[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





                  DIVESTING SADDAM: FREEZING, SEIZING,
                   AND REPATRIATING SADDAM'S MONEY TO
                               THE IRAQIS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 14, 2003

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 108-28



89-631              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 BARNEY FRANK, Massachusetts
DOUG BEREUTER, Nebraska              PAUL E. KANJORSKI, Pennsylvania
RICHARD H. BAKER, Louisiana          MAXINE WATERS, California
SPENCER BACHUS, Alabama              CAROLYN B. MALONEY, New York
MICHAEL N. CASTLE, Delaware          LUIS V. GUTIERREZ, Illinois
PETER T. KING, New York              NYDIA M. VELAZQUEZ, New York
EDWARD R. ROYCE, California          MELVIN L. WATT, North Carolina
FRANK D. LUCAS, Oklahoma             GARY L. ACKERMAN, New York
ROBERT W. NEY, Ohio                  DARLENE HOOLEY, Oregon
SUE W. KELLY, New York, Vice         JULIA CARSON, Indiana
    Chairman                         BRAD SHERMAN, California
RON PAUL, Texas                      GREGORY W. MEEKS, New York
PAUL E. GILLMOR, Ohio                BARBARA LEE, California
JIM RYUN, Kansas                     JAY INSLEE, Washington
STEVEN C. LaTOURETTE, Ohio           DENNIS MOORE, Kansas
DONALD A. MANZULLO, Illinois         CHARLES A. GONZALEZ, Texas
WALTER B. JONES, Jr., North          MICHAEL E. CAPUANO, Massachusetts
    Carolina                         HAROLD E. FORD, Jr., Tennessee
DOUG OSE, California                 RUBEN HINOJOSA, Texas
JUDY BIGGERT, Illinois               KEN LUCAS, Kentucky
MARK GREEN, Wisconsin                JOSEPH CROWLEY, New York
PATRICK J. TOOMEY, Pennsylvania      WM. LACY CLAY, Missouri
CHRISTOPHER SHAYS, Connecticut       STEVE ISRAEL, New York
JOHN B. SHADEGG, Arizona             MIKE ROSS, Arkansas
VITO FOSELLA, New York               CAROLYN McCARTHY, New York
GARY G. MILLER, California           JOE BACA, California
MELISSA A. HART, Pennsylvania        JIM MATHESON, Utah
SHELLEY MOORE CAPITO, West Virginia  STEPHEN F. LYNCH, Massachusetts
PATRICK J. TIBERI, Ohio              BRAD MILLER, North Carolina
MARK R. KENNEDY, Minnesota           RAHM EMANUEL, Illinois
TOM FEENEY, Florida                  DAVID SCOTT, Georgia
JEB HENSARLING, Texas                ARTUR DAVIS, Alabama
SCOTT GARRETT, New Jersey             
TIM MURPHY, Pennsylvania             BERNARD SANDERS, Vermont
GINNY BROWN-WAITE, Florida
J. GRESHAM BARRETT, South Carolina
KATHERINE HARRIS, Florida
RICK RENZI, Arizona

                 Robert U. Foster, III, Staff Director
              Subcommittee on Oversight and Investigations

                     SUE W. KELLY, New York, Chair

RON PAUL, Texas, Vice Chairman       LUIS V. GUTIERREZ, Illinois
STEVEN C. LaTOURETTE, Ohio           JAY INSLEE, Washington
MARK GREEN, Wisconsin                DENNIS MOORE, Kansas
JOHN B. SHADEGG, Arizona             JOSEPH CROWLEY, New York
VITO FOSSELLA, New York              CAROLYN B. MALONEY, New York
JEB HENSARLING, Texas                CHARLES A. GONZALEZ, Texas
SCOTT GARRETT, New Jersey            RUBEN HINOJOSA, Texas
TIM MURPHY, Pennsylvania             JIM MATHESON, Utah
GINNY BROWN-WAITE, Florida           STEPHEN F. LYNCH, Massachusetts
J. GRESHAM BARRETT, South Carolina


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    May 14, 2003.................................................     1
Appendix:
    May 14, 2003.................................................    31

                               WITNESSES
                        Wednesday, May 14, 2003

Aufhauser, Hon. David, General Counsel, Department of the 
  Treasury.......................................................     5
Lanzillotta, Lawrence, Principal Deputy and Deputy Under 
  Secretary of Defense for Management Reform, Department of 
  Defense........................................................     9
Wayne, Hon. E. Anthony, Assistant Secretary for Economic and 
  Business Affairs, Department of State..........................     7

                                APPENDIX

Prepared statements:
    Kelly, Hon. Sue W............................................    32
    Oxley, Hon. Michael G........................................    34
    Gutierrez, Hon. Luis V.......................................    36
    Maloney, Hon. Carolyn B......................................    38
    Shadegg, Hon. John B.........................................    40
    Aufhauser, Hon. David D......................................    42
    Lanzillotta, Lawrence........................................    51
    Wayne, Hon. E. Anthony.......................................    54

              Additional Material Submitted for the Record

Kelly, Hon. Sue W.:
    Banker who hid Saddam's Millions, London Times, April 13, 
      2003.......................................................    63
    Hussein's Son Took $1 Billion Just Before War, New York 
      Times, May 6, 2003.........................................    69
    Iraqi Oil Smugglers Eluded U.S. Patrols, Washington Post 
      Foreign Service, May 7,2003................................    72
    Swiss Lawyer Denies Being Saddam's Banker, Agence France-
      Presse, April 14, 2003.....................................    75
    The Search for Saddam's Bucks, New York Daily News, May 4, 
      2003.......................................................    77
    The Search for Saddam's Stash, CNNMoney, April 16, 2003......    81
    Tracking Saddam's Billions, April 3, 2003....................    86
Wayne, Hon. E. Anthony:
    Written response to questions from Hon. Luis V. Gutierrez....    89
    Written response to questions from Hon. John B. Shadegg......    94
Lanzilotta, Lawrence:
    Written response to questions from Hon. Luis V. Gutierrez....    99

 
                  DIVESTING SADDAM: FREEZING, SEIZING,
                   AND REPATRIATING SADDAM'S MONEY TO
                               THE IRAQIS

