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DIVESTING SADDAM: FREEZING, SEIZING,

AND REPATRIATING SADDAM’S MONEY TO

THE IRAQIS

HEARING

BEFORE THE

SUBCOMMITTEE ON 

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

MAY 14, 2003

Printed for the use of the Committee on Financial Services

Serial No. 108–28

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa 

DOUG BEREUTER, Nebraska 

RICHARD H. BAKER, Louisiana 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

ROBERT W. NEY, Ohio 

SUE W. KELLY, New York, Vice Chairman 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

JIM RYUN, Kansas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

DOUG OSE, California 

JUDY BIGGERT, Illinois 

MARK GREEN, Wisconsin 

PATRICK J. TOOMEY, Pennsylvania 

CHRISTOPHER SHAYS, Connecticut 

JOHN B. SHADEGG, Arizona 

VITO FOSELLA, New York 

GARY G. MILLER, California 

MELISSA A. HART, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

PATRICK J. TIBERI, Ohio 

MARK R. KENNEDY, Minnesota 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

TIM MURPHY, Pennsylvania 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

BARNEY FRANK, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

DARLENE HOOLEY, Oregon 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

JAY INSLEE, Washington 

DENNIS MOORE, Kansas 

CHARLES A. GONZALEZ, Texas 

MICHAEL E. CAPUANO, Massachusetts 

HAROLD E. FORD, JR., Tennessee 

RUBE ́ N HINOJOSA, Texas 

KEN LUCAS, Kentucky 

JOSEPH CROWLEY, New York 

WM. LACY CLAY, Missouri 

STEVE ISRAEL, New York 

MIKE ROSS, Arkansas 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

JIM MATHESON, Utah 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

RAHM EMANUEL, Illinois 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

BERNARD SANDERS, Vermont

Robert U. Foster, III, Staff Director 

(III)

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

SUE W. KELLY, New York, Chair

RON PAUL, Texas, Vice Chairman 

STEVEN C. LATOURETTE, Ohio 

MARK GREEN, Wisconsin 

JOHN B. SHADEGG, Arizona 

VITO FOSSELLA, New York 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

TIM MURPHY, Pennsylvania 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

LUIS V. GUTIERREZ, Illinois 

JAY INSLEE, Washington 

DENNIS MOORE, Kansas 

JOSEPH CROWLEY, New York 

CAROLYN B. MALONEY, New York 

CHARLES A. GONZALEZ, Texas 

RUBEN HINOJOSA, Texas 

JIM MATHESON, Utah 

STEPHEN F. LYNCH, Massachusetts 

(V)

C O N T E N T S 

Page 

Hearing held on: 

May 14, 2003 ..................................................................................................... 1

Appendix: 

May 14, 2003 ..................................................................................................... 31

WITNESSES 

WEDNESDAY, MAY 14, 2003

Aufhauser, Hon. David, General Counsel, Department of the Treasury ............ 5

Lanzillotta, Lawrence, Principal Deputy and Deputy Under Secretary of Defense for Management Reform, Department of Defense ................................... 9

Wayne, Hon. E. Anthony, Assistant Secretary for Economic and Business 

Affairs, Department of State ............................................................................... 7

APPENDIX 

Prepared statements: 

Kelly, Hon. Sue W. ........................................................................................... 32

Oxley, Hon. Michael G. .................................................................................... 34

Gutierrez, Hon. Luis V. .................................................................................... 36

Maloney, Hon. Carolyn B. ................................................................................ 38

Shadegg, Hon. John B. ..................................................................................... 40

Aufhauser, Hon. David D. ................................................................................ 42

Lanzillotta, Lawrence ....................................................................................... 51

Wayne, Hon. E. Anthony ................................................................................. 54

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Kelly, Hon. Sue W.: 

Banker who hid Saddam’s Millions, London Times, April 13, 2003 ............ 63

Hussein’s Son Took $1 Billion Just Before War, New York Times, May 

6, 2003 ............................................................................................................ 69

Iraqi Oil Smugglers Eluded U.S. Patrols, Washington Post Foreign Service, May 7,2003 .............................................................................................. 72

Swiss Lawyer Denies Being Saddam’s Banker, Agence France-Presse,

April 14, 2003 ................................................................................................ 75

The Search for Saddam’s Bucks, New York Daily News, May 4, 2003 ........ 77

The Search for Saddam’s Stash, CNNMoney, April 16, 2003 ....................... 81

Tracking Saddam’s Billions, April 3, 2003 ..................................................... 86

Wayne, Hon. E. Anthony: 

Written response to questions from Hon. Luis V. Gutierrez ........................ 89

Written response to questions from Hon. John B. Shadegg ......................... 94

Lanzilotta, Lawrence: 

Written response to questions from Hon. Luis V. Gutierrez ........................ 99

(1)

DIVESTING SADDAM: FREEZING, SEIZING, 

AND REPATRIATING SADDAM’S MONEY TO 

THE IRAQIS 

Wednesday, May 14, 2003

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2128, Rayburn House Office Building, Hon. Sue W. Kelly [chairwoman of the subcommittee] presiding. 

Present: Representatives Kelly, Paul, Shadegg, Hensarling, Garrett, Murphy, Brown-Waite, Barrett, Oxley (ex officio), Gutierrez, 

Moore, Inslee, Crowley, Maloney, Lynch, Davis and Renzi. 

Chairwoman KELLY. Before I begin this hearing I want to explain that I am on another committee as well which is in the middle of a markup. I may have to take a break every once in a while 

to go over for votes. So, just to give you all fair warning that may 

happen, I hope that we can move along with this hearing. 

So that being said, this hearing of the Subcommittee on Oversight and Investigations will come to order. 

Over the last 20 years, Iraq and its people have been systematically looted by the brutal tyranny of Saddam Hussein. Today, tens 

of billions of dollars in assets and cash lie somewhere outside of 

Iraq in the smoky depths of phony front companies, hidden trusts, 

and cash accounts in the names of regime family members and loyalists. This stolen money represents another layer of destruction 

and deceit that the Hussein regime inflicted on the Iraqi people. 

Specifically, you can recall the reaction of the Iraqi who stormed 

one of many Presidential palaces on April 14 and was finally free 

to express his feelings. And as he passed through that ruined palace, with shards of crystal from chandeliers and shattered mirrors 

and all that gilt furniture, he was marveling bitterly at Saddam’s 

life of luxury and commented that his family couldn’t even afford 

bread. 

The Iraqi people have suffered enough and this money that was 

taken belongs to them. These assets must be found and they must 

be returned to the people of Iraq to build schools and reopen businesses and hospitals and repair the country’s infrastructure, all of 

it destroyed by the malicious neglect of a tyrant and his inner circle. 

Today the Oversight Investigations Committee holds the first 

congressional hearing on the search for Saddam’s money and the 

2

efforts to return it to the Iraqi people. Initial press reports are startling, with stories of shell companies in numerous countries, discoveries in Iraq of hundreds of millions of U.S. Dollars, and oil smuggling schemes that are without parallel among other petty dictators 

and thugs. 

Passage of this committee’s work on the Patriot Act has been a 

tremendous step toward monitoring the flow of illicit money and it 

has also served to raise the bar for the international community. 

Foreign financial institutions can no longer seek access to the U.S. 

market without providing U.S. financial enterprises with sufficient 

information to determine that no one is being misled by Saddam, 

his family, or their agents. 

Our message to the world is straightforward and it should be 

heeded: The willingness to share cross-border information is now a 

license required to do business in America. 

In case you missed that, let me repeat it: The willingness to 

share cross-border information is now a license required to do business in America. 

We have accomplished a great deal in Iraq in a very short time. 

President Bush has been steadfast in his resolve to end tyranny, 

terrorism, and torture. The Administration, our brave soldiers and 

sailors, the coalition troops, have earned the admiration of the 

American people and the world for the rapid liberation of a terribly 

oppressed nation, a nation that spent its money funding, aiding, 

and exporting terrorism instead of caring for its people. 

Congress must continue to give the Administration the resources 

it needs to locate and return the money to its rightful owners: the 

men, women and children of Iraq. While a collaborative effort is 

underway to seize this money, let’s be very clear. America expects 

nothing less than the highest level of cooperation from financial institutions, international entities, and foreign governments across 

the globe. We know the money is out there and we will find it and 

we will return it to the Iraqi people, and we expect others to do 

the same thing. 

We are pleased to have with us here today witnesses from the 

three principal departments responsible for efforts to repatriate 

this money to Iraq. At this time it is unclear what role each entity 

plays in the process. I am hoping that you can shed some light, you 

who are testifying, on how the U.S. Government works with the 

international community and the financial services industry to repatriate financial assets of dictators. 

The committee has also an immediate interest in determining 

how entities across the world are working together to return 

Saddam’s illegal money to the Iraqi people. Therefore, I would also 

like to announce that we will be requesting, this committee will request for GAO to study these issues. Chairman Oxley and I, along 

with Ranking Members Frank and Gutierrez have agreed that this 

is an issue that must be examined as closely as possible and we 

will be sending a letter this afternoon to request this study from 

the GAO. 

There are many challenges ahead and we believe that this independent investigation by GAO will help to address them in a comprehensive and effective way. 

3

I thank this panel for their appearance. I look forward to working with you all to ensure the Iraqi people recover the assets that 

they now own and that will be critical to building a free and democratic Iraq. 

And Mr. Gutierrez’s plane just landed, so I am going to call on 

Mrs. Maloney. 

[The prepared statement of Hon. Sue W. Kelly can be found on 

page 63 in the appendix.] 

Mrs. MALONEY. And I thank the gentlelady from the great State 

of New York for holding this important hearing. And I thank all 

our panelists. 

This morning the subcommittee examines the seizure of Saddam 

Hussein’s assets and Administration efforts to repatriate them. 

These assets were the product of years of looting from the Iraqi 

people, including the diversion of resources from humanitarian programs such as Oil for Food, and are further evidence of the sickness of Saddam’s regime. 

Just prior to military action on March 20, the President issued 

an Executive Order confiscating and vesting property of the Government of Iraq in the United States. The Executive Order operates under authority in section 106 of the Patriot Act. The order 

resulted in the seizure of 1.7 billion in assets by the U.S. Treasury 

Department from accounts held in the U.S. In the name of the Government of Iraq, the central bank of Iraq, the State organization 

for marketing oil, the Rafidain bank, the Rasheed bank. 

