El Paso, the largest US natural gas transmission company, yesterday said it would pay $7.7m to settle government allegations that it paid indirect kickbacks to the Iraqi government while buying crude oil from participants in the troubled United Nations oil-for-food programme.

Between June 2001 and June 2002 the Houston-based company bought 21.4bn barrels of Iraqi crude from third parties who had paid the Iraqi government illegal surcharges of nearly $5.5m (€4.3m, £2.8m), or 25-30 cents a barrel, according to US officials.