Iraq diverted food purchased under a $5 billion U.S. aid program and exchanged it for money and arms in the Soviet bloc and other countries before invading Kuwait in 1990, The New York Times reported in Monday's editions.
The U.S. government has had evidence of this diversion for more than two years, the paper said, citing documents made available to the daily and interviews with law-enforcement officials.Iraq may have used some of the money to acquire "sensitive nuclear technologies," one high-level U.S. official wrote in an Oct. 13, 1989, confidential document, according to the Times.
A Department of Agriculture (USDA) investigative team confronted high-ranking members of Iraqi leader Saddam Hussein's government with some of the accusations that same month, the paper said.
The team also complained that Iraqi officials were repeatedly demanding bribes from many big U.S. businesses selling food to Iraq, which was using money lent through the American aid program to buy it. In some instances bribes were paid, the investigators said.
Finally, the team charged that all these undertakings were part of a multibillion-dollar bank fraud in the United States that Iraq was engaged in to help finance the rebuilding of its military power, the Times said.
The Iraqis indignantly denied the accusations and, to the astonishment of the U.S. law-enforcement officials investigating the case, President Bush's administration expanded the aid program with another half-billion dollars in guaranteed loans, the paper said.
Direct losses from those loans, which were backed by the USDA's Commodity Credit Corp., ultimately cost U.S. taxpayers at least $400 million, the newspaper said.
It is not clear how much food may have been converted to cash or arms, the Times said.