on Oversight
and Investigations, I am pleased to be here today with representatives
of the Department of Treasury and the Department of Defense to discuss
repatriation of Iraqi state assets to the Iraqi people. I appreciate
the opportunity to appear before you to outline our efforts to
identify, freeze and prepare for return Iraqi state assets so that
they may be made available for the benefit of the Iraqi people. Our
effort is one that includes participation from appropriate agencies
and Departments across the government acting in concert to achieve our
objective.
Iraqi Assets: Part of the Overall Reconstruction Effort
Making Iraqi state assets and the ill-gotten gains of Saddam Hussein
and his regime available for the benefit of the Iraqi people is one
part of our overall reconstruction effort. As the new Iraqi leadership
moves forward to build a better future for all the citizens of Iraq,
there are a number of areas that pose both important challenges and
present real opportunities. Iraq's abundant natural resources,
particularly its oil wealth, were misused by the previous regime as a
political and economic tool of regime power, internationally and
within Iraq. President Bush's determination to address the threat
posed by Saddam Hussein's defiance of his international obligations
has liberated the Iraqi people from a murderous tyrant and created an
opportunity for Iraqis to transform their political and economic
landscape. Restoring assets to Iraq is an important part of our
overall effort.
UN Sanctions and Iraq's Assets
With Saddam Hussein's invasion of Kuwait in 1990, the U.S. acted
quickly and decisively to deprive the Iraqi regime of the means and
materials to continue its regional aggression, further develop its
weapons of mass destruction programs, and continue its repression of
the Iraqi people. Consistent with UN Security Council resolution 661,
the United States blocked all Iraqi state assets legally within its
control. Today, the United States is using those assets, as I will
explain shortly, for the benefit of the Iraqi people, as they build a
new and better Iraq.
The United States also acted, throughout the years between the two
wars with Iraq, to prevent Saddam Hussein's regime from acquiring
revenues and goods through the illicit sale of Iraqi oil. To this end,
the United States mounted an aggressive, long-term diplomatic campaign
to pressure countries to enforce UN sanctions on Iraq, worked with
Gulf War Coalition partners to interdict illicit oil shipments and
other trade in areas such as the Persian Gulf, and took punitive
actions against sanctions busters where such actions were available,
such as restricting exports and re-exports of US-origin goods to
offending persons or commercial entities and taking steps to deprive
those responsible for illicit transfers of the privilege of travel to
the United States. These are examples of just some United States
actions; others actions can only be discussed in a classified setting.
Iraqi Assets are for the Iraqi People
With the outbreak of hostilities in Iraq on March 20 the President
took action to preserve Iraqi state assets for the Iraqi people. In
Executive Order 13290, the President determined:
"The United States and Iraq are engaged in armed hostilities, that it
is in the interest of the United States to confiscate certain property
of the Government of Iraq and its agencies, instrumentalities, or
controlled entities, and that all right, title, and interest in any
property so confiscated should vest in the Department of the Treasury.
I intend that such vested property should be used to assist the Iraqi
people and to assist in the reconstruction of Iraq, and determine that
such use would be in the interest of and for the benefit of the United
States."
There are two dimensions to our efforts to ensure that Iraqi state
assets may be available for the benefit of the Iraqi people. First,
the President vested more than $1.7 billion in Iraqi government assets
in the United States. These funds are being made available to assist
the Iraqi people and to assist in the reconstruction of Iraq. The
Secretary of the Treasury has already designated the Secretary of
Defense with the authority to use $91.648 million of these assets to
meet the immediate humanitarian needs of the Iraqi people.
Second, we are working with the more than thirty countries around the
world that declared Iraqi state assets to the UN in 1991 to determine
the status of assets frozen under their domestic laws in 1990 and 1991
under UN Security Council resolutions. We have also reached out to
more than twenty additional countries that also may have information
regarding Iraqi state assets. In many countries, as in the U.S.,
individuals and entities with claims against the Iraqi government have
sought to satisfy those claims with frozen Iraqi assets. Since the
President signed the March 20 Executive Order vesting Iraqi state
assets in the U.S., the State Department, in cooperation with our
interagency partners, is confirming the status of assets declared
frozen by foreign governments in 1991. We have asked all governments
to identify within their own domestic laws the most expedient means
make these assets available for the benefit of the Iraqi people.
Many countries have expressed their support for our efforts to make
these assets available to the people of Iraq. Countries' legal systems
nevertheless differ in the manner and extent to which their respective
governments may take action in this regard. Many of our partners in
this effort do not have the robust legal tools available to the
President under our domestic laws. Some governments are awaiting UN
Security Council action to release their assets. Some have indicated
that they are awaiting the emergence of a new Iraqi government which
can receive any assets currently frozen.
Lifting United Nations Sanctions
On May 9 the United States tabled, along with Spain and the U.K.