                              ----------                              


                        Wednesday, May 14, 2003

             U.S. House of Representatives,
      Subcommittee on Oversight and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2128, Rayburn House Office Building, Hon. Sue W. Kelly 
[chairwoman of the subcommittee] presiding.
    Present: Representatives Kelly, Paul, Shadegg, Hensarling, 
Garrett, Murphy, Brown-Waite, Barrett, Oxley (ex officio), 
Gutierrez, Moore, Inslee, Crowley, Maloney, Lynch, Davis and 
Renzi.
    Chairwoman Kelly. Before I begin this hearing I want to 
explain that I am on another committee as well which is in the 
middle of a markup. I may have to take a break every once in a 
while to go over for votes. So, just to give you all fair 
warning that may happen, I hope that we can move along with 
this hearing.
    So that being said, this hearing of the Subcommittee on 
Oversight and Investigations will come to order.
    Over the last 20 years, Iraq and its people have been 
systematically looted by the brutal tyranny of Saddam Hussein. 
Today, tens of billions of dollars in assets and cash lie 
somewhere outside of Iraq in the smoky depths of phony front 
companies, hidden trusts, and cash accounts in the names of 
regime family members and loyalists. This stolen money 
represents another layer of destruction and deceit that the 
Hussein regime inflicted on the Iraqi people.
    Specifically, you can recall the reaction of the Iraqi who 
stormed one of many Presidential palaces on April 14 and was 
finally free to express his feelings. And as he passed through 
that ruined palace, with shards of crystal from chandeliers and 
shattered mirrors and all that gilt furniture, he was marveling 
bitterly at Saddam's life of luxury and commented that his 
family couldn't even afford bread.
    The Iraqi people have suffered enough and this money that 
was taken belongs to them. These assets must be found and they 
must be returned to the people of Iraq to build schools and 
reopen businesses and hospitals and repair the country's 
infrastructure, all of it destroyed by the malicious neglect of 
a tyrant and his inner circle.
    Today the Oversight Investigations Committee holds the 
first congressional hearing on the search for Saddam's money 
and the efforts to return it to the Iraqi people. Initial press 
reports are startling, with stories of shell companies in 
numerous countries, discoveries in Iraq of hundreds of millions 
of U.S. Dollars, and oil smuggling schemes that are without 
parallel among other petty dictators and thugs.
    Passage of this committee's work on the Patriot Act has 
been a tremendous step toward monitoring the flow of illicit 
money and it has also served to raise the bar for the 
international community. Foreign financial institutions can no 
longer seek access to the U.S. market without providing U.S. 
financial enterprises with sufficient information to determine 
that no one is being misled by Saddam, his family, or their 
agents.
    Our message to the world is straightforward and it should 
be heeded: The willingness to share cross-border information is 
now a license required to do business in America.
    In case you missed that, let me repeat it: The willingness 
to share cross-border information is now a license required to 
do business in America.
    We have accomplished a great deal in Iraq in a very short 
time. President Bush has been steadfast in his resolve to end 
tyranny, terrorism, and torture. The Administration, our brave 
soldiers and sailors, the coalition troops, have earned the 
admiration of the American people and the world for the rapid 
liberation of a terribly oppressed nation, a nation that spent 
its money funding, aiding, and exporting terrorism instead of 
caring for its people.
    Congress must continue to give the Administration the 
resources it needs to locate and return the money to its 
rightful owners: the men, women and children of Iraq. While a 
collaborative effort is underway to seize this money, let's be 
very clear. America expects nothing less than the highest level 
of cooperation from financial institutions, international 
entities, and foreign governments across the globe. We know the 
money is out there and we will find it and we will return it to 
the Iraqi people, and we expect others to do the same thing.
    We are pleased to have with us here today witnesses from 
the three principal departments responsible for efforts to 
repatriate this money to Iraq. At this time it is unclear what 
role each entity plays in the process. I am hoping that you can 
shed some light, you who are testifying, on how the U.S. 
Government works with the international community and the 
financial services industry to repatriate financial assets of 
dictators.
    The committee has also an immediate interest in determining 
how entities across the world are working together to return 
Saddam's illegal money to the Iraqi people. Therefore, I would 
also like to announce that we will be requesting, this 
committee will request for GAO to study these issues. Chairman 
Oxley and I, along with Ranking Members Frank and Gutierrez 
have agreed that this is an issue that must be examined as 
closely as possible and we will be sending a letter this 
afternoon to request this study from the GAO.
    There are many challenges ahead and we believe that this 
independent investigation by GAO will help to address them in a 
comprehensive and effective way.
    I thank this panel for their appearance. I look forward to 
working with you all to ensure the Iraqi people recover the 
assets that they now own and that will be critical to building 
a free and democratic Iraq.
    And Mr. Gutierrez's plane just landed, so I am going to 
call on Mrs. Maloney.
    [The prepared statement of Hon. Sue W. Kelly can be found 
on page 63 in the appendix.]
    Mrs. Maloney. And I thank the gentlelady from the great 
State of New York for holding this important hearing. And I 
thank all our panelists.
    This morning the subcommittee examines the seizure of 
Saddam Hussein's assets and Administration efforts to 
repatriate them. These assets were the product of years of 
looting from the Iraqi people, including the diversion of 
resources from humanitarian programs such as Oil for Food, and 
are further evidence of the sickness of Saddam's regime.
    Just prior to military action on March 20, the President 
issued an Executive Order confiscating and vesting property of 
the Government of Iraq in the United States. The Executive 
Order operates under authority in section 106 of the Patriot 
Act. The order resulted in the seizure of 1.7 billion in assets 
by the U.S. Treasury Department from accounts held in the U.S. 
In the name of the Government of Iraq, the central bank of 
Iraq, the State organization for marketing oil, the Rafidain 
bank, the Rasheed bank.
    As CRS explains and I quote: This authority becomes 
available when the United States is engaged in armed 
hostilities or has been attacked by a foreign country or its 
nationals. At this time, the property of any foreign person, 
organization or nation which planned, authorized, aided, or 
engaged in the hostilities or attack become forfeitable.
    Given that we have yet to find Saddam, this seizure is 
especially important because of flight risk and the threat that 
his assets could be used to assist terrorists.
    This morning our panelists will testify to the success of 
their efforts to track down Saddam's assets through his tangled 
web of accounts. This was difficult work and our witnesses and 
their departments deserve credit for a job well done. However, 
the job of limiting Saddam's funding sources is far more 
complex. Treasury's own testimony estimates that his family's 
wealth could be as much as $40 billion worldwide.
    I also look forward to a discussion this morning of what is 
next for the assets seized from Saddam. The President's 
Executive Order stated, and I quote, ``such a vested property 
should be used to assist the Iraqi people and to assist in the 
reconstruction of Iraq,'' end quote.
    This is a very broad statement that gives the 
Administration wide latitude for potential uses of this money. 
As this money was stolen from the people of Iraq, the U.S. in a 
sense is acting as a fiduciary for the Iraqi people. Iraq is a 
nation that suffers massive international debts. The Iraqi 
people will need every resource available to them to rebuild 
the country and service their debt obligations.
    Whatever the final determination is for the uses of this 
money, I believe these decisions should be made in the open, 
not in closed Administration meetings. This money does not 
belong to the United States and it must not be obligated in no-
bid rebuilding contracts, as has been the case with other Iraq 
projects. I think this issue is so important that last week I 
offered an amendment in the Government Reform Committee that 
would apply the highest Federal contracting standards to seized 
Iraqi assets. I withdrew the amendment because I wanted to hear 
from our witnesses this morning before proceeding. I did offer 
another amendment that requires full and open disclosure of 
contracts that were awarded without open bidding to the lowest 
responsible bidder. I am pleased that this amendment was 
accepted by the majority and attached to the defense 
authorization bill. I believe a similar one may be required for 
the assets that are the topic of this hearing. And I look very 
much forward to your statements.
    In short, the Iraqi people suffered for 25 years and it is 
very important to get this money back into their hands for the 
rebuilding effort. And I hope that we are working with the 
United Nations, which happens to be in the district that I 
represent, to broaden the burden sharing so that other 
countries will be participating in a multilateral effort to 
help Iraq and to help rebuild it.
    I am also interested in any efforts to seize the assets in 
foreign countries and where the United Nations stands in 
assisting our country to find these assets, seize them, return 
them to the Iraqi people. I am very concerned and dedicated to 
helping them. But we have many domestic challenges here at home 
in education, health care, and we really cannot carry this 
burden alone. So I hope the Administration is working to share 
this burden with other countries.
    I thank you very much for being here and I yield back the 
balance of my time.
    Chairwoman Kelly. Thank you.
    [The prepared statement of Hon. Carolyn B. Maloney can be 
found on page 38 in the appendix.]
    Chairwoman Kelly. Mr. Murphy. No opening statement?
    Mr. Gutierrez.
    Mr. Gutierrez. So that we can get to the witnesses, may I 
hand my opening statement for the record?
    Chairwoman Kelly. Yes. Without objection, all members' 
opening statements will be made part of the record.
    [The prepared statement of Hon. Luis V. Gutierrez can be 
found on page 36 in the appendix.:]
    Chairwoman Kelly. Mr. Barrett. Mr. Oxley, I am sorry, I 
didn't see you down there.
    Mr. Oxley. Thank you. I was hiding behind----
    Chairwoman Kelly. Mr. Chairman.
    Mr. Oxley. ----behind our distinguished freshman here. I 
just want to congratulate the Chairlady for this hearing today, 
submit my statement for the record, and welcome our witnesses.
    This is a very important issue that our committee has 
undertaken, having passed the anti-money laundering provisions 
of the USA Patriot Act, and I know your interest in this 
personally. And we are looking forward to this as being the 
first step in finding where Saddam's money is and going after 
it.
    So again, I thank you for your perseverance and I yield 
back.
    Chairwoman Kelly. Thank you.
    [The prepared statement of Hon. Michael G. Oxley can be 
found on page 34 in the appendix.]
    Chairwoman Kelly. All right, then, we are just going to go 
on down here.
    Mr. Barrett. No? No statement.
    Mr. Renzi.
    Mr. Renzi. I am good to go.
    Chairwoman Kelly. Mr. Hensarling?
    All right, then, if there are no more opening statements, 
we proceed to the witness panel, the witnesses this morning. We 
welcome David Aufhauser, General Counsel, the Treasury 
Department, and Mr. E. Anthony Wayne, Assistant Secretary for 
the Economic and Business Affairs of the State Department, who 
together represent the lead Cabinet departments in the 
worldwide search for Saddam's money.
    We also welcome Larry Lanzillotta, who is Principal Deputy 
of Defense in the Comptroller's Office and Deputy Under 
Secretary of Defense for Management Reform--that is a lot of 
water you are carrying there sir--who is testifying about the 
assets found in Iraq by our troops which will be used for the 
benefit of the Iraqi people.
    We thank the witnesses for testifying. We welcome you on 
behalf of the committee and, without objection, your written 
statements and any attachment that you may have will be made 
part of the record. You will now each be recognized for a 5-
minute summary of your testimony. When the light goes on green, 
obviously means you have time; yellow means you have 1 minute 
to sum up; and red means the time is over.
    And we will proceed with you, Mr. Aufhauser.