As CRS explains and I quote: This authority becomes available 

when the United States is engaged in armed hostilities or has been 

attacked by a foreign country or its nationals. At this time, the 

property of any foreign person, organization or nation which 

planned, authorized, aided, or engaged in the hostilities or attack 

become forfeitable. 

Given that we have yet to find Saddam, this seizure is especially 

important because of flight risk and the threat that his assets 

could be used to assist terrorists. 

This morning our panelists will testify to the success of their efforts to track down Saddam’s assets through his tangled web of accounts. This was difficult work and our witnesses and their departments deserve credit for a job well done. However, the job of limiting Saddam’s funding sources is far more complex. Treasury’s 

own testimony estimates that his family’s wealth could be as much 

as $40 billion worldwide. 

I also look forward to a discussion this morning of what is next 

for the assets seized from Saddam. The President’s Executive 

Order stated, and I quote, ‘‘such a vested property should be used 

to assist the Iraqi people and to assist in the reconstruction of 

Iraq,’’ end quote. 

This is a very broad statement that gives the Administration 

wide latitude for potential uses of this money. As this money was 

stolen from the people of Iraq, the U.S. in a sense is acting as a 

fiduciary for the Iraqi people. Iraq is a nation that suffers massive 

international debts. The Iraqi people will need every resource 

available to them to rebuild the country and service their debt obligations. 

4

Whatever the final determination is for the uses of this money, 

I believe these decisions should be made in the open, not in closed 

Administration meetings. This money does not belong to the United 

States and it must not be obligated in no-bid rebuilding contracts, 

as has been the case with other Iraq projects. I think this issue is 

so important that last week I offered an amendment in the Government Reform Committee that would apply the highest Federal contracting standards to seized Iraqi assets. I withdrew the amendment because I wanted to hear from our witnesses this morning before proceeding. I did offer another amendment that requires full 

and open disclosure of contracts that were awarded without open 

bidding to the lowest responsible bidder. I am pleased that this 

amendment was accepted by the majority and attached to the defense authorization bill. I believe a similar one may be required for 

the assets that are the topic of this hearing. And I look very much 

forward to your statements. 

In short, the Iraqi people suffered for 25 years and it is very important to get this money back into their hands for the rebuilding 

effort. And I hope that we are working with the United Nations, 

which happens to be in the district that I represent, to broaden the 

burden sharing so that other countries will be participating in a 

multilateral effort to help Iraq and to help rebuild it. 

I am also interested in any efforts to seize the assets in foreign 

countries and where the United Nations stands in assisting our 

country to find these assets, seize them, return them to the Iraqi 

people. I am very concerned and dedicated to helping them. But we 

have many domestic challenges here at home in education, health 

care, and we really cannot carry this burden alone. So I hope the 

Administration is working to share this burden with other countries. 

I thank you very much for being here and I yield back the balance of my time. 

Chairwoman KELLY. Thank you. 

[The prepared statement of Hon. Carolyn B. Maloney can be 

found on page 38 in the appendix.] 

Chairwoman KELLY. Mr. Murphy. No opening statement? 

Mr. Gutierrez. 

Mr. GUTIERREZ. So that we can get to the witnesses, may I hand 

my opening statement for the record? 

Chairwoman KELLY. Yes. Without objection, all members’ opening statements will be made part of the record. 

[The prepared statement of Hon. Luis V. Gutierrez can be found 

on page 36 in the appendix.:] 

Chairwoman KELLY. Mr. Barrett. Mr. Oxley, I am sorry, I didn’t 

see you down there. 

Mr. OXLEY. Thank you. I was hiding behind—— 

Chairwoman KELLY. Mr. Chairman. 

Mr. OXLEY. ——behind our distinguished freshman here. I just 

want to congratulate the Chairlady for this hearing today, submit 

my statement for the record, and welcome our witnesses. 

This is a very important issue that our committee has undertaken, having passed the anti-money laundering provisions of the 

USA Patriot Act, and I know your interest in this personally. And 

5

we are looking forward to this as being the first step in finding 

where Saddam’s money is and going after it. 

So again, I thank you for your perseverance and I yield back. 

Chairwoman KELLY. Thank you. 

[The prepared statement of Hon. Michael G. Oxley can be found 

on page 34 in the appendix.] 

Chairwoman KELLY. All right, then, we are just going to go on 

down here. 

Mr. Barrett. No? No statement. 

Mr. Renzi. 

Mr. RENZI. I am good to go. 

Chairwoman KELLY. Mr. Hensarling? 

All right, then, if there are no more opening statements, we proceed to the witness panel, the witnesses this morning. We welcome 

David Aufhauser, General Counsel, the Treasury Department, and 

Mr. E. Anthony Wayne, Assistant Secretary for the Economic and 

Business Affairs of the State Department, who together represent 

the lead Cabinet departments in the worldwide search for 

Saddam’s money. 

We also welcome Larry Lanzillotta, who is Principal Deputy of 

Defense in the Comptroller’s Office and Deputy Under Secretary of 

Defense for Management Reform—that is a lot of water you are 

carrying there sir—who is testifying about the assets found in Iraq 

by our troops which will be used for the benefit of the Iraqi people. 

We thank the witnesses for testifying. We welcome you on behalf 

of the committee and, without objection, your written statements 

and any attachment that you may have will be made part of the 

record. You will now each be recognized for a 5-minute summary 

of your testimony. When the light goes on green, obviously means 

you have time; yellow means you have 1 minute to sum up; and 

red means the time is over. 

And we will proceed with you, Mr. Aufhauser. 

STATEMENT OF DAVID AUFHAUSER, GENERAL COUNSEL, 

DEPARTMENT OF THE TREASURY 

Mr. AUFHAUSER. Thank you, Madam Chairwoman, and thank 

you to members of the committee for holding this session. We look 

forward to not only informing you about what we are doing, but we 

look forward to your counsel and to your recommendations and 

suggestions. 

A great deal of money will be required to put Iraq back on an 

even keel. But that is not because of 25 days of war. It is because 

of 25 years of tyranny, a tyranny that made a prisoner of thought 

and a criminal of honest enterprise. The long war with Iran, the 

unlawful invasion of Kuwait, the elevation of palace corruption to 

an art form, and the decade of sanctions, book-ended by obscene 

public extravagances in the palaces while the common man lined 

up at one of 55,000 U.N. food distribution points, all bankrupted 

a rich country in everything except the hunger for freedom. 

Now that they have the freedom, the Iraqi people deserve their 

wealth back: the inestimable wealth of the oil in their soil; the $1.7 

billion of vested assets here in the U.S.; the approximately $2.3 billion of similarly frozen or blocked accounts in countries around the 

globe dating back to 1990; the recovery of the stolen assets of the 

6

central bank; the unallocated U.N. OFF money, Oil for Food program money; the establishment of the donors fund from the community of nations under the supervision of the World Bank or the 

IMF; and, of course, the identification, capture, and repatriation of 

the hidden money or previously unaccounted for wealth of the nation. 

This last tranche of money is expected to occupy much of this 

morning’s testimony. And it should. It should not be because we 

are Pollyanna-ish in the belief that much of it has not been widely 

misspent in acts of unimagined profligacy, and not because it 

makes good theater, and not because much of it may already have 

taken flight; but rather, it is the right thing to do for so many reasons. Whatever unfound money there is ought to be returned to 

feed people. Whatever the hidden wealth is, it needs to be captured 

before it falls into the hands of purveyors of terror. And whatever 

commerce took place by corrupting the U.N. Oil for Food program 

and by nakedly gaming the economic sanction program up at the 

U.N., it needs to be answered and punished by denying profit to 

the illegal trade. 

Now, frankly this last point is perhaps the most troubling. Some 

of the best of our kids perished in Iraq because a significant part 

of the world did not effectively enforce the U.N. sanctions program 

to keep arms from Saddam Hussein. One of the first acts of the 

Bush Administration back in March of 2001 was to introduce a resolution in the U.N. to smarten those sanctions, to accelerate the delivery of humanitarian goods, to close the trafficking in smuggled 

oil, and to try to stem the holiday of corruption that Hussein had 

made of the Oil for Food program. We succeeded only in the 

former. The price has been the lengthened tenure of a tyrant, and 

now blood in the sand. 

The search for the hidden wealth of Hussein and his regime is 

therefore more than a search for assets. It is a reaffirmation of the 

rule of law and a necessary reinforcement of the notion that while 

economic sanctions can be a powerful tool for policing state sponsors of terror, where the enemies of democracy worldwide, if casually enforced—if casually enforced, they can be a lethal tonic of 

false security. So the search both in-country, back in Iraq, and 

around the globe is an imperative. 

I am happy to report there are promising advances in that 

search, both in setting up the process and in capturing previously 

unknown monies. I leave you with one example. We have been in 

dialogue, near constant dialogue with the central bank of Lebanon. 

They have confirmed yesterday that more than $495 million of previously unknown assets held by the central bank, the former central bank of Iraq, and by SOMA, the State Oil Marketing Organization, have been secured and will not be released to anyone until we 

stand up a new central bank, at which time they commit to send 

it back to and to repatriate it back to Iraq. 

More importantly, we have an open invitation from that jurisdiction and others, but particularly that jurisdiction and the governor 

of the central bank, to proceed with presenting them with what evidence we have of suspected front companies, again with the commitment that if the evidence is sufficient to act upon, they would 

7

secure those accounts, whatever they are, with the ultimate intention of repatriating them back to Iraq. 

I give that to you as one example. I will be glad to give you more 

during the testimony. With that I will close. 

Chairwoman KELLY. Thank you, Mr. Aufhauser. 

[The prepared statement of Hon. David Aufhauser can be found 

on page 42 in the appendix.] 

Chairwoman AUFHAUSER. Mr. Wayne. 

STATEMENT OF E. ANTHONY WAYNE, ASSISTANT SECRETARY 

FOR ECONOMIC AND BUSINESS AFFAIRS, DEPARTMENT OF 

STATE 

Mr. WAYNE. Thank you very much, Madam Chair, and esteemed 

members of the subcommittee and the general committee. 

It is a pleasure to be here to discuss this very important topic 

of all the work that we are doing to identify, freeze, and prepare 

for the return of Iraqi State assets so they can benefit the Iraqi 

people. This is a truly interagency effort with the active participation of a number of agencies and departments not represented here 

today, and it has to be that to succeed. 

And as you know, this is one part of the broader effort to deal 

with all the challenges that have arisen and are now there to get 

back on a path to development and prosperity for the people of 

Iraq. But finding and restoring these assets can be a very important part in that process, in providing the resources that are needed for the people of Iraq to develop themselves and to build their 

prosperity. 