{United Kingdom], a draft Security Council resolution that would lift
sanctions on Iraq. This resolution reflects the President's call for
the United Nations to lift from the Iraqi people the burden of
economic sanctions originally directed against Saddam Hussein's regime
in order to compel Iraqi compliance with their disarmament
obligations. It will allow Iraq to resume exports, to sell its own
oil, provided that the proceeds are deposited in the Iraqi Central
Bank, and to use its revenues to purchase needed goods from overseas.
Our proposed resolution directs countries to identify all Iraqi state
funds, or other economic resources, including financial assets, funds
that Saddam Hussein or members of his regime, their families or
persons acting on their behalf removed from Iraq, and to repatriate of
those funds to an Iraqi Assistance Fund held by the Iraqi Central Bank
with an international advisory board which will be used to rebuild
Iraq.
The State Department is engaged at all levels in working with our
allies and Security Council partners to advance this proposed
resolution. Secretary Powell traveled to New York May 7-8 to meet with
the UN Secretary General and others on the urgent reasons for this
resolution. He has also spoken directly to many of his ministerial
colleagues to urge support for the resolution. Secretary Powell is
currently in the region, where this issue, as well as advancing the
Israeli/Palestinian roadmap, is at the top of his agenda. Deputy
Secretary [Richard] Armitage traveled last week to South Asia to,
among other things, build support for our proposal. Assistant
Secretary Kim Holmes visited Moscow and Berlin to preview the
resolution and to convey personally to our Russian and German
colleagues our strong commitment to Iraq's recovery and
reconstruction. We will be working intensely with other UNSC [U.N.
Security Council] members, coalition partners, and allies to achieve
agreement to lift Iraqi sanctions soon.
Identifying Ill-Gotten Gains of Saddam's Regime
The Department of State is working closely with the Departments of the
Treasury, Justice, Defense, and Homeland Security, as well as law
enforcement and intelligence colleagues across the government to
identify assets and front companies that may be connected to Saddam
Hussein or his fallen regime. The interagency group is coordinating
and disseminating information gathered from intelligence leads,
investigation and interrogations in Iraq, and the work of teams
examining bank records and account information. Our efforts are
leading to the identification of funds that can be made available for
the benefit of the Iraqi people.
Our efforts to identify Iraqi state assets and ill-gotten gains of
Saddam Hussein's regime are focused in a number of countries. We are
actively engaged in discussions with countries in the region such as
Jordan, Turkey, Lebanon, Syria, Bahrain and the UAE, as well as
elsewhere to pursue this effort. Overall, foreign governments are
cooperating in confirming previously frozen Iraqi state assets, and
are actively looking for assets that can be traced to Saddam Hussein
and his fallen regime. Our effort is being coordinated with senior
officials around the world.
Within hours of the President's announcement on March 20 of the
vesting of frozen Iraqi state assets in the U.S., our Ambassadors were
briefing coalition partners and other countries known to have Iraqi
assets on our actions. We also asked these governments, at the highest
levels, to cooperate with us in identifying, freezing and preparing to
return ill-gotten gains of Saddam Hussein and his regime. My
colleagues and I have stressed the need for all countries to search
their financial institutions for ill-gotten gains of Saddam Hussein
and his regime in meetings with dozens of local Ambassadors and
visiting officials from a number of countries.
Among the many countries we are working closely with to trace Iraqi
state assets, Switzerland is often in the spotlight. The Swiss
government has stepped forward to demonstrate its commitment to make
Iraqi assets frozen in Switzerland available for the benefit of the
Iraqi people, and to investigate accounts that may be linked to the
ill-gotten gains of Saddam's regime. With the onset of hostilities in
Iraq, the Swiss Cabinet moved to expand the 1990 ordinance that had
blocked Iraqi regime assets in Swiss financial institutions. The
Cabinet's action reaffirmed the 1990 freeze and added an additional
reporting requirement on institutions to provide the additional
account detail necessary to make these assets available for the
benefit of the Iraqi people once UN sanctions are lifted. Swiss
authorities have met with State and Treasury Department officials both
in Washington and Bern to share information on measures they have
taken to ensure that assets with suspected links to the Saddam Hussein
regime are investigated, and to reiterate their commitment to act on
any information we share with them in this effort.
We are also coordinating closely with the U.K. government in these
efforts. The U.K. is taking steps to ensure that Iraqi assets frozen
in the U.K. may be made available for the benefit of the Iraqi people.
Like many of our other partners the U.K. has also stressed that a new
Security Council resolution would be required for it to be able under
its domestic law to make these assets available for the Iraqi people.
Our efforts at the UN to move forward with the lifting of sanctions
will open the path for return of assets.
We are actively pursuing Saddam's underground network which funneled
the ill-gotten gains of non-Oil For Food program oil sales and
kickbacks into accounts overseas. This effort builds on the
substantial strides that have been made in recent years in combating
money laundering and build comprehensive anti-terrorist finance
regimes in countries without them. The United States is leading the
charge to increase regulatory scrutiny of suspicious financial
transactions and root out illicit transfers of money. Our sustained
effort in this area is paying dividends through greater information
sharing, stronger laws and institutional infrastructure worldwide. I
can also assure you that the important tools that Congress has
provided in this area, most recently with the passage of the USA
PATRIOT Act, are important as we work to achieve our goals.