 STATEMENT OF DAVID AUFHAUSER, GENERAL COUNSEL, DEPARTMENT OF 
                          THE TREASURY

    Mr. Aufhauser. Thank you, Madam Chairwoman, and thank you 
to members of the committee for holding this session. We look 
forward to not only informing you about what we are doing, but 
we look forward to your counsel and to your recommendations and 
suggestions.
    A great deal of money will be required to put Iraq back on 
an even keel. But that is not because of 25 days of war. It is 
because of 25 years of tyranny, a tyranny that made a prisoner 
of thought and a criminal of honest enterprise. The long war 
with Iran, the unlawful invasion of Kuwait, the elevation of 
palace corruption to an art form, and the decade of sanctions, 
book-ended by obscene public extravagances in the palaces while 
the common man lined up at one of 55,000 U.N. food distribution 
points, all bankrupted a rich country in everything except the 
hunger for freedom.
    Now that they have the freedom, the Iraqi people deserve 
their wealth back: the inestimable wealth of the oil in their 
soil; the $1.7 billion of vested assets here in the U.S.; the 
approximately $2.3 billion of similarly frozen or blocked 
accounts in countries around the globe dating back to 1990; the 
recovery of the stolen assets of the central bank; the 
unallocated U.N. OFF money, Oil for Food program money; the 
establishment of the donors fund from the community of nations 
under the supervision of the World Bank or the IMF; and, of 
course, the identification, capture, and repatriation of the 
hidden money or previously unaccounted for wealth of the 
nation.
    This last tranche of money is expected to occupy much of 
this morning's testimony. And it should. It should not be 
because we are Pollyanna-ish in the belief that much of it has 
not been widely misspent in acts of unimagined profligacy, and 
not because it makes good theater, and not because much of it 
may already have taken flight; but rather, it is the right 
thing to do for so many reasons. Whatever unfound money there 
is ought to be returned to feed people. Whatever the hidden 
wealth is, it needs to be captured before it falls into the 
hands of purveyors of terror. And whatever commerce took place 
by corrupting the U.N. Oil for Food program and by nakedly 
gaming the economic sanction program up at the U.N., it needs 
to be answered and punished by denying profit to the illegal 
trade.
    Now, frankly this last point is perhaps the most troubling. 
Some of the best of our kids perished in Iraq because a 
significant part of the world did not effectively enforce the 
U.N. sanctions program to keep arms from Saddam Hussein. One of 
the first acts of the Bush Administration back in March of 2001 
was to introduce a resolution in the U.N. to smarten those 
sanctions, to accelerate the delivery of humanitarian goods, to 
close the trafficking in smuggled oil, and to try to stem the 
holiday of corruption that Hussein had made of the Oil for Food 
program. We succeeded only in the former. The price has been 
the lengthened tenure of a tyrant, and now blood in the sand.
    The search for the hidden wealth of Hussein and his regime 
is therefore more than a search for assets. It is a 
reaffirmation of the rule of law and a necessary reinforcement 
of the notion that while economic sanctions can be a powerful 
tool for policing state sponsors of terror, where the enemies 
of democracy worldwide, if casually enforced--if casually 
enforced, they can be a lethal tonic of false security. So the 
search both in-country, back in Iraq, and around the globe is 
an imperative.
    I am happy to report there are promising advances in that 
search, both in setting up the process and in capturing 
previously unknown monies. I leave you with one example. We 
have been in dialogue, near constant dialogue with the central 
bank of Lebanon. They have confirmed yesterday that more than 
$495 million of previously unknown assets held by the central 
bank, the former central bank of Iraq, and by SOMA, the State 
Oil Marketing Organization, have been secured and will not be 
released to anyone until we stand up a new central bank, at 
which time they commit to send it back to and to repatriate it 
back to Iraq.
    More importantly, we have an open invitation from that 
jurisdiction and others, but particularly that jurisdiction and 
the governor of the central bank, to proceed with presenting 
them with what evidence we have of suspected front companies, 
again with the commitment that if the evidence is sufficient to 
act upon, they would secure those accounts, whatever they are, 
with the ultimate intention of repatriating them back to Iraq.
    I give that to you as one example. I will be glad to give 
you more during the testimony. With that I will close.
    Chairwoman Kelly. Thank you, Mr. Aufhauser.
    [The prepared statement of Hon. David Aufhauser can be 
found on page 42 in the appendix.]
    Chairwoman Aufhauser. Mr. Wayne.

STATEMENT OF E. ANTHONY WAYNE, ASSISTANT SECRETARY FOR ECONOMIC 
           AND BUSINESS AFFAIRS, DEPARTMENT OF STATE

    Mr. Wayne. Thank you very much, Madam Chair, and esteemed 
members of the subcommittee and the general committee.
    It is a pleasure to be here to discuss this very important 
topic of all the work that we are doing to identify, freeze, 
and prepare for the return of Iraqi State assets so they can 
benefit the Iraqi people. This is a truly interagency effort 
with the active participation of a number of agencies and 
departments not represented here today, and it has to be that 
to succeed.
    And as you know, this is one part of the broader effort to 
deal with all the challenges that have arisen and are now there 
to get back on a path to development and prosperity for the 
people of Iraq. But finding and restoring these assets can be a 
very important part in that process, in providing the resources 
that are needed for the people of Iraq to develop themselves 
and to build their prosperity.
    After the 1990 invasion of Kuwait, the United States acted 
very quickly and decisively to deprive the regime of Saddam 
Hussein of the means and materials to continue its regional 
aggression, to further develop its programs of weapons of mass 
destruction, and to continue the repression of the Iraqi 
people.
    Based on U.N. Security Council Resolution 661, we quickly 
froze and blocked all of the Iraqi State assets legally in our 
jurisdiction. We also acted to prevent the regime of Saddam 
Hussein from acquiring additional revenues and goods through 
the illicit sale of Iraqi oil. We mounted and continued through 
the decade a very aggressive campaign, a diplomatic campaign to 
pressure countries to enforce the sanctions against Iraq. We 
worked with our Gulf War coalition partners to interdict 
illicit oil in the Gulf, and we took punitive actions in a 
number of cases for sanction busters where we had those options 
available.
    As Mr. Aufhauser has made clear, there are two dimensions 
to our current effort to assure that Iraqi State assets are 
made available for the benefit of the Iraqi people:
    First, President Bush has acted to vest more than $1.7 
billion in Iraqi Government assets in the U.S., and these 
assets are being made available to assist the Iraqi people and 
to assist in the reconstruction of Iraq.
    And secondly, we are working with other countries around 
the world. We have reached out first to about 30 countries that 
declared that they have assets that were frozen in 1990 and 
1991, and simultaneously to an additional 20 or so countries 
where we thought there might be additional assets available. 
And we have asked all of these countries to carefully examine 
their bank records, their other financial records, to verify 
the numbers that are there, to find additional assets and to 
work with us to prepare for the return of these assets to Iraq.
    Many countries have expressed their support in this effort. 
Also many countries have different legal systems than we do. In 
fact, not many countries have the robust set of tools which you 
and your fellow Members of Congress have made available to the 
President to act as he did, vesting these assets in the United 
States. And many governments are looking forward to a new U.N. 
Security Council resolution that will help prepare the way for 
them to feel that they can return the assets to Iraq.
    As you know, we have now tabled, along with the United 
Kingdom and with Spain, on May 9, such a Security Council 
resolution. As President Bush has made clear, this resolution 
is aimed at lifting the sanctions on Iraq. But part of this 
resolution also would direct other countries to identify all 
the Iraqi State funds, other economic resources and financial 
assets tied to Saddam Hussein and members of his regime, and 
repatriate those funds into an Iraqi Assistance Fund, which 
would be held in the Iraqi central bank, would be held there in 
conjunction with an international advisory board, and would be 
used to help rebuild Iraq and to help meet the urgent 
humanitarian needs.
    The State Department is now deeply engaged, as you have 
seen on the front pages every day, from Secretary Powell on 
down and our Ambassadors around the world and our team in New 
York, working hard to get this resolution passed very quickly. 
We are also working extremely closely with the Departments of 
Treasury, Justice, Defense, Homeland Security, as well as the 
law enforcement and intelligence agencies to identify the 
assets that are out there and to identify the front companies 
that have been connected to Saddam Hussein and his regime.
    We have focused on a number of countries in this effort. We 
have reached out to countries in the region such as Jordan, 
Turkey, Lebanon, Syria, Bahrain and the UAE. Overall, we have 
found foreign governments very open to cooperating in this 
effort, as Mr. Aufhauser indicated.
    We are reaching out to countries such as Switzerland, the 
United Kingdom, the other countries in Europe. We are very 
closely working to identify all the illicit channels, and we 
can get into this further in the testimony, since I see my time 
has run out.
    I would just say that as we have also worked through this 
effort, we have a very closely knit interagency team. They are 
in practically daily--not practically, really daily--contact in 
working this through so we can use law enforcement intelligence 
and diplomatic channels in this overall effort.
    We have also been, I think, very clear on the use of 
assets, as Mrs. Maloney mentioned in her introductory remarks, 
that these have to be for the benefit of the Iraqi people and 
that these assets need to be spent in a transparent, publicly 
explainable, accountable method that is evidently for the 
benefit of the Iraqi people.
    We look forward to talking about this and also some of our 
broader efforts, if you are interested, against corruption and 
in favor of transparency around the world. And we look forward 
and I look forward to working with you, Madam Chair, and the 
other members of the committee in this ongoing discussion and 
this ongoing effort of how we best take these tasks on and 
bring them to a successful conclusion.
    Thank you very much.
    Chairwoman Kelly. Thank you, Mr. Wayne.
    [The prepared statement of Hon. E. Anthony Wayne can be 
found on page 54 in the appendix.]
    Chairwoman Kelly. Mr. Lanzillotta.

