In August 1990, Iraq invaded Kuwait, and the United Nations imposed sanctions against the regime. Security Council Resolution 661 of 1990, prohibited all nations from buying Iraqi oil and selling Iraq any commodities except food or medicines. The resolution also required member states to block the transfer of Iraqi assets from their countries. Consistent with this resolution, the President froze all Iraq’s assets held in the United States. Other nations similarly froze Iraqi government assets in their countries. In 1991, the Security Council offered to let Iraq sell oil under a U.N. program to meet its peoples’ basic needs. The Iraqi government rejected the offer and, over the next 5 years, food shortages and a general deterioration in social services were reported. In December 1996, the United Nations and Iraq agreed on the Oil for Food Program, which allowed Iraq to sell a set amount of oil to pay for food, medicine, and infrastructure repairs. The United Nations monitored and screened contracts that the Iraqi government signed with commodity suppliers. Iraq’s oil revenue was placed in a U.N.-controlled escrow account. From 1997 through 2002, Iraq sold more than $67 billion of oil through the U.N. program and issued $38 billion in letters of credit for humanitarian goods. In May 2003, the Security Council passed Resolution 1483, which recognized the United States, Great Britain, and coalition partners as the authority for providing security and provisional administration in Iraq. The resolution also ended the sanctions, except for the prohibition on exporting arms to Iraq. We estimate that, from 1997 through 2002, the former Iraqi regime acquired $10.1 billion in illegal revenues related to the Oil for Food Program—$5.7 billion through oil smuggling and $4.4 billion through surcharges against oil sales and illicit commissions from commodity suppliers. This estimate is higher than the $6.6 billion we reported in May 2002. We updated this estimate to include (1) oil revenue and contract amounts for 2002, (2) updated letters of credit from prior years, and (3) newer estimates of illicit commissions from commodity suppliers. Oil was smuggled out through several routes, according to U.S. government officials and oil industry experts. Oil entered Syria by pipeline, crossed the borders of Jordan and Turkey by truck, and was smuggled through the Persian Gulf by ship. In addition to revenues from oil smuggling, the Iraqi government levied surcharges against oil purchasers and commissions against commodity suppliers participating in the Oil for Food Program. According to some Security Council members, the surcharge was up to 50 cents per barrel of oil and the commission was 5 to 10 percent of the commodity contract. The funds were paid directly to officials connected with the Iraqi government. In addition, according to a Department of Defense (DOD) official, a DOD report in September 2003 evaluated 759 contracts funded and approved under the Oil for Food Program. The study found that at least 48 percent of the contracts were overpriced and that on average the contracts were overpriced by 21 percent. The United States has tapped the services of several U.S. agencies and used recently developed U.S. and international authorities in its efforts to recover Iraqi assets worldwide. About 20 entities, including those of the Departments of the Treasury, Homeland Security, Defense, Justice, State, intelligence agencies, law enforcement agencies, and the White House National Security Council, are involved in recovering Iraqi assets. To lead the asset recovery efforts, the United States created an interagency coordinating body headed by the Department of the Treasury. The Iraqi Assets Working Group has developed a strategy to identify, freeze, seize, and transfer former regime assets to Iraq. The working group’s goals are to: Exploit documents and key financial figures in Iraq to better Secure the cooperation of jurisdictions through which illicit funds have flowed so that working group members may exploit financial records and uncover the money trail; Secure the cooperation of jurisdictions in which illicit assets may reside to locate, freeze, and repatriate the assets; Engage the financial community in the hunt for illicit assets generally, and specifically secure the cooperation of the financial institutions through which illicit funds have flowed or may still reside; Develop a system to facilitate the fluid repatriation of funds; and Prepare for potential sanctions against uncooperative jurisdictions and financial institutions. The working group is leveraging the expertise of U.S. officials involved in efforts to recover assets of terrorists and money launderers. The U.S. Congress recently passed legislation containing provisions that allowed the President to confiscate foreign funds frozen in U.S. financial institutions. Specifically, provisions in the USA PATRIOT Act of 2001 amended IEEPA to allow the President to confiscate foreign property subject to U.S. jurisdiction in times of “on-going hostilities” or if the