Close Coordination of Effort
The effort to identify, freeze and make these assets available for the
benefit of the Iraq people includes actions from a host of agencies
and departments, working toward our objective. A senior-level
interagency team meets weekly to coordinate the search for assets. We
are working closely with those on the ground in Iraq to expand our
search using documents obtained during Operation Iraqi Freedom. We are
also beginning the process of interrogating those Iraqi officials that
are in U.S. custody that have knowledge of the financial affairs of
Saddam's regime. As these leads develop we are expanding our net
further to capture assets that must be made available for the benefit
of the Iraqi people.
This strong interagency teamwork involves the intelligence agencies,
with support from other agencies including the State Department, all
leading the Administration's efforts to ferret out the system of
financial schemes, facilitators and intermediaries that played a role
in Saddam's shadowy financial world. It involves the Treasury
Department, working with other agencies, leading the process by which
we are examining records that can lead us to the final nesting
locations for assets hidden away by Saddam and his cronies. The FBI
[Federal Bureau of Investigations] and the Department of Homeland
Security, through the Bureau of Immigration and Customs Enforcement,
are also playing important roles in this interagency process. The
State Department is leading the interagency effort to engage and
sustain the bilateral and multilateral relationships, strategies and
activities to win international support for and cooperation with our
efforts.
Use of Assets
President Bush has made it clear that Iraqi assets under the control
of the United States are to be used only for the benefit of the Iraqi
people. These assets fall into two categories: $1.7 billion of Iraqi
state assets that were vested by the President on March 20, and assets
in Iraq that are under the control of U.S. Armed Forces. The President
has authorized Treasury to allocate and disburse the vested assets. As
for the assets under the control of the U.S. Armed Forces, the
President ordered that Defense, in consultation with Treasury, State
and OMB [Office of Management and Budget], develop procedures to
ensure that the assets in Iraq are used for the benefit of the Iraqi
people and are properly accounted for.
We believe that our use of Iraqi assets should be transparent,
publicly explainable, accountable, and for the benefit of Iraqis in
Iraq. The world will be looking at how we shepherd these funds for the
good of the Iraqi people, and whether we set the right priorities to
ensure the most direct and immediate benefits flow to the Iraqi
people. There are many urgent needs that fill this definition,
including to pay the salaries of Iraqis who are helping to rebuild the
country, to provide basic human needs for health, sanitation, water
and food, to fund infrastructure rehabilitation, to provide assets to
support an Iraqi currency and more.
Treasury has allocated some of the vested assets to Defense's Office
of Reconstruction and Humanitarian Assistance (ORHA) to meet the most
immediate needs on the ground. We are working interagency to identify
and coordinate the uses of these assets, with the NSC [National
Security Council] and the Office of Management and Budget playing key
roles. Our goal is to meet the priority needs of the Iraqi people in
Iraq. The Administration is committed to do this in a fully
transparent manner so that it will be clear to the world that all the
assets under our control have met the priority needs of the Iraqis in
Iraq and that the US has been a good steward of these resources.
Beyond Iraq - Corruption and Kleptocrats
The United States takes very seriously the broader problem of theft
and transfer abroad of state assets by corrupt heads of state, high
government officials, their family members, cronies and collaborators.
Such people, including of course, Saddam Hussein, have victimized
their own people and abused the world's financial markets for their
own personal gain. They have been able to take advantage of national
and jurisdictional boundaries to hide their corruption and shield them
from law enforcement.
The United States is moving forward with an aggressive
anti-corruption/transparency action plan that we have proposed jointly
in the G8 [Group of 8 industrialized nations] with the U.K. Reducing
corruption and enhancing transparency are top priorities because they
are central to advancing our national security interests and
supporting stable democracies. The U.S. has long been a leader in the
campaign to stop corruption by promoting transparency and
strengthening judicial systems and rule of law. The United States was
the first country to outlaw foreign bribery in 1977 with enactment of
the Foreign Corrupt Practices Act. Our goal is to improve country
public financial management and governance systems, drawing upon
international best practices and the help of the international
financial institutions' experience in this field.
Conclusion
As I have outlined, the Department of State is an active participant
in the U.S. effort to marshal Iraqi state assets and trace the
ill-gotten gains of Saddam Hussein and his cronies. U.S. Ambassadors
and our Embassy teams overseas are pressing foreign governments to
move swiftly to preserve and make available these assets for the
benefit of the Iraqi people. We are also deeply engaged at the UN and
around the world to build support for the President's call to lift the
burden of sanctions from Iraq, and to open the door for countries
around the world to make these assets available to meet the
humanitarian and reconstruction needs of the people. I look forward to
continuing to work with the members of the committee in this effort.
(end text)
(Distributed by the Bureau of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)
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