After the 1990 invasion of Kuwait, the United States acted very 

quickly and decisively to deprive the regime of Saddam Hussein of 

the means and materials to continue its regional aggression, to further develop its programs of weapons of mass destruction, and to 

continue the repression of the Iraqi people. 

Based on U.N. Security Council Resolution 661, we quickly froze 

and blocked all of the Iraqi State assets legally in our jurisdiction. 

We also acted to prevent the regime of Saddam Hussein from acquiring additional revenues and goods through the illicit sale of 

Iraqi oil. We mounted and continued through the decade a very aggressive campaign, a diplomatic campaign to pressure countries to 

enforce the sanctions against Iraq. We worked with our Gulf War 

coalition partners to interdict illicit oil in the Gulf, and we took punitive actions in a number of cases for sanction busters where we 

had those options available. 

As Mr. Aufhauser has made clear, there are two dimensions to 

our current effort to assure that Iraqi State assets are made available for the benefit of the Iraqi people: 

First, President Bush has acted to vest more than $1.7 billion in 

Iraqi Government assets in the U.S., and these assets are being 

made available to assist the Iraqi people and to assist in the reconstruction of Iraq. 

And secondly, we are working with other countries around the 

world. We have reached out first to about 30 countries that declared that they have assets that were frozen in 1990 and 1991, 

and simultaneously to an additional 20 or so countries where we 

thought there might be additional assets available. And we have 

8

asked all of these countries to carefully examine their bank 

records, their other financial records, to verify the numbers that 

are there, to find additional assets and to work with us to prepare 

for the return of these assets to Iraq. 

Many countries have expressed their support in this effort. Also 

many countries have different legal systems than we do. In fact, 

not many countries have the robust set of tools which you and your 

fellow Members of Congress have made available to the President 

to act as he did, vesting these assets in the United States. And 

many governments are looking forward to a new U.N. Security 

Council resolution that will help prepare the way for them to feel 

that they can return the assets to Iraq. 

As you know, we have now tabled, along with the United Kingdom and with Spain, on May 9, such a Security Council resolution. 

As President Bush has made clear, this resolution is aimed at lifting the sanctions on Iraq. But part of this resolution also would direct other countries to identify all the Iraqi State funds, other economic resources and financial assets tied to Saddam Hussein and 

members of his regime, and repatriate those funds into an Iraqi Assistance Fund, which would be held in the Iraqi central bank, 

would be held there in conjunction with an international advisory 

board, and would be used to help rebuild Iraq and to help meet the 

urgent humanitarian needs. 

The State Department is now deeply engaged, as you have seen 

on the front pages every day, from Secretary Powell on down and 

our Ambassadors around the world and our team in New York, 

working hard to get this resolution passed very quickly. We are 

also working extremely closely with the Departments of Treasury, 

Justice, Defense, Homeland Security, as well as the law enforcement and intelligence agencies to identify the assets that are out 

there and to identify the front companies that have been connected 

to Saddam Hussein and his regime. 

We have focused on a number of countries in this effort. We have 

reached out to countries in the region such as Jordan, Turkey, Lebanon, Syria, Bahrain and the UAE. Overall, we have found foreign 

governments very open to cooperating in this effort, as Mr. 

Aufhauser indicated. 

We are reaching out to countries such as Switzerland, the United 

Kingdom, the other countries in Europe. We are very closely working to identify all the illicit channels, and we can get into this further in the testimony, since I see my time has run out. 

I would just say that as we have also worked through this effort, 

we have a very closely knit interagency team. They are in practically daily—not practically, really daily—contact in working this 

through so we can use law enforcement intelligence and diplomatic 

channels in this overall effort. 

We have also been, I think, very clear on the use of assets, as 

Mrs. Maloney mentioned in her introductory remarks, that these 

have to be for the benefit of the Iraqi people and that these assets 

need to be spent in a transparent, publicly explainable, accountable 

method that is evidently for the benefit of the Iraqi people. 

We look forward to talking about this and also some of our 

broader efforts, if you are interested, against corruption and in 

favor of transparency around the world. And we look forward and 

9

I look forward to working with you, Madam Chair, and the other 

members of the committee in this ongoing discussion and this ongoing effort of how we best take these tasks on and bring them to 

a successful conclusion. 

Thank you very much. 

Chairwoman KELLY. Thank you, Mr. Wayne. 

[The prepared statement of Hon. E. Anthony Wayne can be found 

on page 54 in the appendix.] 

Chairwoman KELLY. Mr. Lanzillotta. 

STATEMENT OF LAWRENCE LANZILLOTTA, PRINCIPAL DEPUTY AND DEPUTY UNDER SECRETARY OF DEFENSE FOR 

MANAGEMENT REFORM, DEPARTMENT OF DEFENSE 

Mr. LANZILLOTTA. Madam Chairwoman and members of the subcommittee, we appreciate this subcommittee’s interest in the disposition of Saddam Hussein’s assets and returning these assets to 

the Iraqi people. I welcome the opportunity to summarize the role 

of the Department of Defense in this area as well as discuss our 

procedures pertaining to the administrative use and accounting of 

the vested and seized Iraqi property. 

Now that the regime of Saddam Hussein no longer rules Iraq, it 

is the primary aim of the Department of Defense to take all measures necessary to ensure much needed humanitarian and reconstruction assistance is brought to the Iraqi people so that they can 

begin to rebuild their lives and the country after decades of oppression. 

Towards this end, the Department is committed to using Iraqi 

State- and regime-owned property that has been vested in the U.S. 

Treasury from banking accounts in the U.S. and state- and regimeowned cash, funds, or realizable securities found and seized in Iraq 

to assist the Iraqi people and to assist the reconstruction of their 

country. 

On March 20, 2003 the President, acting pursuant to the International Emergency Economic Powers Act, confiscated and vested 

in the Treasury approximately 1.7 billion in Iraqi Government assets to be used to assist the Iraqi people and to assist in the reconstruction of Iraq. The Secretary of the Treasury has subsequently 

designated the Secretary of Defense with the authority to use approximately 92 million of this property. 

On April 30, 2003, the President confirmed the authority of the 

Secretary of Defense under the laws and usage of war to seize, sell, 

administer, or use state- or regime-owned cash, funds, or realizable 

securities in Iraq. The President specified that this property shall 

be used only to assist the Iraqi people in support of the reconstruction of Iraq. 

The Department of Defense is dedicated to work with the affected U.S. Government agencies to ensure that vested and seized 

properties are subject to rigorous procedures to ensure that such 

property is properly safeguarded, accounted for, audited, and used 

only to assist the Iraqi people and to assist in the reconstruction 

of Iraq. 

Presently the Department, in collaboration with U.S. Government entities such as the Department of the Treasury, Office of 

Management and Budget, GAO, has developed procedures for adVerDate 0ct 09 2002 09:33 Oct 22, 2003 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 C:\DOCS\89631.TXT MICAH PsN: MICAHW
10

ministrating, using, and accounting for vested assets. These procedures outline, for example, the manner in which vested property 

will be secured, transported, accounted for, disbursed, and used 

and audited to ensure it applies, as authorized by law and approved by the President. 

To date, nearly 22.8 million in vested assets have been used to 

assist the Iraqi people and assist in reconstruction efforts. These 

vested funds have been used to make greatly needed emergency 

payments to Iraqi civil servants and pensioneers; to help pay for 

startup costs of Iraqi ministries; and to provide other forms of intermediate impact humanitarian assistance. 

With regard to state- and regime-owned property seized in Iraq, 

the Department is in the process of developing in coordination with 

other affected government agencies, procedures similar to those 

used for vested assets regarding safeguarding, auditing, accounting 

for, and use of such property to ensure its use as authorized by law 

and approved by the President. 

The procedures will specify, among other things, that seized 

state- and regime-owned property shall be held on behalf and for 

the benefit of the Iraqi people and shall only be used to assist the 

Iraqi people in support of reconstruction of Iraq. The procedures 

will also ensure that determinations of whether the property found 

in Iraq is public or private are made in accordance with applicable 

domestic and international law. 

In summary, the Department of Defense is deeply committed to 

ensure that vested and seized assets of the Saddam Hussein regime are used in accordance with law, and rigorous accounting and 

auditing procedures are in place, and only to assist the Iraqi people 

and assist the reconstruction of Iraq. 

I thank you for this opportunity. This concludes my formal statement, and I would welcome any questions from the committee. 

Chairwoman KELLY. Thank you very much Mr. Lanzillotta. 

[The prepared statement of Lawrence Lanzillotta can be found on 

page 51 in the appendix.] 

Chairwoman KELLY. Mr. Aufhauser, I want to thank you for the 

very important information about the Lebanon bank. Congratulations on that, sir. I think most Americans were completely appalled 

when the news came out that there was someone in the Saddam 

regime who was essentially using U.S. currency as what might be 

called an insulation in their house. So when they opened that wall 

and found all those dollars in boxes, we knew that there was a lot 

of money. And I am delighted to think that the Bank of Lebanon 

is now working with us, and you are to be congratulated on that. 

You mentioned that you might have other examples. Would you 

be willing to share some of those with us? 

Mr. AUFHAUSER. Well, let me go through, if I can, the—thank 

you first for that comment. 

It is more than Treasury, though. It was, again to reflect Mr. 

Wayne’s comments, everything we do actually is quite joined at the 

hip, interagency, on this matter. Tony and I know each other too 

well because of all of this. 

It might be helpful if we rehearse the litany of actions we have 

taken. The first and most important is the exploitation of the data 

that we find in Baghdad which is effectively shared in what is 

11

called the fusion center of information, either in Qatar or Kuwait, 

or back in CENTCOM down in Tampa, made available to those of 

us working on these matters. That is the exploitation of the data. 

Some of the documents, by way of example—and I want to refer 

to this somewhat elliptically and maybe we can get into it in a 

later session—is perhaps a road map for front companies that we 

previously didn’t know about. 

Second major resources, of course, would be information made 

available to us by the detainees, and interrogations have gone forward on some of the key detainees, such as the Finance Minister. 

But that is an interactive process and those will continue. 

Those participating either in scripting it or actually in conducting the interrogations include representatives from the FBI 

and Customs and Treasury and DOD and others. 

Third, of course, is reaching out to the jurisdictions of the border 

states which did a great deal of what we will term the illicit trade 

with Iraq, and to secure document exploitation there as well as the 

attempts to request that they freeze assets. 