United States is attacked. These provisions gave the President the necessary authority, through an Executive Order, to confiscate the property of the former Iraqi regime and to vest these assets in the U.S. Treasury. In addition, the State Department cited U.N. Security Council Resolution 1483 as an important vehicle for requiring other countries to transfer assets to Iraq. On May 22, 2003, the U.N. Security Council adopted Resolution 1483, which (1) noted the establishment of the DFI, a special account in the name of the Central Bank of Iraq; and (2) required member states to freeze and immediately transfer to the DFI all assets of the former Iraqi government and of Saddam Hussein, senior officials of his regime and their family members. The resolution also included a unique immunity provision to protect the assets from new claims. In 2003, the U.S. government quickly vested Iraq’s assets held in the United States and transferred them to Iraq. Similarly, the U.S. military, in coordination with U.S. law enforcement agencies, seized assets of the former regime in Iraq. The CPA has used most of the vested and seized assets for reconstruction projects and ministry operations. U.S. officials noted that some other countries’ efforts to transfer Iraqi funds have been slowed by their lack of implementing legislation. There has been little progress in recovering the regime’s hidden assets. In 2003, the United States vested about $1.9 billion of the former regime’s assets in the U.S. Treasury. Between May and December, the United States transferred more than $1.7 billion to Iraq and $192 million to the DFI. The United States had the necessary legal authorities to make the transfers quickly. On August 2, 1990, in compliance with a Presidential Executive Order, the Treasury Office of Foreign Assets Control (OFAC) issued regulations to financial institutions requiring them to freeze Iraqi assets in the United States. More than 30 banks in the United States identified and froze accounts with $1.4 billion in Iraqi assets. These institutions held assets in accounts that accumulated interest. In March 2003, the President used authorities, including the enhanced authority in IEEPA, as amended by provisions in the USA PATRIOT Act, to issue a new executive order to confiscate or take ownership of Iraqi assets held by U.S. financial institutions and vest them in the U.S. Treasury. According to Treasury and Federal Reserve officials, Treasury instructed the Federal Reserve Bank to release portions of the funds to DOD upon the Office of Management and Budget’s approval of DOD’s spending plans. As of March 2004, the CPA had spent about $1.67 billion of the $1.9 billion for emergency needs, including salaries for civil servants and pensions, and for ministry operations. CPA informed us in March 2004 that the U.S. military, in coordination with U.S. law enforcement agencies had seized about $926 million of the regime’s assets in Iraq. The U.S. military seized about $894 million in Iraqi bonds, U.S. dollars, euros, and Iraqi dinars, as well as quantities of gold and jewelry. This amount included $750,000 found with Saddam Hussein when he was captured. Department of Homeland Security agents seized an additional $32 million. The CPA is authorized to use these seized funds for humanitarian and reconstruction efforts. As of March 2004, the CPA had used $752 million for reconstruction activities, including projects, ministry operations, and liquefied petroleum gas purchases. According to Treasury, other countries have frozen about $3.7 billion in Iraqi assets. Treasury officials reported that, as of March 2004, more than 10 countries and the Bank for International Settlements have transferred $751 million to the DFI. Treasury officials noted that the remaining assets have not been transferred to the DFI because some countries do not have the necessary legislation to affect the transfer or are holding about $1 billion to adjudicate claims. U.N. Security Council Resolution 1483 requires the immediate transfer of Iraqi funds identified and frozen in these accounts to the DFI. To encourage other countries to transfer the funds to Iraq, the Secretary of the Treasury requested that the international community identify and freeze all assets of the former regime. Additionally, Treasury and State officials said that they have engaged in diplomatic efforts to encourage countries to report and transfer the amounts of Iraqi assets that they had frozen. For example, since March 2003, State officials told us that they have sent more than 400 cables to other countries requesting that they transfer funds to the DFI. According to U.S. officials, Treasury and State continue to leverage the U.S. government’s diplomatic relations with finance ministries and central banks to encourage the transfer of Iraqi assets to the DFI, according to Treasury officials. Some of the remaining frozen funds are located in financial institutions in Iraq’s neighboring countries or Europe. Little progress has been made in recovering the former Iraqi regime’s hidden assets.