STATEMENT OF LAWRENCE LANZILLOTTA, PRINCIPAL DEPUTY AND DEPUTY 
UNDER SECRETARY OF DEFENSE FOR MANAGEMENT REFORM, DEPARTMENT OF 
                            DEFENSE

    Mr. Lanzillotta. Madam Chairwoman and members of the 
subcommittee, we appreciate this subcommittee's interest in the 
disposition of Saddam Hussein's assets and returning these 
assets to the Iraqi people. I welcome the opportunity to 
summarize the role of the Department of Defense in this area as 
well as discuss our procedures pertaining to the administrative 
use and accounting of the vested and seized Iraqi property.
    Now that the regime of Saddam Hussein no longer rules Iraq, 
it is the primary aim of the Department of Defense to take all 
measures necessary to ensure much needed humanitarian and 
reconstruction assistance is brought to the Iraqi people so 
that they can begin to rebuild their lives and the country 
after decades of oppression.
    Towards this end, the Department is committed to using 
Iraqi State- and regime-owned property that has been vested in 
the U.S. Treasury from banking accounts in the U.S. and state- 
and regime-owned cash, funds, or realizable securities found 
and seized in Iraq to assist the Iraqi people and to assist the 
reconstruction of their country.
    On March 20, 2003 the President, acting pursuant to the 
International Emergency Economic Powers Act, confiscated and 
vested in the Treasury approximately 1.7 billion in Iraqi 
Government assets to be used to assist the Iraqi people and to 
assist in the reconstruction of Iraq. The Secretary of the 
Treasury has subsequently designated the Secretary of Defense 
with the authority to use approximately 92 million of this 
property.
    On April 30, 2003, the President confirmed the authority of 
the Secretary of Defense under the laws and usage of war to 
seize, sell, administer, or use state- or regime-owned cash, 
funds, or realizable securities in Iraq. The President 
specified that this property shall be used only to assist the 
Iraqi people in support of the reconstruction of Iraq.
    The Department of Defense is dedicated to work with the 
affected U.S. Government agencies to ensure that vested and 
seized properties are subject to rigorous procedures to ensure 
that such property is properly safeguarded, accounted for, 
audited, and used only to assist the Iraqi people and to assist 
in the reconstruction of Iraq.
    Presently the Department, in collaboration with U.S. 
Government entities such as the Department of the Treasury, 
Office of Management and Budget, GAO, has developed procedures 
for administrating, using, and accounting for vested assets. 
These procedures outline, for example, the manner in which 
vested property will be secured, transported, accounted for, 
disbursed, and used and audited to ensure it applies, as 
authorized by law and approved by the President.
    To date, nearly 22.8 million in vested assets have been 
used to assist the Iraqi people and assist in reconstruction 
efforts. These vested funds have been used to make greatly 
needed emergency payments to Iraqi civil servants and 
pensioneers; to help pay for startup costs of Iraqi ministries; 
and to provide other forms of intermediate impact humanitarian 
assistance.
    With regard to state- and regime-owned property seized in 
Iraq, the Department is in the process of developing in 
coordination with other affected government agencies, 
procedures similar to those used for vested assets regarding 
safeguarding, auditing, accounting for, and use of such 
property to ensure its use as authorized by law and approved by 
the President.
    The procedures will specify, among other things, that 
seized state- and regime-owned property shall be held on behalf 
and for the benefit of the Iraqi people and shall only be used 
to assist the Iraqi people in support of reconstruction of 
Iraq. The procedures will also ensure that determinations of 
whether the property found in Iraq is public or private are 
made in accordance with applicable domestic and international 
law.
    In summary, the Department of Defense is deeply committed 
to ensure that vested and seized assets of the Saddam Hussein 
regime are used in accordance with law, and rigorous accounting 
and auditing procedures are in place, and only to assist the 
Iraqi people and assist the reconstruction of Iraq.
    I thank you for this opportunity. This concludes my formal 
statement, and I would welcome any questions from the 
committee.
    Chairwoman Kelly. Thank you very much Mr. Lanzillotta.
    [The prepared statement of Lawrence Lanzillotta can be 
found on page 51 in the appendix.]
    Chairwoman Kelly. Mr. Aufhauser, I want to thank you for 
the very important information about the Lebanon bank. 
Congratulations on that, sir. I think most Americans were 
completely appalled when the news came out that there was 
someone in the Saddam regime who was essentially using U.S. 
currency as what might be called an insulation in their house. 
So when they opened that wall and found all those dollars in 
boxes, we knew that there was a lot of money. And I am 
delighted to think that the Bank of Lebanon is now working with 
us, and you are to be congratulated on that.
    You mentioned that you might have other examples. Would you 
be willing to share some of those with us?
    Mr. Aufhauser. Well, let me go through, if I can, the--
thank you first for that comment.
    It is more than Treasury, though. It was, again to reflect 
Mr. Wayne's comments, everything we do actually is quite joined 
at the hip, interagency, on this matter. Tony and I know each 
other too well because of all of this.
    It might be helpful if we rehearse the litany of actions we 
have taken. The first and most important is the exploitation of 
the data that we find in Baghdad which is effectively shared in 
what is called the fusion center of information, either in 
Qatar or Kuwait, or back in CENTCOM down in Tampa, made 
available to those of us working on these matters. That is the 
exploitation of the data.
    Some of the documents, by way of example--and I want to 
refer to this somewhat elliptically and maybe we can get into 
it in a later session--is perhaps a road map for front 
companies that we previously didn't know about.
    Second major resources, of course, would be information 
made available to us by the detainees, and interrogations have 
gone forward on some of the key detainees, such as the Finance 
Minister. But that is an interactive process and those will 
continue.
    Those participating either in scripting it or actually in 
conducting the interrogations include representatives from the 
FBI and Customs and Treasury and DOD and others.
    Third, of course, is reaching out to the jurisdictions of 
the border states which did a great deal of what we will term 
the illicit trade with Iraq, and to secure document 
exploitation there as well as the attempts to request that they 
freeze assets.
    Let me pause there for a second and underscore how 
important the documents are. A lot of the information we get in 
this kind of endeavor, as is the case in the war on terrorist 
financing, is really suspect. It comes from disreputable 
people, or it comes from people who find themselves in distress 
and will say anything. But the one thing that doesn't lie are 
the financial records that you get ahold of. And these 
financial records are very useful for three reasons: One is not 
only trying to secure the assets; but, two, telling us who 
participated, who participated in the nefarious activity; and 
three, perhaps helping us track down suppliers or purveyors of 
what is necessary to put together weapons of mass destruction. 
So going after the records is almost as important as going 
after the assets.
    But to return to the litany of actions taken, we have gone 
to those border jurisdictions and we have investigative teams 
in some of them--I don't want to identify them in this 
session--again, to good accord, to the effect of another $800 
million, give or take, that has been secured. I use the word 
``secured.'' I don't want to use the word ``locked'' or 
``frozen,'' because they are in a suspense account under a 
different kind of legal regime.
    Then, of course, we have the jurisdictions which were the 
switching stations for where the money went. Some of those are 
border states. Some of those are other Gulf States, and we have 
gone to them to see whether or not we can get access to 
information to trace where the money might be nested.
    And finally, we have gone to many of the jurisdictions 
which are known as nested jurisdictions or potential nested 
jurisdictions where we think the money might be, if it hasn't 
flown the coop already.
    On all of those actions we are actually making substantial 
progress. I will be making a fair amount of trips in very short 
order, delivering some material information developed by the 
U.S. Government to whet the appetite of those nested 
jurisdictions and others to climb on board and help us.