Let me pause there for a second and underscore how important 

the documents are. A lot of the information we get in this kind of 

endeavor, as is the case in the war on terrorist financing, is really 

suspect. It comes from disreputable people, or it comes from people 

who find themselves in distress and will say anything. But the one 

thing that doesn’t lie are the financial records that you get ahold 

of. And these financial records are very useful for three reasons: 

One is not only trying to secure the assets; but, two, telling us who 

participated, who participated in the nefarious activity; and three, 

perhaps helping us track down suppliers or purveyors of what is 

necessary to put together weapons of mass destruction. So going 

after the records is almost as important as going after the assets. 

But to return to the litany of actions taken, we have gone to 

those border jurisdictions and we have investigative teams in some 

of them—I don’t want to identify them in this session—again, to 

good accord, to the effect of another $800 million, give or take, that 

has been secured. I use the word ‘‘secured.’’ I don’t want to use the 

word ‘‘locked’’ or ‘‘frozen,’’ because they are in a suspense account 

under a different kind of legal regime. 

Then, of course, we have the jurisdictions which were the switching stations for where the money went. Some of those are border 

states. Some of those are other Gulf States, and we have gone to 

them to see whether or not we can get access to information to 

trace where the money might be nested. 

And finally, we have gone to many of the jurisdictions which are 

known as nested jurisdictions or potential nested jurisdictions 

where we think the money might be, if it hasn’t flown the coop already. 

On all of those actions we are actually making substantial 

progress. I will be making a fair amount of trips in very short 

order, delivering some material information developed by the U.S. 

Government to whet the appetite of those nested jurisdictions and 

others to climb on board and help us. 

Chairwoman KELLY. Thank you. I want to ask both you and Mr. 

Wayne, who is the single official in charge of this effort? 

12

Mr. AUFHAUSER. Out of deference to the man who gave me my 

job, I want to say President Bush is first. In country, in country 

in Iraq, mainly DOD is in charge of marshaling the assets and setting up the interrogations and exploiting the documents. But we 

are in—as I referred to the fusion center before, we are in constant 

dialogue with them. But short answer, in country, it is DOD. The 

rest of the globe it is Treasury, but it is Treasury building consensus, not in a linear fashion of commanding people what to do. 

Chairwoman KELLY. But is there one single individual who is in 

charge of this? 

Mr. AUFHAUSER. Yes. 

Chairwoman KELLY. The reason I am asking is—— 

Mr. AUFHAUSER. The answer is me, on behalf of Secretary Snow. 

Chairwoman KELLY. All right. So that in other words, you have 

the authority if there is—the agencies disagree on a strategy or an 

action, you have the authority then to make the final decision; is 

that correct? 

Mr. AUFHAUSER. No, I don’t want to overstate my importance. I 

have the authority to make a recommendation to Secretary Snow 

to make the final decision. 

Chairwoman KELLY. So Secretary Snow is the individual in 

charge. 

Mr. AUFHAUSER. Yeah. But I do want to come back to you and 

I want to underscore the dynamics of the process. It is nearly like 

an NSC interagency policy coordinating committee. So we ultimately make recommendations to the NSC, which is to say, the 

White House and the President, if there is disagreement. But our 

job is to make sure that we iron out disagreement at our level. 

Chairwoman KELLY. Thank you very much. I am out of time. 

Mr. Gutierrez. 

Mr. GUTIERREZ. Thank you very much. I guess just for the panel, 

how much do you believe is out there, approximately? If there is 

a—and of that, and I understand a little bit more about the decisionmaking— but how do—is there a plan? How much does the 

United States get? How much do those that have claims, how much 

do the Kuwaitis—I mean, if there is—I guess if somebody said 

there were $50 billion out there and I suspected there were $50 billion out there and I knew that there were different people claiming 

the money, and I was in charge, and I also had expenses in terms 

of the rebuilding of Iraq and providing—is there a plan that says 

well, you know, it is costing the United States Government so 

much, so maybe 10 percent of every dollar should go here and 5 

percent should go here and, you, know the Kuwaitis are demanding 

100 billion, so maybe 40 cent of every dollar—is there a plan that 

says here is how we are going to distribute the money? 

Mr. AUFHAUSER. I will give you paragraph one and perhaps Tony 

will give you paragraph two. 

First, on the estimate, it is wild-eyed guesstimating frankly, Congressman. Probably the best single guess is the GAO guess, which 

was $6.6 billion, to use their term, ‘‘conservatively’’ between 1997 

and 2001. And, of course, we would have 2 more years of the gaming and the corruption, so that number is undoubtedly, in my 

mind, conservative. With one exception. I do believe that amount 

of money was generated, at least that amount of money and more, 

13

perhaps twice, perhaps three times that, but I also believe a great 

deal of it was misspent, misspent either on those extravagances of 

personal disgrace, or for supplying, resupplying their army with 

spare parts, weapons, and the like. 

In terms of the plan, the ultimate plan is that wherever these 

assets are—with the resolution tabled in New York by the United 

States—is that they will be marshaled, gathered, and repatriated 

to the people of Iraq through the Iraqi Assistance Fund to be set 

up under the resolution established there. And that is the plan. It 

is not intended to reimburse the U.S. In any way for any of the 

costs incurred in freeing and liberating the people of Iraq, if I understood your question correctly. 

Mr. GUTIERREZ. Well, I just thought that as we move forward 

and we have plans as a government to assist the people of Iraq in 

the reconstruction, and those plans incur bills that need to be paid, 

if that—I think I understand that there is going to be a fund, and 

then they will—— 

Mr. AUFHAUSER. Well, in addition to the fund, a part of the current resources that we have command of—and Larry referred to 

it—is, under the law of occupation law, free to be expended for the 

benefit of the Iraqi people currently by General Franks and the coalition provisional authority right now. So the ongoing costs, if you 

will, the standing-up of the Iraq economy and the Iraq civilian authorities, is being underwritten by the Iraqi assets that have either 

been vested here in the U.S. Or found or seized in Iraq. To give you one specific example, $91 million in cash was shrinkwrapped here on the East Coast, put on convoy, taken to Andrews, 

I believe, put on planes and flown to Iraq, and that money has 

been used to underwrite the initial costs of pensioneers, pensions 

for the pensioneers, civilian costs of the oil workers and dock workers down in Kazar and the like. So the vested funds are being used 

precisely how the President said they would be used, and, Congressman Maloney, with every intention of being absolutely transparent about the expenditure of that money. 

Mr. GUTIERREZ. We are going to paragraph two. 

Mr. WAYNE. I might just add, you mentioned compensation 

claims. There are indeed a number of compensation claims from 

Kuwait and others that have been treated under a U.N. compensation commission. A number of those have been awarded, a large 

number have not yet been adjudicated. 

In the draft U.S. Security Council resolution that we have tabled, 

we have proposed to reduce the percentage of oil revenues that go 

into that from 25 percent right now to 5 percent, so that more of 

the oil revenues would go into rebuilding Iraq and that the compensation claims would be repaid over a longer period of time. 

There is also outstanding Iraqi debt. There is at least 19 billion 

indicated in the Paris Club initial look at this that we are now 

going out and trying to do additional, what we call data calls, to 

find out how much other debt is out there. That does not include 

any interest that might have accrued on this debt, because much 

of this debt has not been paid since 1990 or 1991, no payments into 

it. 

Additionally, just in totals of money, in 1991 there were about 

$6 billion of assets reported frozen around the world under the iniVerDate 0ct 09 2002 09:33 Oct 22, 2003 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 C:\DOCS\89631.TXT MICAH PsN: MICAHW
14

tial U.N. Security Council freeze orders, U.N. Security Council Resolution 661. Much of that remains in place. Much of that was the 

money that President Bush vested. 

In some countries, under their legal systems, some of that money 

has been used to pay claims that existed in that country, in the 

same way there are a number of court cases in the United States 

which had claims against some of the money in—that had been frozen in the United States. 

Mr. GUTIERREZ. Thank you very much. 

Chairwoman KELLY. Thank you. Chairman Oxley. 

Mr. OXLEY. Thank you, Madam Chairwoman. 

I had an opportunity to look over some of the press reports of 

some of the activities going on, the smuggling of oil under the oil 

for—somebody described the oil for palaces program, which I think 

really calls into question whether this type of plan set up by the 

United Nations really does work. It appeared that Saddam was 

skimming profits almost from the get-go on the sale of embargoed 

oil. And the article says Saddam even found ways to profit from the 

U.N.-run Oil for Food program. The Baghdad regime billed a 30-

cent to 50-cent per barrel kickback for its oil price. Can you imagine a 50-cent kickback on oil? 

And then it goes on to say, since U.N. sanctions were imposed, 

investigators and expatriates say the regime has kept most of its 

money outside Iraq in such safe and liquid investments as bank deposits and government bonds, even U.S. Treasuries. 

So these folks were obviously sophisticated in many ways. And 

apparently Saddam’s half brother, al-Tikriti, Hassan al-Tikriti who 

is now in our custody, was essentially the major bag man, although 

he had apparently a lot of help from Tariq Aziz who was operating, 

of course, under diplomatic immunity all over the world. Rather interesting. And I am going to ask all of you to just comment on this 

general situation. 

But it also indicates how difficult all of this process is as we 

learned, I think, when we were working on the anti-money laundering provisions of the USA Patriot Act. Although—and this is a 

quote from a Money Magazine article: Although agreements were 

reached in the 1990s to make asset recovery easier, the system remains difficult to negotiate, as I am sure all you gentlemen know. 

Eighteen years after Ferdinand Marcos—remember him—was overthrown in the Philippines, for example, at least six Swiss banks 

still are holding deposits he had made, even though they acknowledge the money is illicit and Marcos is long since dead. 

All of us recognize, again, how difficult this is, but perhaps the 

good news is now that we have access to some of these major players, that we can start to unravel that. Let me just open it up to 

all three of you in terms of some comments you may have. 

And lastly, if I could, it appears that without a concerted effort 

by either the Group of 8 or the U.N. or some international organization, this is going to be even more difficult. So let me just throw 

all of those out and let you—I know it is a softball, but that is what 

we are here for. 

Mr. AUFHAUSER. Mr. Chairman, I think we would just be repeating what you said. As for the U.N. program, as I pointed out in my 

brief oral statement, the Bush Administration immediately seized 

15

on the opportunity to try to tighten up the sanctions, because they 

were being corrupted in a naked, nefarious, brazen fashion, one 

that should have embarrassed the whole world. We failed up at the 

U.N. in doing that. So we resorted, if you will, to plan B, to make 

sure that to the extent we have the capabilities, intelligence or otherwise, to follow the money, that none of it is used to buy arms. 

