Did Saddam Skim Billions?

By John Greenwald.

Check any list of the world's richest people and you probably won't find any mention of Saddam Hussein. Now those lists will have to be revised. Iraq's dictator controls a personal fortune worth at least $10 billion, according to investigators who say he skimmed that colossal amount from his country's oil revenues and created an army of front companies to put it in banks and investments around the world. Such unprecedented thievery would dwarf the more than $200 million that authorities in the Philippines say former President Ferdinand Marcos looted from that nation's treasury. With so much at stake, governments around the world rushed to dig through mountains of financial documents last week to find Saddam's hidden wealth.

The hunt created a trail that linked such unlikely landmarks as a mansion in Beverly Hills, the shadowy Bank of Credit & Commerce International -- a notorious offshore enterprise that has been convicted of money laundering -- and Paris-based Hachette, one of the world's largest communications companies. Perhaps most disturbing, the signs pointed to evidence that Saddam had used his secret financial network to acquire advanced technology to upgrade Iraq's nuclear- and chemical-weapons programs and buttress its war machine.

Jules Kroll, a New York City investigator who previously tracked down hidden assets of Marcos and former Haitian President Jean-Claude ("Baby Doc") Duvalier, disclosed the audacious magnitude of Saddam's scheme last week on CBS's 60 Minutes. Kroll began chasing the hidden billions after Kuwait's government-in-exile hired him in the wake of last year's invasion. His mission: to locate secret Iraqi funds that Kuwait could use to rebuild itself once the crisis ended. "The phenomenon of using front companies is common," Kroll says of his findings. "What distinguishes this one is its level of sophistication."

Saddam launched the scheme after he seized power in 1979, Kroll and other investigators say. Key figures in the family-run scam allegedly included Saddam's half brother Barzan al-Takriti, Iraq's ambassador to the United Nations in Geneva, and Saddam's son-in-law Hussein Kamel, Iraq's Minister for Oil and Industry. Probers say the conspirators siphoned off 5% of the $200 billion that Iraq accumulated in oil revenues during the past decade. The group also reportedly demanded a 2.5% kickback from Japanese firms that did business in Iraq, and even skimmed off money from contracts between the Baghdad government and Saddam's own front companies.

Saddam shifted his funds through scores of dummy firms and dozens of foreign banks. Conspicuous among the financial institutions was B.C.C.I., now based in Abu Dhabi, which Kroll called "one of the more prominent banks in handling Iraqi money." Saddam also used a Panamanian shell company called Montana Management to acquire an 8.4% stake in Hachette, the publisher of such popular magazines as Elle, Woman's Day and Road & Track. While Hachette swiftly denied that Montana played any role in its management, nervous investors unloaded the media giant's stock, causing it to lose 3.6% of its value in a single day once the Iraqi stake became known. Hachette closed the week at a little less than 36 a share, down 4.3% from the previous week.

Washington had previously seized some of Saddam's holdings as part of $1 billion of Iraqi assets that the U.S. froze after Iraq invaded Kuwait. The properties were connected with Anees Masoor Wadi, an Iraqi middleman who resided in a $3.5 million Beverly Hills home -- where his neighbors included actor Gene Hackman and director John Landis -- and who was allegedly part of Saddam's global network for procuring arms and military technology. Wadi reportedly helped acquire a suburban Cleveland machine-tool firm called Matrix-Churchill, which made versatile computer-operated jig grinders that could be used to produce precision parts for everything from consumer products to aerospace and nuclear equipment. According to Kroll, the Ohio-based company also submitted inflated bills to Iraq that enabled Saddam to skim funds and deposit them in foreign bank accounts.

Washington targeted both Wadi and Matrix-Churchill in its seizure of Iraqi holdings in the U.S. after the gulf crisis broke out. Federal agents shut the machine-tool company in September and took possession of Wadi's Sunset Boulevard mansion last month, along with his bank accounts, including one that contained $200,000. The Immigration and Naturalization Service ordered Wadi to leave the country by the end of March, when his visa was due to expire, or face arrest and deportation proceedings. As governments assemble more details of Saddam's stolen secret billions, such crackdowns could become increasingly common around the world.

With reporting by S.C. Gwynne/New York, with other bureaus