    Chairwoman Kelly. Thank you. I want to ask both you and Mr. 
Wayne, who is the single official in charge of this effort?
    Mr. Aufhauser. Out of deference to the man who gave me my 
job, I want to say President Bush is first. In country, in 
country in Iraq, mainly DOD is in charge of marshaling the 
assets and setting up the interrogations and exploiting the 
documents. But we are in--as I referred to the fusion center 
before, we are in constant dialogue with them. But short 
answer, in country, it is DOD. The rest of the globe it is 
Treasury, but it is Treasury building consensus, not in a 
linear fashion of commanding people what to do.
    Chairwoman Kelly. But is there one single individual who is 
in charge of this?
    Mr. Aufhauser. Yes.
    Chairwoman Kelly. The reason I am asking is----
    Mr. Aufhauser. The answer is me, on behalf of Secretary 
Snow.
    Chairwoman Kelly. All right. So that in other words, you 
have the authority if there is--the agencies disagree on a 
strategy or an action, you have the authority then to make the 
final decision; is that correct?
    Mr. Aufhauser. No, I don't want to overstate my importance. 
I have the authority to make a recommendation to Secretary Snow 
to make the final decision.
    Chairwoman Kelly. So Secretary Snow is the individual in 
charge.
    Mr. Aufhauser. Yeah. But I do want to come back to you and 
I want to underscore the dynamics of the process. It is nearly 
like an NSC interagency policy coordinating committee. So we 
ultimately make recommendations to the NSC, which is to say, 
the White House and the President, if there is disagreement. 
But our job is to make sure that we iron out disagreement at 
our level.
    Chairwoman Kelly. Thank you very much. I am out of time.
    Mr. Gutierrez.
    Mr. Gutierrez. Thank you very much. I guess just for the 
panel, how much do you believe is out there, approximately? If 
there is a--and of that, and I understand a little bit more 
about the decisionmaking-- but how do--is there a plan? How 
much does the United States get? How much do those that have 
claims, how much do the Kuwaitis--I mean, if there is--I guess 
if somebody said there were $50 billion out there and I 
suspected there were $50 billion out there and I knew that 
there were different people claiming the money, and I was in 
charge, and I also had expenses in terms of the rebuilding of 
Iraq and providing--is there a plan that says well, you know, 
it is costing the United States Government so much, so maybe 10 
percent of every dollar should go here and 5 percent should go 
here and, you, know the Kuwaitis are demanding 100 billion, so 
maybe 40 cent of every dollar--is there a plan that says here 
is how we are going to distribute the money?
    Mr. Aufhauser. I will give you paragraph one and perhaps 
Tony will give you paragraph two.
    First, on the estimate, it is wild-eyed guesstimating 
frankly, Congressman. Probably the best single guess is the GAO 
guess, which was $6.6 billion, to use their term, 
``conservatively'' between 1997 and 2001. And, of course, we 
would have 2 more years of the gaming and the corruption, so 
that number is undoubtedly, in my mind, conservative. With one 
exception. I do believe that amount of money was generated, at 
least that amount of money and more, perhaps twice, perhaps 
three times that, but I also believe a great deal of it was 
misspent, misspent either on those extravagances of personal 
disgrace, or for supplying, resupplying their army with spare 
parts, weapons, and the like.
    In terms of the plan, the ultimate plan is that wherever 
these assets are--with the resolution tabled in New York by the 
United States--is that they will be marshaled, gathered, and 
repatriated to the people of Iraq through the Iraqi Assistance 
Fund to be set up under the resolution established there. And 
that is the plan. It is not intended to reimburse the U.S. In 
any way for any of the costs incurred in freeing and liberating 
the people of Iraq, if I understood your question correctly.
    Mr. Gutierrez. Well, I just thought that as we move forward 
and we have plans as a government to assist the people of Iraq 
in the reconstruction, and those plans incur bills that need to 
be paid, if that--I think I understand that there is going to 
be a fund, and then they will----
    Mr. Aufhauser. Well, in addition to the fund, a part of the 
current resources that we have command of--and Larry referred 
to it--is, under the law of occupation law, free to be expended 
for the benefit of the Iraqi people currently by General Franks 
and the coalition provisional authority right now. So the 
ongoing costs, if you will, the standing-up of the Iraq economy 
and the Iraq civilian authorities, is being underwritten by the 
Iraqi assets that have either been vested here in the U.S. Or 
found or seized in Iraq.
    To give you one specific example, $91 million in cash was 
shrink-wrapped here on the East Coast, put on convoy, taken to 
Andrews, I believe, put on planes and flown to Iraq, and that 
money has been used to underwrite the initial costs of 
pensioneers, pensions for the pensioneers, civilian costs of 
the oil workers and dock workers down in Kazar and the like. So 
the vested funds are being used precisely how the President 
said they would be used, and, Congressman Maloney, with every 
intention of being absolutely transparent about the expenditure 
of that money.
    Mr. Gutierrez. We are going to paragraph two.
    Mr. Wayne. I might just add, you mentioned compensation 
claims. There are indeed a number of compensation claims from 
Kuwait and others that have been treated under a U.N. 
compensation commission. A number of those have been awarded, a 
large number have not yet been adjudicated.
    In the draft U.S. Security Council resolution that we have 
tabled, we have proposed to reduce the percentage of oil 
revenues that go into that from 25 percent right now to 5 
percent, so that more of the oil revenues would go into 
rebuilding Iraq and that the compensation claims would be 
repaid over a longer period of time.
    There is also outstanding Iraqi debt. There is at least 19 
billion indicated in the Paris Club initial look at this that 
we are now going out and trying to do additional, what we call 
data calls, to find out how much other debt is out there. That 
does not include any interest that might have accrued on this 
debt, because much of this debt has not been paid since 1990 or 
1991, no payments into it.
    Additionally, just in totals of money, in 1991 there were 
about $6 billion of assets reported frozen around the world 
under the initial U.N. Security Council freeze orders, U.N. 
Security Council Resolution 661. Much of that remains in place. 
Much of that was the money that President Bush vested.
    In some countries, under their legal systems, some of that 
money has been used to pay claims that existed in that country, 
in the same way there are a number of court cases in the United 
States which had claims against some of the money in--that had 
been frozen in the United States.
    Mr. Gutierrez. Thank you very much.
    Chairwoman Kelly. Thank you. Chairman Oxley.
    Mr. Oxley. Thank you, Madam Chairwoman.
    I had an opportunity to look over some of the press reports 
of some of the activities going on, the smuggling of oil under 
the oil for--somebody described the oil for palaces program, 
which I think really calls into question whether this type of 
plan set up by the United Nations really does work. It appeared 
that Saddam was skimming profits almost from the get-go on the 
sale of embargoed oil. And the article says Saddam even found 
ways to profit from the U.N.-run Oil for Food program. The 
Baghdad regime billed a 30-cent to 50-cent per barrel kickback 
for its oil price. Can you imagine a 50-cent kickback on oil?
    And then it goes on to say, since U.N. sanctions were 
imposed, investigators and expatriates say the regime has kept 
most of its money outside Iraq in such safe and liquid 
investments as bank deposits and government bonds, even U.S. 
Treasuries.
    So these folks were obviously sophisticated in many ways. 
And apparently Saddam's half brother, al-Tikriti, Hassan al-
Tikriti who is now in our custody, was essentially the major 
bag man, although he had apparently a lot of help from Tariq 
Aziz who was operating, of course, under diplomatic immunity 
all over the world. Rather interesting. And I am going to ask 
all of you to just comment on this general situation.
    But it also indicates how difficult all of this process is 
as we learned, I think, when we were working on the anti-money 
laundering provisions of the USA Patriot Act. Although--and 
this is a quote from a Money Magazine article: Although 
agreements were reached in the 1990s to make asset recovery 
easier, the system remains difficult to negotiate, as I am sure 
all you gentlemen know. Eighteen years after Ferdinand Marcos--
remember him--was overthrown in the Philippines, for example, 