Mr. OXLEY. Do you think that the—given the abject failure of the 

U.N. that front and obviously on the military front, that there is 

any hope that the U.N. could be shamed into changing their ways 

based on the incontrovertible evidence that is out there? 

Mr. AUFHAUSER. Well I don’t want to use the word ‘‘shamed.’’ 

and I occupy this office because I am actually a sanguine guy. The 

U.N. Security Council resolution tabled last week in Manhattan by 

Secretary Powell puts the ball right back into the U.N.’s court. It 

says we have to have—the worst and lousiest model in the world 

is 18 years of litigation in Switzerland over $600 million dollars of 

the Marcos assets. It is precisely that example that informed us in 

the drafting of the omnibus resolution tabled in New York, that 

said we need an alternative for the quick repatriation of these monies. So there continue to be a lot of complexities. 

If I can tell you one brief anecdote. Shortly after we vested assets 

here in the U.S., I was visited by an Ambassador from one of the 

former eastern bloc states who said to me, David, unfortunately in 

my country, we cannot take title to people’s property without going 

to court first. What he meant by that—and I, of course, retorted 

that was probably something, a difficult habit to kick. But they 

have changed their regime. The problem is the Patriot Act gave 

and vested in the President of the United States the most extraordinary power, the power to actually, through the stroke of a pen, 

take people’s money, take possession of people’s money and title to 

it, and apply it and disburse it. There is almost no other nation on 

Earth that has a similar statute. So we have to deal with the litigation—the legal issues posed in those countries in terms of dealing with third-party claims against the assets. 

Tony did you have something? 

Mr. WAYNE. Well, just to say there definitely were kickbacks that 

were going on. We were aware that there were kickbacks going on 

during this period. As you remember, it came in the context of establishing the Oil for Food program where there was a great concern expressed around the world, including in the United States, 

that the Iraqi people were not getting the food and the medicines 

that they needed to survive at a minimal level. So there was an 

attempt to really modify these comprehensive sanctions so you 

could allow and monitor certain kinds of sales and try to direct a 

lot of that to the humanitarian needs. 

Now, clearly Saddam Hussein and his officials figured out a lot 

of ways to try and get around that and the GAO study, that was 

done was a very good study. It identified how they started accumulating illicit assets. As we tried to work that through, as the U.S. 

Government over the past several years, at one point the United 

States and the U.K. put in a whole different way of pricing oil, so 

one didn’t get paid for oil until a month after the prices were set. 

And that actually cut back significantly the amount of kickbacks on 

the oil sales that had been going on. But it was far from perfect. 

16

And one of the real challenges here was that this was such a comprehensive sanction system, existing for such a long time, that very 

clever people found a lot of ways to go about it. 

We had an active interagency process involving the intelligence 

community, the law enforcement community, and others aimed at 

trying to find sanctions busters and to act against them. But often 

we were the strongest voice and the loudest voice in the world to 

act on this. And it was very tough slogging, as I am sure you remember, both in the U.N. and internationally a lot of times, to 

keep the momentum up on this issue. 

On the more general question of going after assets, it is exactly 

right that it is extremely complicated, because we have a plethora 

of different legal systems around the world. One of the additional 

areas where we are working on now to see if we can’t get a multilateral agreement is a proposed anticorruption convention in the 

U.N.. This would have a special chapter specifically on going after 

the assets, illicit assets of leaders and exposed leaders and others 

around the world. The idea is trying to get some common baseline 

so we can more easily work together with other countries and they 

can more easily work together with U.S.. 

It is an ongoing process. It is a real tough process, and certainly 

the tools that you have given the President and the Administration 

are very helpful in this effort. 

Mr. OXLEY. How many countries would you need to get to critical 

mass on something like that? 

Mr. WAYNE. Well, I think there are 120-some countries right now 

in the negotiation on this broad convention. There are clearly a 

number of key financial centers that will be essential to have in 

any convention. And they are all engaged in this. Some of them are 

in Europe, some of them in Asia, some in the Middle East and 

other places. And we are engaging with them not only, of course, 

in this U.N. Convention, but also in this process that is going on. 

In fact, one of the very nice stories in this so far is Switzerland. 

One of our colleagues just returned from Switzerland. The Swiss 

have actually stepped up and issued new ordinances and guidances 

to all of their institutions regarding the assets of Saddam Hussein 

and have been very actively cooperating with us in this effort. 

Mr. AUFHAUSER. On Saddam Hussein’s assets, if we had 20 countries, whether or not it is under the umbrella of the U.N. or 

through some other agreement, that would be critical mass. We 

have specifically identified countries. 

Mr. OXLEY. Very good. Thank you, Madam Chairman. 

Chairwoman KELLY. Thank you. 

Mr. Moore. 

Mr. MOORE. Thank you, Madam Chairwoman. 

To the panel generally, there is an Executive Order that some of 

you mentioned—it was in Mr. Wayne’s testimony—on March 20 

issued by the President that says, ‘‘All right, title, and interest in 

any property so confiscated,’’ and obviously he is talking about 

property confiscated in Iraq or elsewhere, ‘‘should vest in the Department of the Treasury. I intend that such vested property 

should be used to assist the Iraqi people, and should be used for 

the reconstruction of Iraq.’’. 

17

To that end, Mr. Wayne or others on the panel, what is the time 

frame for getting the oil fields in Iraq up and producing again? If 

you spoke to that while I was out—I met with some constituents 

briefly, so please forgive me, but I would like to know the answer 

to that, if there is an answer. 

Mr. WAYNE. Just about the Iraqi oil fields, you may have noted 

that we have—an Iraqi who has assumed leadership in the Oil 

Ministry and in the effort to restore the Iraqi oil fields, with the 

very strong support from our Defense Department and also some 

contract help on the ground to get that production restored. If I remember correctly, he gave a press conference a few days ago. 

Mr. MOORE. He, who? 

Mr. WAYNE. Mr. Ghadhban, Thamir Ghadhban. He estimated 

that he would hope to have production restored to its post—to the 

pre-conflict level by the end of June. That was about 1.5 million 

barrels a day, with the aim of getting to 3 million barrels a day 

by the end of the year. 

All of this, of course, is estimates, and it is going to take a lot 

of hard work to get it up and running not only because of damage 

that might have been done during the conflict, but because a lot 

of it was being held together by duct tape up until that point. 

Mr. MOORE. Duct tape has been very handy, hasn’t it? 

Mr. WAYNE. Duct tape does a lot of things. 

Do you want to add anything, Larry? 

Mr. LANZILLOTTA. I really don’t have anything to add to that. 

The Administration is committed to get these oil fields producing 

as fast as possible. We have run into some technical difficulties we 

are trying to overcome. These are the estimates out there now, and 

we are trying to make them. 

Mr. MOORE. Do you have any information about sales? I am talking about monthly or annual sales prior to us going to Iraq, and 

what might be expected and what might be anticipated in terms of 

sales? 

I understand this is all kind of speculative right now because of 

damage to the oil fields, but I’m looking for a number that we 

might use a portion of to help in the reconstruction of Iraq. Any 

ideas? 

Mr. AUFHAUSER. There is no question that whatever oil revenues 

are produced, they are going to be poured over into an Iraq assistance fund to underwrite the cost of reconstruction, to underwrite 

the budget of the IIA and the new Iraq. There is no question about 

that. That is reflected in the U.N. Security Council resolution. 

I can’t put a number, sir, on it; but I am aware that very soon, 

very soon production in Iraq will exceed domestic requirements, 

which means there will be oil for sale. 

Mr. MOORE. Okay. Any other answers there, Mr. Wayne? 

Mr. WAYNE. Well, one very important point is that pending the 

lifting of the oil sanctions, and thus the U.N. resolution in New 

York, there were not international sales going on at present. 

Secondly, of course, the amount of money that comes in from this 

will depend upon the price of oil in general. Some of the ballpark 

figures have been perhaps $20 billion a year. A lot of that depends 

on the price of oil and the amount of production you get going. 

Mr. MOORE. Thank you. 

18

Thank you, Madam Chairman. Thank you, members of the 

panel. 

Chairwoman KELLY. Thank you, Mr. Moore. 

Mr. Murphy? 

Mr. MURPHY. Thank you, Madam Chairman. 

As you were reviewing companies that have been cooperative 

with these efforts in freezing and seizing assets, how do European 

countries rate on their cooperation level, and in particular, Russia, 

Germany, and France? 

I might add to that, have there been some assets hidden in some 

of their banks that you have found, too? 

Mr. WAYNE. Well, the process is actually just going on right now. 

I would rather not get into details in this open session, but would 

be happy to in the next session that we are having. 

What I can say is that the initial response from all of those countries has been ‘‘yes, we want to cooperate in this effort; and yes, 

we agree that any assets need to be restored to Iraq.’’ 

Mr. MURPHY. I appreciate that. 

Have there been any attempts to access any of the assets since 

the war began from some of the operatives from Iraq? Can you tell 

us any information on that, what they have tried to do? 

Mr. AUFHAUSER. Why don’t we deal with that in the next session? 

Mr. MURPHY. I am apparently asking some excellent questions. 

How about issues involved with our knowledge of these deals 

being done on the Oil for Food? What were some of the things they 

were doing with this money instead of buying food? When did we 

become aware of that? 

Can I ask that one? Is that okay? 

Mr. AUFHAUSER. Yes. The money skimmed—you have seen on 

videotape some of the things they have used it for, which are the 

extravagances in their palaces. We also know they used some of the 

skimmed money to buy goods and weapons otherwise prohibited 

under the U.N. sanctions program. 

Just to show you how this would be comic, except it turned into 

a terrible tragedy, the U.N. program was wildly successful in one 

sense. It is the source of food for the better part of the people of 

Iraq. When I mentioned those 55,000 distribution points, that is because of the U.N. program. 

The ration card that the common Iraqi holds today is as good as 

currency, as is the Saddam dinar, because it is his meal ticket. 

Notwithstanding that, there are other portions of the program 

which were designed to fail. For example, they had 75 inspectors 

on a porous border thousands of miles long located at a limited 

number of border crossings, say three or four, who were empowered 

only to look at authorized imports into the country. 

Step back and think about that. If something came in and it was 

not a U.N. import, a U.N. Oil for Food program import, they were 

disempowered from investigating what is going in. 

Mr. MURPHY. Were those authorizations set up by the U.N.? 

Mr. AUFHAUSER. Yes. So it was comic, leading to tragedy. Those 

borders were not policed. 

