Records show banks fined for Saddam dealings

The US-led post-war government in Iraq awarded business to two multinational banks fined for violating US sanctions against Iraq during the regime of ousted dictator Saddam Hussein, records show.

The US-appointed interim Iraqi government awarded one of the first foreign banking licenses in Iraq to British bank HSBC – the only firm fined twice for transactions with Saddam’s Iraq by the US Treasury Department.

A CIA report last month said Saddam’s regime also stashed illicit oil profits in accounts at an HSBC branch in Jordan.

And an Iraqi bank under Saddam was one of five investors in a London bank controlled by HSBC.

The deal gave one of Saddam’s bankers a seat on the board of directors of the British Arab Commercial Bank until last year.

HSBC said in a statement that its internal reviews have found no evidence of wrongdoing.

Bids from 58 banks from around the world were considered in selecting the consortium led by JPMorgan. JPMorgan and HSBC were the only banks on that list which had paid fines for violations involving Saddam’s Iraq.

The Iraqi interim government awarded banking licenses in January to HSBC and the National Bank of Kuwait. Neither has opened any branches in Iraq. HSBC got the license despite its recent connections with Saddam’s regime.

Iraq’s state-owned Rafidain Bank owns 4.91% of the British Arab Commercial Bank, which is an affiliate of the HSBC banking group. HSBC owns 46.51% of the bank and the next-largest shareholder is the Libyan Arab Foreign Bank, which owns 25%.

Separately, the report last month from chief US weapons inspector Charles Duelfer said an HSBC branch in Amman, Jordan, was part of an international network of banks Saddam’s regime used to hide black-market profits.

Duelfer wrote that one way to finance an under-the-table oil deal with Saddam was to pay cash to Iraq’s Rafidain Bank in Amman, which would then transfer money to the HSBC branch, ”where regime money remained”.

In a statement, HSBC said it tried to avoid dealing with Saddam’s regime while Iraq was under UN sanctions. The bank said it periodically reviewed accounts in Jordan and elsewhere for possible ties to Saddam and those reviews ”revealed no irregularities”.