at least six Swiss banks still are holding deposits he had 
made, even though they acknowledge the money is illicit and 
Marcos is long since dead.
    All of us recognize, again, how difficult this is, but 
perhaps the good news is now that we have access to some of 
these major players, that we can start to unravel that. Let me 
just open it up to all three of you in terms of some comments 
you may have.
    And lastly, if I could, it appears that without a concerted 
effort by either the Group of 8 or the U.N. or some 
international organization, this is going to be even more 
difficult. So let me just throw all of those out and let you--I 
know it is a softball, but that is what we are here for.
    Mr. Aufhauser. Mr. Chairman, I think we would just be 
repeating what you said. As for the U.N. program, as I pointed 
out in my brief oral statement, the Bush Administration 
immediately seized on the opportunity to try to tighten up the 
sanctions, because they were being corrupted in a naked, 
nefarious, brazen fashion, one that should have embarrassed the 
whole world. We failed up at the U.N. in doing that. So we 
resorted, if you will, to plan B, to make sure that to the 
extent we have the capabilities, intelligence or otherwise, to 
follow the money, that none of it is used to buy arms.
    Mr. Oxley. Do you think that the--given the abject failure 
of the U.N. that front and obviously on the military front, 
that there is any hope that the U.N. could be shamed into 
changing their ways based on the incontrovertible evidence that 
is out there?
    Mr. Aufhauser. Well I don't want to use the word 
``shamed.'' and I occupy this office because I am actually a 
sanguine guy. The U.N. Security Council resolution tabled last 
week in Manhattan by Secretary Powell puts the ball right back 
into the U.N.'s court. It says we have to have--the worst and 
lousiest model in the world is 18 years of litigation in 
Switzerland over $600 million dollars of the Marcos assets. It 
is precisely that example that informed us in the drafting of 
the omnibus resolution tabled in New York, that said we need an 
alternative for the quick repatriation of these monies. So 
there continue to be a lot of complexities.
    If I can tell you one brief anecdote. Shortly after we 
vested assets here in the U.S., I was visited by an Ambassador 
from one of the former eastern bloc states who said to me, 
David, unfortunately in my country, we cannot take title to 
people's property without going to court first. What he meant 
by that--and I, of course, retorted that was probably 
something, a difficult habit to kick. But they have changed 
their regime. The problem is the Patriot Act gave and vested in 
the President of the United States the most extraordinary 
power, the power to actually, through the stroke of a pen, take 
people's money, take possession of people's money and title to 
it, and apply it and disburse it. There is almost no other 
nation on Earth that has a similar statute. So we have to deal 
with the litigation--the legal issues posed in those countries 
in terms of dealing with third-party claims against the assets.
    Tony did you have something?
    Mr. Wayne. Well, just to say there definitely were 
kickbacks that were going on. We were aware that there were 
kickbacks going on during this period. As you remember, it came 
in the context of establishing the Oil for Food program where 
there was a great concern expressed around the world, including 
in the United States, that the Iraqi people were not getting 
the food and the medicines that they needed to survive at a 
minimal level. So there was an attempt to really modify these 
comprehensive sanctions so you could allow and monitor certain 
kinds of sales and try to direct a lot of that to the 
humanitarian needs.
    Now, clearly Saddam Hussein and his officials figured out a 
lot of ways to try and get around that and the GAO study, that 
was done was a very good study. It identified how they started 
accumulating illicit assets. As we tried to work that through, 
as the U.S. Government over the past several years, at one 
point the United States and the U.K. put in a whole different 
way of pricing oil, so one didn't get paid for oil until a 
month after the prices were set. And that actually cut back 
significantly the amount of kickbacks on the oil sales that had 
been going on. But it was far from perfect. And one of the real 
challenges here was that this was such a comprehensive sanction 
system, existing for such a long time, that very clever people 
found a lot of ways to go about it.
    We had an active interagency process involving the 
intelligence community, the law enforcement community, and 
others aimed at trying to find sanctions busters and to act 
against them. But often we were the strongest voice and the 
loudest voice in the world to act on this. And it was very 
tough slogging, as I am sure you remember, both in the U.N. and 
internationally a lot of times, to keep the momentum up on this 
issue.
    On the more general question of going after assets, it is 
exactly right that it is extremely complicated, because we have 
a plethora of different legal systems around the world. One of 
the additional areas where we are working on now to see if we 
can't get a multilateral agreement is a proposed anticorruption 
convention in the U.N.. This would have a special chapter 
specifically on going after the assets, illicit assets of 
leaders and exposed leaders and others around the world. The 
idea is trying to get some common baseline so we can more 
easily work together with other countries and they can more 
easily work together with U.S..
    It is an ongoing process. It is a real tough process, and 
certainly the tools that you have given the President and the 
Administration are very helpful in this effort.
    Mr. Oxley. How many countries would you need to get to 
critical mass on something like that?
    Mr. Wayne. Well, I think there are 120-some countries right 
now in the negotiation on this broad convention. There are 
clearly a number of key financial centers that will be 
essential to have in any convention. And they are all engaged 
in this. Some of them are in Europe, some of them in Asia, some 
in the Middle East and other places. And we are engaging with 
them not only, of course, in this U.N. Convention, but also in 
this process that is going on. In fact, one of the very nice 
stories in this so far is Switzerland. One of our colleagues 
just returned from Switzerland. The Swiss have actually stepped 
up and issued new ordinances and guidances to all of their 
institutions regarding the assets of Saddam Hussein and have 
been very actively cooperating with us in this effort.
    Mr. Aufhauser. On Saddam Hussein's assets, if we had 20 
countries, whether or not it is under the umbrella of the U.N. 
or through some other agreement, that would be critical mass. 
We have specifically identified countries.
    Mr. Oxley. Very good. Thank you, Madam Chairman.
    Chairwoman Kelly. Thank you.
    Mr. Moore.
    Mr. Moore. Thank you, Madam Chairwoman.
    To the panel generally, there is an Executive Order that 
some of you mentioned--it was in Mr. Wayne's testimony--on 
March 20 issued by the President that says, ``All right, title, 
and interest in any property so confiscated,'' and obviously he 
is talking about property confiscated in Iraq or elsewhere, 
``should vest in the Department of the Treasury. I intend that 
such vested property should be used to assist the Iraqi people, 
and should be used for the reconstruction of Iraq.''.
    To that end, Mr. Wayne or others on the panel, what is the 
time frame for getting the oil fields in Iraq up and producing 
again? If you spoke to that while I was out--I met with some 
constituents briefly, so please forgive me, but I would like to 
know the answer to that, if there is an answer.
    Mr. Wayne. Just about the Iraqi oil fields, you may have 
noted that we have--an Iraqi who has assumed leadership in the 
Oil Ministry and in the effort to restore the Iraqi oil fields, 
with the very strong support from our Defense Department and 
also some contract help on the ground to get that production 
restored. If I remember correctly, he gave a press conference a 
few days ago.
    Mr. Moore. He, who?
    Mr. Wayne. Mr. Ghadhban, Thamir Ghadhban. He estimated that 
he would hope to have production restored to its post--to the 
pre-conflict level by the end of June. That was about 1.5 
million barrels a day, with the aim of getting to 3 million 
barrels a day by the end of the year.
    All of this, of course, is estimates, and it is going to 
take a lot of hard work to get it up and running not only 
because of damage that might have been done during the 
conflict, but because a lot of it was being held together by 
duct tape up until that point.
    Mr. Moore. Duct tape has been very handy, hasn't it?
    Mr. Wayne. Duct tape does a lot of things.
    Do you want to add anything, Larry?