19

Mr. MURPHY. With some of the food that was purchased, I heard 

some reports that some of that was to go for food supplies for the 

Iraqi soldiers and not for the citizens. Was that accurate? 

Mr. AUFHAUSER. I can’t confirm that. I don’t know. 

Mr. WAYNE. I don’t know. But I do know that there was a very 

tight system for going through all the contracts in the formal system. In many cases, we had holds on contracts for years and 

stopped them up. We gave them very careful scrutiny. There was 

also a very tight system for auditing the use of money within the 

system. 

The real challenges came to things that were taking place outside the system, or the special deals that were made around the 

edges of the contracts. That is where we got a lot of the challenges 

that we tried to deal with, and we can talk about in the next session, and the ways that we worked to deal with them. 

Mr. MURPHY. Another area. I hear mixed reports in the media 

that the people in Iraq are grateful to us, and some say, Thanks 

for the war, now get out. 

Clearly, there must be an awareness—you talk about the 25 

years of the incredible oppression that took place, and these issues 

about the continued corruption and deceit that leaders in Iraq had 

with the money and Oil for Food that became oil for weapons. 

How aware are the Iraqi people being made of what is being discovered now, and what is their reaction to that? 

Mr. AUFHAUSER. I don’t know the level of their awareness of 

what is being discovered now. I don’t know what is being broadcast 

to them in Iraq about the discoveries. 

You know, many of the discoveries are just confirmation of what 

has been a public source information for the last decade in terms 

of the corruption. 

Mr. MURPHY. Certainly I would hope, Madam Chair, that is 

something we can check to see what the State Department does 

with these kinds of discoveries, because it is important for them to 

know. 

Mr. WAYNE. We could work to get back to you, because I know 

that the U.S. Authorities in Iraq have been working to get information out to them. General Franks and his colleagues have been 

working hard on this to inform the Iraqi people of what is going 

on, so we can certainly take your question and get back to you. 

Mr. MURPHY. I appreciate that. It may well be that part of what 

was done, if it was not becoming food for people and people were 

harmed, it is one of those more subtle weapons of mass destruction 

that the people in Iraq were using against their own people. 

Chairwoman KELLY. We will make that an official request of the 

committee. If you will get back to us with an answer, that would 

be good. 

Chairwoman KELLY. Mrs. Maloney. 

Mrs. MALONEY. Thank you. You have testified we have seized 

roughly $7.5 billion, an additional $8 billion has been added in our 

own country, 20 countries are cooperating. 

Do we have a sense of how much is in those other countries? Do 

we know how many billions are there that belong to the Iraqi people in Saddam’s accounts? 

20

Mr. AUFHAUSER. Two answers. By definition, the hidden wealth 

we don’t know yet. We need to track that down. As for the money 

that has been held in suspense or frozen accounts, yes, we have a 

pretty good peg on it. That is a broad—it is upwards of $2.3 billion. 

By the way, that represents a substantial leakage from the 

amount of money seized by those countries back in 1990, following 

U.N. Security Council Resolution 661. In other words, as Mr. 

Wayne alluded to, a lot of the money has been awarded to other 

claimants, so it shrunk. Also, other parts of the money seized in 

other countries require explanation as to why it disappeared. 

Mrs. MALONEY. You testified we have spent roughly $91 million 

on dock workers and the border, for pensioners and oil workers. 

Can you describe how this decision was made? Apparently Treasury is making decisions on seizing assets and DOD is making decisions on how this is spent. 

Certainly during war, decisions need to be made quickly, but now 

that things have calmed down you mentioned that it is transparent. How can we see this information? How is it transparent 

and how is it publicly disclosed, and how are you making decisions 

to hire dock workers as opposed to teachers, or the security force 

that is now trying to be built in collaboration with the American 

government? 

Mr. LANZILLOTTA. Until the appointment of Ambassador Bremer, 

Jay Garner was assigned that exact responsibility. These payments 

were made based on his assessment of what it was going to take 

to get certain industries or functions like ministries working. 

The types of payments we have been making basically boil down 

to emergency payments to civil service type people to get the Government of Iraq back working. Outside that arena, I believe there 

was a payment made to oil workers and at the docks to try to be 

able to offload the humanitarian aid that has been coming in from 

other countries as well as the United States. So this assessment is 

made on the ground of what it is taking to be able to get the country up and moving. 

I think in the long-term plan that we are developing spending 

plans that outline exactly the concerns that you have: where this 

money is going, how it is being spent. But Jay Garner, and now 

Ambassador Bremer, had a very difficult task of stepping in on 

ground zero and immediately trying to get the Government of Iraq 

stood up and some of the necessary supplies to come in. 

So that is where the initial—I think so far an estimate of $22 

million has gone. 

Mrs. MALONEY. You testified earlier $91 million. 

Mr. LANZILLOTTA. That is how much money has been made available, but $22 million has been disbursed. 

Mrs. MALONEY. You mentioned that it is transparent. If I didn’t 

have the opportunity to ask you these questions and I was a taxpayer and just wanted to know, where would I go? With our government spending, we can go to agencies and look at their budgets 

and go to the Office of Procurement and look at the budgets. Where 

can citizens go? Where is the transparency? 

Everybody keeps saying it is transparent, but I don’t know where 

it is. I don’t know how to find out this information without having 

a hearing and asking you, so how is it transparent? 

21

Mr. LANZILLOTTA. It is not on the Web site yet, and most of this 

is just developing now. On these interagency meetings we have, we 

have invited GAO as a participant to talk about exactly how this 

money is spent and where it is going, with that very purpose in 

mind, to assure the American people—and as directed by the President—that this money is going for reconstruction and, in fact, to 

the Iraqi people. 

I don’t know of any reason why, for the record, that we can’t provide where these disbursements to date have gone. 

Mrs. MALONEY. I think it would be good to put it on the Web 

site. I would send it back to the committee, that I would like to see 

it and to understand where we are going. 

When we let these contracts to Halliburton and others, is this 

money being used for that, to run the oil fields and to rebuild the 

construction that is taking place to rebuild the water works and 

electricity? Is that coming from the seized Iraqi money, or is that 

coming from the U.S. Government? 

Mr. AUFHAUSER. No, for the most part that is USAID money. 

Mrs. MALONEY. USAID. 

Mr. WAYNE. There are actually two different sets of money. 

There is USAID money, which is one set, and then there are Department of Defense contracts that are being let. The oil contracts 

have been under the Army Corps of Engineers, I believe, that are 

in charge of that. 

The AID money, when the choice of contractors and others are 

put on their Web site right away, whenever there has been a decision. 

Mrs. MALONEY. Could this seized Iraqi money be used to pay 

Halliburton and Bechtel and some of the companies that have gone 

in on the groundwork to restore water and electricity? 

Mr. WAYNE. What I can say is that up until now the proposed 

uses of this have been to go right to the benefit of the Iraqi people, 

notably to pay salaries. 

There was an emergency—there is an emergency plan to give 

people an emergency payment for 1 month in various parts of the 

country. There has been a proposal to buy some emergency equipment for the Ministry of Trade, which runs the Oil for Food distribution program, so they can start distributing food again. 

I am not aware of any proposal to use this to pay for contractors. 

Mr. LANZILLOTTA. From the Department’s point of view, we have 

not used any of the seized or vested property to pay for contracts. 

It has all gone towards payroll or operational costs to try to clear 

out ministry buildings in a small amount, to try to get these ministries up and running. The department has taken the administrative costs for operating Jay Garner’s group, or that group that is 

trying to put Iraq back together out of appropriated funds. We assume that is within the Department of Defense’s budget. 

We have not used any of the invested or seized assets to date on 

any of those types of contracts you mentioned. 

Chairwoman KELLY. Mrs. Maloney, why don’t we make your request, as you had asked the expenses—let us make it an official request of this committee. That will get it started. 

22

Mr. Lanzillotta, Mrs. Maloney has a good point. It would be good 

for all of the people in America who are interested in this subject 

if we could get that on the Web site. Thank you very much. 

Mrs. MALONEY. I know my time is up. Can I ask one question 

on debt? 

Chairwoman KELLY. No, I’m sorry, your time is up. We have others who have been waiting as well. 

Mr. Hensarling. 

Mr. HENSARLING. Thank you, Madam Chairman. 

Gentlemen, quite obviously the Oil for Food program left much 

to be desired. I think, Mr. Aufhauser, in your written testimony 

you said that Hussein not only survived under the U.N. sanctions 

regime, he flourished. I think we would all agree with that assessment. 

My question is, what is it precisely that we can do—what is it 

the United States can do in future sanction programs or limited 

trade programs to ensure that the U.N. does a better job of monitoring these programs? 

Mr. AUFHAUSER. We have to structure the architecture of the 

program in a manner so it is policed similar to our own financial 

borders, so money cannot be diverted and so that you can more 

easily catch people if there are kickbacks and the like. That is, if 

you will, country-specific or product-specific or industry-specific, so 

I can’t give you a better answer than that. 

But in my professional opinion, also wearing my hat with responsibilities for the country’s money laundering program, what was designed in New York was not designed well to capture wrongdoing; 

it was designed well to get food into people’s mouths. 

Mr. HENSARLING. Do the other two gentlemen have a comment? 

Mr. WAYNE. Just to say that we are going—we do definitely need 

to sit back and think about the lessons from this 10-year effort to 

have a sanctions regime in place. It is very hard to maintain the 

political enthusiasm of countries all around the world, in a longterm situation, for a sanctions regime. So there are clearly a number of lessons that we need to draw from this. I haven’t drawn 

them all yet, but clearly we could do this better, and we need to 

think of a different set of tools, if we are approaching a long-term 

effort like this again. 

Mr. HENSARLING. Mr. Lanzillotta. 

Mr. LANZILLOTTA. I really don’t have any specific comments, 

since it is outside of the Department of Defense. But, of course, we 

are interested in a viable program, and would continue to work 

with the Agency to make it most efficient. 

Mr. HENSARLING. It appears that the money laundering provisions of the Patriot Act are a very powerful tool to enable you to 

accomplish your mission to identify, seize, and repatriate assets. 

If your agencies or departments had their wish list granted, are 

there other tools, other provisions, that you would like to bring to 

this subcommittee’s attention that would better help you accomplish your mission? 

Mr. AUFHAUSER. I have only one specific request which is long 

outstanding up here on the Hill. The section 11 power to effectively 

bar a foreign financial institution from doing business in the U.S. 

