Questions were raised on Thursday about the role BNP Paribas may have played in the scandal surrounding the United Nations oil-for-food programme after the French banking group admitted it made procedural “mistakes” in its oversight of millions of dollars in payments in connection to the programme.
The admission, before the US House subcommittee on oversight and investigations, followed the release of new evidence by committee investigators that BNP oversaw at least 400 payments that appear to have violated its contract with the UN.
BNP paid suppliers of humanitarian aid in its role as the primary banking group charged with transferring money between parties in oil-for-food transactions. It was barred by the UN from transferring payments to anyone other than the supplier or the supplier's bank.
However, Everett Schenk, chief executive of BNP Paribas North America, said the bank's agreement with the UN was “ambiguous”.
“Nothing in our [internal] investigation to date has led us to believe that any letter of credit proceeds that were assigned or paid to anyone other than a bank. . . were causally related to any corruption which may have occurred in the oil-for-food programme,” he said. But congressional investigators alleged that dozens of payments by BNP to non-banking “third parties” were in direct violation of its UN agreement, and that the bank might have violated banking laws in the US that require entities to “know your customer”.
Republican congressmen raised concerns about “misdirected” payments to a company called East Star Trading, a “shadowy” company that participated in other oil-for-food transactions.
Dana Rohrabacher, chairman of the subcommittee on oversight and investigations, said the payments should have been made to Al-Riyadh International Flowers, a group owned by Prince Bandar bin Mohammed, a member of the Saudi royal family not the Saudi ambassador to the US.
The committee also obtained documents from BNP in which the company's auditors reported in two separate audits that the group's operating procedures were out of date as of January 1997, soon after the oil-for-food programme began. The revelations provide a potential new piece in what investigators describe as a giant puzzle, through which Iraq was able to manipulate the oil-for-food programme.
■ Charles Pasqua, former French interior minister, said yesterday he was not involved in any way in corruption around the UN oil-for-food programme, AP reports. Mr Pasqua said claims he had traded in Iraqi oil were “ridiculous”.