    Mr. Lanzillotta. I really don't have anything to add to 
that. The Administration is committed to get these oil fields 
producing as fast as possible. We have run into some technical 
difficulties we are trying to overcome. These are the estimates 
out there now, and we are trying to make them.
    Mr. Moore. Do you have any information about sales? I am 
talking about monthly or annual sales prior to us going to 
Iraq, and what might be expected and what might be anticipated 
in terms of sales?
    I understand this is all kind of speculative right now 
because of damage to the oil fields, but I'm looking for a 
number that we might use a portion of to help in the 
reconstruction of Iraq. Any ideas?
    Mr. Aufhauser. There is no question that whatever oil 
revenues are produced, they are going to be poured over into an 
Iraq assistance fund to underwrite the cost of reconstruction, 
to underwrite the budget of the IIA and the new Iraq. There is 
no question about that. That is reflected in the U.N. Security 
Council resolution.
    I can't put a number, sir, on it; but I am aware that very 
soon, very soon production in Iraq will exceed domestic 
requirements, which means there will be oil for sale.
    Mr. Moore. Okay. Any other answers there, Mr. Wayne?
    Mr. Wayne. Well, one very important point is that pending 
the lifting of the oil sanctions, and thus the U.N. resolution 
in New York, there were not international sales going on at 
present.
    Secondly, of course, the amount of money that comes in from 
this will depend upon the price of oil in general. Some of the 
ballpark figures have been perhaps $20 billion a year. A lot of 
that depends on the price of oil and the amount of production 
you get going.
    Mr. Moore. Thank you.
    Thank you, Madam Chairman. Thank you, members of the panel.
    Chairwoman Kelly. Thank you, Mr. Moore.
    Mr. Murphy?
    Mr. Murphy. Thank you, Madam Chairman.
    As you were reviewing companies that have been cooperative 
with these efforts in freezing and seizing assets, how do 
European countries rate on their cooperation level, and in 
particular, Russia, Germany, and France?
    I might add to that, have there been some assets hidden in 
some of their banks that you have found, too?
    Mr. Wayne. Well, the process is actually just going on 
right now. I would rather not get into details in this open 
session, but would be happy to in the next session that we are 
having.
    What I can say is that the initial response from all of 
those countries has been ``yes, we want to cooperate in this 
effort; and yes, we agree that any assets need to be restored 
to Iraq.''
    Mr. Murphy. I appreciate that.
    Have there been any attempts to access any of the assets 
since the war began from some of the operatives from Iraq? Can 
you tell us any information on that, what they have tried to 
do?
    Mr. Aufhauser. Why don't we deal with that in the next 
session?
    Mr. Murphy. I am apparently asking some excellent 
questions.
    How about issues involved with our knowledge of these deals 
being done on the Oil for Food? What were some of the things 
they were doing with this money instead of buying food? When 
did we become aware of that?
    Can I ask that one? Is that okay?
    Mr. Aufhauser. Yes. The money skimmed--you have seen on 
videotape some of the things they have used it for, which are 
the extravagances in their palaces. We also know they used some 
of the skimmed money to buy goods and weapons otherwise 
prohibited under the U.N. sanctions program.
    Just to show you how this would be comic, except it turned 
into a terrible tragedy, the U.N. program was wildly successful 
in one sense. It is the source of food for the better part of 
the people of Iraq. When I mentioned those 55,000 distribution 
points, that is because of the U.N. program.
    The ration card that the common Iraqi holds today is as 
good as currency, as is the Saddam dinar, because it is his 
meal ticket.
    Notwithstanding that, there are other portions of the 
program which were designed to fail. For example, they had 75 
inspectors on a porous border thousands of miles long located 
at a limited number of border crossings, say three or four, who 
were empowered only to look at authorized imports into the 
country.
    Step back and think about that. If something came in and it 
was not a U.N. import, a U.N. Oil for Food program import, they 
were disempowered from investigating what is going in.
    Mr. Murphy. Were those authorizations set up by the U.N.?
    Mr. Aufhauser. Yes. So it was comic, leading to tragedy. 
Those borders were not policed.
    Mr. Murphy. With some of the food that was purchased, I 
heard some reports that some of that was to go for food 
supplies for the Iraqi soldiers and not for the citizens. Was 
that accurate?
    Mr. Aufhauser. I can't confirm that. I don't know.
    Mr. Wayne. I don't know. But I do know that there was a 
very tight system for going through all the contracts in the 
formal system. In many cases, we had holds on contracts for 
years and stopped them up. We gave them very careful scrutiny. 
There was also a very tight system for auditing the use of 
money within the system.
    The real challenges came to things that were taking place 
outside the system, or the special deals that were made around 
the edges of the contracts. That is where we got a lot of the 
challenges that we tried to deal with, and we can talk about in 
the next session, and the ways that we worked to deal with 
them.
    Mr. Murphy. Another area. I hear mixed reports in the media 
that the people in Iraq are grateful to us, and some say, 
Thanks for the war, now get out.
    Clearly, there must be an awareness--you talk about the 25 
years of the incredible oppression that took place, and these 
issues about the continued corruption and deceit that leaders 
in Iraq had with the money and Oil for Food that became oil for 
weapons.
    How aware are the Iraqi people being made of what is being 
discovered now, and what is their reaction to that?
    Mr. Aufhauser. I don't know the level of their awareness of 
what is being discovered now. I don't know what is being 
broadcast to them in Iraq about the discoveries.
    You know, many of the discoveries are just confirmation of 
what has been a public source information for the last decade 
in terms of the corruption.
    Mr. Murphy. Certainly I would hope, Madam Chair, that is 
something we can check to see what the State Department does 
with these kinds of discoveries, because it is important for 
them to know.
    Mr. Wayne. We could work to get back to you, because I know 
that the U.S. Authorities in Iraq have been working to get 
information out to them. General Franks and his colleagues have 
been working hard on this to inform the Iraqi people of what is 
going on, so we can certainly take your question and get back 
to you.
    Mr. Murphy. I appreciate that. It may well be that part of 
what was done, if it was not becoming food for people and 
people were harmed, it is one of those more subtle weapons of 
mass destruction that the people in Iraq were using against 
their own people.
    Chairwoman Kelly. We will make that an official request of 
the committee. If you will get back to us with an answer, that 
would be good.
    Chairwoman Kelly. Mrs. Maloney.
    Mrs. Maloney. Thank you. You have testified we have seized 
roughly $7.5 billion, an additional $8 billion has been added 
in our own country, 20 countries are cooperating.
    Do we have a sense of how much is in those other countries? 
Do we know how many billions are there that belong to the Iraqi 
people in Saddam's accounts?
    Mr. Aufhauser. Two answers. By definition, the hidden 
wealth we don't know yet. We need to track that down. As for 
the money that has been held in suspense or frozen accounts, 
yes, we have a pretty good peg on it. That is a broad--it is 
upwards of $2.3 billion.
    By the way, that represents a substantial leakage from the 
amount of money seized by those countries back in 1990, 
following U.N. Security Council Resolution 661. In other words, 
as Mr. Wayne alluded to, a lot of the money has been awarded to 
other claimants, so it shrunk. Also, other parts of the money 
seized in other countries require explanation as to why it 
disappeared.
    Mrs. Maloney. You testified we have spent roughly $91 
million on dock workers and the border, for pensioners and oil 
workers. Can you describe how this decision was made? 
Apparently Treasury is making decisions on seizing assets and 
DOD is making decisions on how this is spent.
    Certainly during war, decisions need to be made quickly, 
but now that things have calmed down you mentioned that it is 
transparent. How can we see this information? How is it 
transparent and how is it publicly disclosed, and how are you 
making decisions to hire dock workers as opposed to teachers, 
or the security force that is now trying to be built in 
collaboration with the American government?