Is an extraordinarily powerful tool in undermining, if not downVerDate 0ct 09 2002 09:33 Oct 22, 2003 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 C:\DOCS\89631.TXT MICAH PsN: MICAHW
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right destroying, the franchise of any international institution. The 

ability, also, to argue that it reaches barring anybody who does 

business with such an institution has a potentially paralyzing effect, so it is the nuclear bomb of the Patriot Act. 

Unfortunately, I can’t use it as often—I can’t recommend to John 

Snow to use it as often as I think I would like, because much of 

the evidence in support of such actions is highly classified and becomes subject to revealing and disclosure in a courtroom. 

I have asked the Hill to consider giving section 311 the same evidentiary privileges that IEEPA now enjoys under the Patriot Act, 

which is to present, ex parte and in camera, sensitive information 

in support of our legal actions. 

Beyond that, our real problem is abroad. I don’t think a U.S. law 

can change it. That is when the venue turns to Tony, and we need 

to go abroad and convince people to follow suit, because most of the 

assets we are concerned about are abroad, most of the cash flow 

we are concerned about capturing is abroad, and most of the 

records we hope to exploit are abroad. 

It is all the more reason Tony and I have a direct line. The 

Treasury Department can’t do this without the State Department, 

and vice versa. 

Mr. HENSARLING. Mr. Wayne? 

Mr. WAYNE. I would just add that this is exactly what we have 

been working on since 2001 in the area of terrorist financing, 

where we have the same team essentially working all around the 

world. What is very key is having the bilateral agreements and 

building in, as we can, the multilateral agreements to get other jurisdictions to cooperate with us without using, as David said, the 

nuclear weapon of our sanctions. 

In this connection, the work that has been done in the Financial 

Action Task Force, for example, has been extremely important in 

building up money laundering best practices, and now, over the 

past year and a half, terrorist financing best practices. 

Again, this work that is going on in the U.N. Convention Against 

Corruption is exceptionally important. We have also been trying to 

work in the G-8 process to come up with a multifaceted attack on 

corruption and promotion of transparency, which is all part of this 

same problem. 

Then we have been working in regional institutions like the Organization of American States, where they have put in place for the 

first time a very thorough anticorruption convention. Now, the 

challenge is to actually implement it. So the effort is part using our 

own tools, but also building that network and building up that base 

of cooperation. 

Mr. HENSARLING. Thank you, gentlemen. 

Chairwoman KELLY. Thank you. Mr. Lynch. 

Mr. LYNCH. Thank you, Madam Chair. 

Gentlemen, thank you for your willingness to help the committee 

with this important work. 

Most of the members of the committee are aware of a report from 

back on May 6, and there was a related story in the New York 

Times, where at about 4 o’clock in the morning on March 18, one 

of Saddam Hussein’s sons, accompanied by one of his chief advisers, went to the central bank of Iraq and withdrew about $1 billion, 

24

$900 million in U.S. Currency, $100 bills, and about $100 million 

in Euros, and put them all in three semi-tractor/trailers. 

Then we have a corresponding report from the U.S. Military that 

intelligence tells us that a convoy of three semi-tractor/trailers 

pulled into Syria at the same time, shortly after the seizure of 

money. We have the U.S. Treasury that confirms that that happened. 

I just wanted to know specifically what we are doing about that 

incident. If you can’t speak to that specific incident for security reasons and, I hope, for recovering the money, maybe you can give me 

an example of how we respond to large robberies, if you will, like 

the one I have just described. 

Mr. AUFHAUSER. Congressman, the incident you described is an 

astonishing example of the plunder of the Hussein family. Perhaps 

with serendipity and perhaps with some pretty good forensic work 

by DOD and others in Iraq, we may well be on being able to confirm that a substantial amount of the found money is indeed the 

plundered money. Let me be more specific. 

This is all subject to confirmation. There is no certainty to this, 

but it is more likely than not. Some 236 boxes of cash, either Euros 

or U.S. Dollars, were packaged that night by central bank personnel, but they were very meticulous in the records they kept. 

They indexed the boxes and numbered them, and they put certificates in the boxes indicating how much money had been placed in 

them. 

Out of the 236 boxes, we may well have found 191, constituting 

$850 million U.S., give or take, and $100 million of Euros, leaving 

still an unbelievable amount of wealth unaccounted for in that 

theft. But if this information is correct, a substantial amount of the 

found money that you have been reading about in Iraq is indeed 

the plundered money. 

Mr. LYNCH. That is great. That is good news. I hope we can confirm that. Thank you. 

Chairwoman KELLY. Thank you, Mr. Lynch. 

Mr. Shadegg? 

Mr. SHADEGG. Thank you, Madam Chairman. Thank you for 

holding this very, very important hearing. 

Gentlemen, I appreciate the job you are doing. I wish you the 

best in doing it, but I have grave concerns. I listened to you read 

and stress that the current Executive Order says that the purpose 

of this is only to assist the people of Iraq and in the reconstruction 

of Iraq. For political purposes, I fully understand that, and think 

that it is important that Iraqi assets be used for that purpose. 

But I am here concerned about a different issue. As you gentlemen I think know, particularly in the State Department and at the 

Treasury, in the first Gulf War as a result of Iraq’s invasion of Kuwait, millions of dollars in property losses were suffered by American citizens. 

A procedure was put in place to compensate those American citizens. It was structured to go through the United Nations Compensation Commission, UNCC. 

As I understand the process, a group of Americans litigated their 

claims in the United States in front of the United States Foreign 

Claims Settlement Commission, and actually a case was pending. 

25

There were more claimants that came forward. A judge made a decision to bifurcate the cases. One set of cases went to judgment and 

was concluded. A second set of cases involving other claimants with 

claims and losses that were every bit as legitimate has not been 

resolved as a result of that judge’s decision to bifurcate the two 

cases. 

Where we stand at this point has been that it has been some 12 

years since these people suffered losses, losses in the millions of 

dollars. Only a small handful of Americans are aware of this circumstance. Only a small handful of Members of Congress are 

aware of this circumstance. 

Nonetheless, those U.S. Citizens who lost millions of dollars in 

property claims in the first Gulf War have been totally frustrated 

by the UNCC process and have not received any compensation. I 

can tell you that personally because I have met and sat with them. 

Some of them have had their financial lives ruined, and some have 

had their personal lives ruined because their families have fallen 

apart as a result of the economic pressure. I can take you to people 

who are divorced and whose children are now raised in single-family homes because of the consequences of this. 

My concern is, given that right now we are focused on the current war, and given that we are as a Nation focused on rebuilding 

Iraq, as we should be, I am deeply worried about this other small 

subset of claims of people who are not Iraqi citizens, but American 

citizens. They are not even Kuwaitis; they were American citizens 

who were in Kuwait at the time of the first Gulf War and who lost 

homes, cars, businesses, and property. 

As I read the language of the President’s Executive Order, it precludes or could be read to preclude that any of those assets be used 

to take care of those claims. 

I must tell you before I put the question to you, number one, I 

am convinced that the UNCC’s process is a joke. It has not worked 

or functioned to help those American families. I am interested in 

what you can do to help solve that problem. 

Second, I would like your answer today, and if not, if you can get 

a better answer at a subsequent time. I am intensely interested in 

the Administration’s plan to help these American victims obtain 

compensation for the property they lost in the first Gulf War. 

I suppose that question is directed both at you, Mr. Aufhauser, 

and you, Mr. Wayne. 

Mr. AUFHAUSER. There were a lot of questions there. Let me see 

if I can capture most of them. 

Mr. SHADEGG. Please do. Take your best shot. If you want to submit more in writing later, that is good. 

Mr. AUFHAUSER. I will pick the ones I think I can answer. 

First, a little background. The assets that were invested previously had been frozen. Those frozen assets, by law, were beyond 

the reach of judicial process to anybody, with one exception: holders 

of victims’ judgments, the shield people. But property, property 

judgment holders could not access those funds under TRIA, the 

Terrorist Risk Insurance Act. 

So the funds that were invested were funds that were never historically available, and this is not a perfect answer to your quesVerDate 0ct 09 2002 09:33 Oct 22, 2003 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 C:\DOCS\89631.TXT MICAH PsN: MICAHW
26

tion, I understand, but never historically available for judicial process and award to property claimants. That is point one, okay? 

Point two, the President’s first desire in applying the funds here 

is to make sure that there are no more victims of terror and the 

like. The $1.7 billion really represents the kickstart to the Iraqi 

economy. 

I think it was Congresswoman Maloney who asked how we can 

account for this. The ambition is that the lion’s share of that money 

will go back into the reserves of the central bank, because it was 

the reserves of the central bank; $1.1 billion of the vested funds 

were held by the central bank up at the New York Fed. It is absolutely necessary to kickstart the economy there in Iraq. 

In terms of whether the UNCC process is frustrating these 

claimants, I confess I am unaware of it, and I am happy to look 

into it for you and reply to you in writing. I will say, although still 

uninformed, the receipt of claims against the State of Iraq is one 

of the necessary things the Treasury Department, our economic 

team under Ambassador Bremer right now in Baghdad, and ultimately the interim Iraqi Authority, is going to have to deal with 

in some setting, dealing with everybody’s claims and using the 

wealth of the nation, which is the oil generated, the oil generated, 

to try to satisfy those claims in a sensible fashion. 

Mr. SHADEGG. Maybe Mr. Wayne can add greater clarity. But let 

me tell you this much. These claims have been submitted to the 

State Department, were submitted years ago to the State Department, and have been submitted to the UNCC and have not been 

paid. I can assure you that people are frustrated. 

Not only have I introduced legislation, but other Members of the 

House have introduced legislation and several Members of the Senate have introduced legislation to try to get these victims compensated. 

Chairwoman KELLY. I am sorry, Mr. Shadegg, you are out of 

time. If you want, we can go to the adjacent hearing, or you can 

ask Mr. Wayne to submit his answer in writing. 

Mr. SHADEGG. If he would submit his answer in writing, Madam 

Chairman, that would be fine. 

[The following information can be found on page 94 in the appendix.] 

Chairwoman KELLY. Thank you. 

Mr. Garrett. 

Mr. GARRETT. I will begin by yielding to Mr. Murphy. 

Mr. MURPHY. I just have one question. I thank the gentleman for 

yielding. 

I have a question which relates back to the March 11 hearing on 

efforts to stop terrorist financing, and we have talked about groups 

such as al Qaeda, Hamas, and Hezbollah. At the time, the President’s critics didn’t seem to want to face the truth of those links; 

but weren’t those alliances further proven during the liberation 

and with some of the investigations you have done? 

Mr. WAYNE. Well, we have no doubt that there were very strong 

links between Saddam’s regime and terrorist organizations. Ansar 

al Islam, the Mujaheddin, al-Aqsa, the Abu-Nidal organization, the 

Arab Liberation Front, and the Palestinian Liberation Front are 

27

among those that enjoyed safe haven and various levels of support 

from the Iraqi regime. 

The U.S. Government is in the process and the people on the 

ground are in the process of gathering and assessing information 

from captured terrorists such as the PLF leader, Abu Abbas. We 

expect to gain from this effort a great deal of additional information, but right now we are still in the process of gathering this all 

together. 

We might be able to add a little bit in the next session. 

Mr. MURPHY. Thank you. I appreciate it. 

I yield back, Mr. Garrett. 

Mr. GARRETT. Just following up on Mrs. Maloney’s question, one 

of the answers we received was going back to the 1991—the term 

used was a linkage occurred back then. I wondered if in the time 

remaining if you could just briefly explain what was the nature of 

that linkage. 

I know the initial question by the Chairwoman was who was on 

the ground, who was in charge. So the question is, who was in 

charge when the past linkage occurred, what have we learned since 

then, and what will be implemented differently? 

Mr. AUFHAUSER. I am trying to count the countries by orders of 

magnitude. There are about 30 countries outside of the United 

States back in 1991 that froze approximately $2.35 billion, according to our estimates, including United Kingdom, Switzerland, Germany, Bahrain, Italy, and France, by way of example. 

By today’s date, if you take out the close to $1.2 billion of new 

money that has been found since Secretary Snow announced in 

March this effort of outreach of finding hidden assets, if you take 

out that $1.2 billion, that had been reduced down to about $1 billion. I am reading from a chart now. 

So the differences in accounting—by way of example, in Germany 

in 1991, they reported $359 million was frozen. Today, we have 

been unable to identify from them whether any of those frozen assets remain. It is zero right now, just by way of example. 

Now, back to your question of who was in charge in 1991, I confess I was in private practice and I don’t know. 

Mr. WAYNE. In that accounting, that is part of what we are doing 

right now in going out and asking people, what is the difference between this money and what happened to it? 

I know in the case of Switzerland they have told us recently, 

when they turned their number in in 1991 they included the assets 

of Swiss banks that were in the United States. So there was a double counting, they are telling us, that went on. When we froze that 

money we counted it in our total. 

They also reported it because it was in the accounts of a Swiss 

bank, even though it was in the United States. So there is part of 

that that we are doing—we are trying to sort the numbers through 

now. 

Also, as David Aufhauser mentioned earlier, a number of countries in their legal systems allowed claims to be paid off over the 

years, claims against Iraq. Their courts would make a judgment. 

So we are trying to figure out exactly what the tallies were of each 

of these right now. 

28

Mr. GARRETT. The GAO says about $61 billion in the Oil for Food program, and they have only spent about $41 billion. Does that 

mean there is $20 billion in the bank? 

Mr. WAYNE. There is about $10 billion in the pipeline and about $3 billion unencumbered in the OFF program. That is as of—our 

estimate now. 

Mr. GARRETT. And the other seven? 

Mr. WAYNE. I can only tell you what our estimates are right now. 

Sorry. 

Chairwoman KELLY. Thank you very much, Mr. Garrett. 

Ms. Brown-Waite? 

Ms. BROWN-WAITE. Thank you very much. 

This question is for Mr. Aufhauser. Last year, this committee 

heard testimony about the successful effort to recover funds misappropriated by Nigeria’s former dictator. The effort actually involved private attorneys working on behalf of the people of Nigeria. 

If the U.N. is ineffective at this, should we try to set up a permanent asset recovery system in the financial action task network? 

Mr. AUFHAUSER. I don’t think they are mutually exclusive. We 

should try, in my judgment, every alternative means to facilitate 

the repatriation of stolen wealth to people so kleptocrats cease to 

have a motive to steal. 

Ms. BROWN-WAITE. I like the term ‘‘kleptocrats.’’ so you obviously 

would support such a privatization and attempts to recover the 

money? 

Mr. AUFHAUSER. I want to be careful. The devil is in the details. 

I don’t support anything I haven’t written, read, and perhaps even 

edited. But the concept—the concept, the concept of an alternative 

to a U.N. mechanism, is very attractive. 

Ms. BROWN-WAITE. I think the follow-up question is, are you as 

frustrated as many of us are at the current U.N. ineffectiveness? 

Mr. AUFHAUSER. Our government has tabled a resolution at the 

U.N. that puts the responsibility right back at the U.N. in repatriating these assets. So right now I back our government’s efforts 

to infuse more legitimacy, authenticity, effectiveness, in that mechanism through the U.N.. 

Ms. BROWN-WAITE. Thank you. 

Chairwoman KELLY. Thank you, Ms. Brown-Waite. 

Mr. Paul. 

Mr. PAUL. Thank you, Madam Chairman. 

I have a question somewhat related to Congressman Shadegg’s 

question dealing with property ownership, because I think we drift 

away from our goals, at least what I think our goals should be. 

Those are not only to defend here the private property principle, 

as well as the market, but—we talk glibly about bringing democracy to Iraq, but we very rarely see many comments dealing with 

what are we going to do about private property ownership. 

I think terminology is so important. Earlier on it was referred to 

that the Halliburton money came from USAID, but more accurately 

what we should say is that money came from American taxpayers. 

I know that is just a technical detail, but it makes a big difference 

if we know what we are dealing with. 

You know, we have a lot of financial assests recovery going on. 

We are talking about the oil assets. It has been conceded here sevVerDate 0ct 09 2002 09:33 Oct 22, 2003 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 C:\DOCS\89631.TXT MICAH PsN: MICAHW
29

eral times today that these assets belong to the Iraqi people, but 

we never talk like that in this country. We don’t talk like that in 

Texas. We don’t say, the oil belongs to the people. I live in Texas, 

but I don’t have any oil. 

Why do we make these assumptions—the President has these extraordinary powers which, quite frankly, frighten me. We have the 

U.N. that is in the oil business. They are making the profits and 

they store the money. They have controls. Nothing is going to be 

done without the U.N. making some deal somewhere along the 

way. We don’t talk about, you know, who owned this stuff once. 

Cuba, it is so much different. We have a Helms-Burton Act that 

emphasizes the fact that once Castro and communism is gone, the 

rightful owners will get their property back again. But there were 

at one time rightful owners and property owners of the oil wells 

over there. It may be because it might have been that the French 

owned a little bit that we have to drop those ideas. The French and 

the Germans and the Americans—we never seem to emphasize the 

importance of returning this to the owners. Contracts are a form 

of property. 

Is there any concern at all or any interest in talking about how 

we might settle some of this, whether it is financial or whether it 

is the oil, in trying to get it back to the rightful owners, and get 

us away from the idea that we are in control and it belongs to the 

people and we do with it what we want? 

It is all fungible, so nobody is going to end up knowing where 

this money goes anyway. Or it might sit in a bank, like Congressman Shadegg indicates; it sits there, and nobody touches it. 

What about is it worthwhile pursuing this, and emphasizing the 

need to talk about private property ownership in a country that 

once understood private property ownership? 

Mr. AUFHAUSER. I don’t think there is any doubt that the longterm strategy of the United States Government is a freestanding 

Iraq that can determine things like what is the best way to promote private enterprise and the like. That is the surest way to 

make sure that the U.S. Taxpayer is not paying the bill. A thriving 

and enriched Iraqi economy that honors property rights and the 

like is a central part of our strategy. How you get there from here 

is a complicated calculus. 

In direct response to your question about the oil, we were both 

trying to recollect here—the oil has been titled in the Iraqi State 

for the last half of the 20th century. It is not like there was a sudden taking from private parties during any of our recent lifetimes. 

Mr. PAUL. But may I interject, it has been probably a half a century that Castro has owned the property as well, but we still talk 

about returning it to the original owners. 

Mr. AUFHAUSER. Now I turn to the State Department. 

Mr. WAYNE. Mr. Congressman, I guess I would add that certainly 

the importance of private property can’t be underestimated as we 

move forward and work in Iraq. 

In fact, already, as you probably noted, in the north of the country there has been a lot of discussion about who has title to what 

land, what apartments, what homes. Sorting these issues out has 

been a very important priority for the Americans working in that 

part of the country. 

30

Similarly, as we move forward, one of our clear intentions is as 

quickly as possible to move decisions into Iraqi hands and to move 

to an elected government in Iraq so they can make some of these 

decisions themselves. 

In that process, of course, as you know, we will be talking of the 

benefits of a market system and the benefits of private property. 

But we are trying to be very respectful of the need for Iraqis to 

come to these conclusions and to build this system themselves. 

Chairwoman KELLY. Thank you, Mr. Paul. 

Before I end this hearing, I would like to read something that I 

find is important for people to think about. It is a paragraph from 

Mr. James Lacey, who is a Times correspondent embedded with the 

101st Airborne Division. 

He says, ‘‘It was the American soldiers who handed over food to 

hungry Iraqis, who gave their own medical supplies to Iraqi doctors, and who brought water to the thirsty. 

‘‘it was the American soldiers who went door-to-door in a slum 

because a girl was rumored to have been injured in the fighting. 

When they found her, they called in a helicopter to take her to an 

Army hospital. It was the American soldiers who wept when a 3-

year old was carried out of the rubble where she had been killed 

by Iraqi mortar fire. 

‘‘It was American soldiers who cleaned up the houses they had 

been fighting over and later occupied, because they wanted the 

places to look at least somewhat tidy when the residents returned. 

‘‘it was these same soldiers who stormed Baghdad in only a couple of weeks, accepted the surrender of three Iraqi army divisions, 

massacred any Republican Guard unit that stood and fought, and 

disposed of a dictator and a regime with ruthless efficiency. 

‘‘there is no other army and there are no other soldiers in the 

world capable of such merciless fighting and possessed of such compassion for their fellow men. No society except America could have 

produced them.’’ . 

I would like to add, and no society but America can lead the way 

to finding the money that rightfully belongs to the Iraqi people. 

Now the Chair notes that some members may have additional 

questions for this panel that they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for members to submit written questions to these witnesses and to 

place their responses, as well as other pertinent information, in the 

record. 

Chairwoman KELLY. This panel is excused with the committee’s 

great appreciation for your time and your patience. I want to briefly thank all the members and their staffs for their assistance in 

making this hearing possible. 

This hearing is adjourned. 

[Whereupon, at 11:50 a.m., the subcommittee was adjourned.] 

(31)

A P P E N D I X

May 14, 2003

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