    Mr. Lanzillotta. Until the appointment of Ambassador 
Bremer, Jay Garner was assigned that exact responsibility. 
These payments were made based on his assessment of what it was 
going to take to get certain industries or functions like 
ministries working.
    The types of payments we have been making basically boil 
down to emergency payments to civil service type people to get 
the Government of Iraq back working. Outside that arena, I 
believe there was a payment made to oil workers and at the 
docks to try to be able to offload the humanitarian aid that 
has been coming in from other countries as well as the United 
States. So this assessment is made on the ground of what it is 
taking to be able to get the country up and moving.
    I think in the long-term plan that we are developing 
spending plans that outline exactly the concerns that you have: 
where this money is going, how it is being spent. But Jay 
Garner, and now Ambassador Bremer, had a very difficult task of 
stepping in on ground zero and immediately trying to get the 
Government of Iraq stood up and some of the necessary supplies 
to come in.
    So that is where the initial--I think so far an estimate of 
$22 million has gone.
    Mrs. Maloney. You testified earlier $91 million.
    Mr. Lanzillotta. That is how much money has been made 
available, but $22 million has been disbursed.
    Mrs. Maloney. You mentioned that it is transparent. If I 
didn't have the opportunity to ask you these questions and I 
was a taxpayer and just wanted to know, where would I go? With 
our government spending, we can go to agencies and look at 
their budgets and go to the Office of Procurement and look at 
the budgets. Where can citizens go? Where is the transparency?
    Everybody keeps saying it is transparent, but I don't know 
where it is. I don't know how to find out this information 
without having a hearing and asking you, so how is it 
transparent?
    Mr. Lanzillotta. It is not on the Web site yet, and most of 
this is just developing now. On these interagency meetings we 
have, we have invited GAO as a participant to talk about 
exactly how this money is spent and where it is going, with 
that very purpose in mind, to assure the American people--and 
as directed by the President--that this money is going for 
reconstruction and, in fact, to the Iraqi people.
    I don't know of any reason why, for the record, that we 
can't provide where these disbursements to date have gone.
    Mrs. Maloney. I think it would be good to put it on the Web 
site. I would send it back to the committee, that I would like 
to see it and to understand where we are going.
    When we let these contracts to Halliburton and others, is 
this money being used for that, to run the oil fields and to 
rebuild the construction that is taking place to rebuild the 
water works and electricity? Is that coming from the seized 
Iraqi money, or is that coming from the U.S. Government?
    Mr. Aufhauser. No, for the most part that is USAID money.
    Mrs. Maloney. USAID.
    Mr. Wayne. There are actually two different sets of money. 
There is USAID money, which is one set, and then there are 
Department of Defense contracts that are being let. The oil 
contracts have been under the Army Corps of Engineers, I 
believe, that are in charge of that.
    The AID money, when the choice of contractors and others 
are put on their Web site right away, whenever there has been a 
decision.
    Mrs. Maloney. Could this seized Iraqi money be used to pay 
Halliburton and Bechtel and some of the companies that have 
gone in on the groundwork to restore water and electricity?
    Mr. Wayne. What I can say is that up until now the proposed 
uses of this have been to go right to the benefit of the Iraqi 
people, notably to pay salaries.
    There was an emergency--there is an emergency plan to give 
people an emergency payment for 1 month in various parts of the 
country. There has been a proposal to buy some emergency 
equipment for the Ministry of Trade, which runs the Oil for 
Food distribution program, so they can start distributing food 
again.
    I am not aware of any proposal to use this to pay for 
contractors.
    Mr. Lanzillotta. From the Department's point of view, we 
have not used any of the seized or vested property to pay for 
contracts. It has all gone towards payroll or operational costs 
to try to clear out ministry buildings in a small amount, to 
try to get these ministries up and running. The department has 
taken the administrative costs for operating Jay Garner's 
group, or that group that is trying to put Iraq back together 
out of appropriated funds. We assume that is within the 
Department of Defense's budget.
    We have not used any of the invested or seized assets to 
date on any of those types of contracts you mentioned.
    Chairwoman Kelly. Mrs. Maloney, why don't we make your 
request, as you had asked the expenses--let us make it an 
official request of this committee. That will get it started.
    Mr. Lanzillotta, Mrs. Maloney has a good point. It would be 
good for all of the people in America who are interested in 
this subject if we could get that on the Web site. Thank you 
very much.
    Mrs. Maloney. I know my time is up. Can I ask one question 
on debt?
    Chairwoman Kelly. No, I'm sorry, your time is up. We have 
others who have been waiting as well.
    Mr. Hensarling.
    Mr. Hensarling. Thank you, Madam Chairman.
    Gentlemen, quite obviously the Oil for Food program left 
much to be desired. I think, Mr. Aufhauser, in your written 
testimony you said that Hussein not only survived under the 
U.N. sanctions regime, he flourished. I think we would all 
agree with that assessment.
    My question is, what is it precisely that we can do--what 
is it the United States can do in future sanction programs or 
limited trade programs to ensure that the U.N. does a better 
job of monitoring these programs?
    Mr. Aufhauser. We have to structure the architecture of the 
program in a manner so it is policed similar to our own 
financial borders, so money cannot be diverted and so that you 
can more easily catch people if there are kickbacks and the 
like. That is, if you will, country-specific or product-
specific or industry-specific, so I can't give you a better 
answer than that.
    But in my professional opinion, also wearing my hat with 
responsibilities for the country's money laundering program, 
what was designed in New York was not designed well to capture 
wrongdoing; it was designed well to get food into people's 
mouths.
    Mr. Hensarling. Do the other two gentlemen have a comment?
    Mr. Wayne. Just to say that we are going--we do definitely 
need to sit back and think about the lessons from this 10-year 
effort to have a sanctions regime in place. It is very hard to 
maintain the political enthusiasm of countries all around the 
world, in a long-term situation, for a sanctions regime. So 
there are clearly a number of lessons that we need to draw from 
this. I haven't drawn them all yet, but clearly we could do 
this better, and we need to think of a different set of tools, 
if we are approaching a long-term effort like this again.
    Mr. Hensarling. Mr. Lanzillotta.
    Mr. Lanzillotta. I really don't have any specific comments, 
since it is outside of the Department of Defense. But, of 
course, we are interested in a viable program, and would 
continue to work with the Agency to make it most efficient.
    Mr. Hensarling. It appears that the money laundering 
provisions of the Patriot Act are a very powerful tool to 
enable you to accomplish your mission to identify, seize, and 
repatriate assets.
    If your agencies or departments had their wish list 
granted, are there other tools, other provisions, that you 
would like to bring to this subcommittee's attention that would 
better help you accomplish your mission?
    Mr. Aufhauser. I have only one specific request which is 
long outstanding up here on the Hill. The section 11 power to 
effectively bar a foreign financial institution from doing 
business in the U.S. Is an extraordinarily powerful tool in 
undermining, if not downright destroying, the franchise of any 
international institution. The ability, also, to argue that it 
reaches barring anybody who does business with such an 
institution has a potentially paralyzing effect, so it is the 
nuclear bomb of the Patriot Act.
    Unfortunately, I can't use it as often--I can't recommend 
to John Snow to use it as often as I think I would like, 
because much of the evidence in support of such actions is 
highly classified and becomes subject to revealing and 
disclosure in a courtroom.
    I have asked the Hill to consider giving section 311 the 
same evidentiary privileges that IEEPA now enjoys under the 
Patriot Act, which is to present, ex parte and in camera, 
sensitive information in support of our legal actions.
    Beyond that, our real problem is abroad. I don't think a 
U.S. law can change it. That is when the venue turns to Tony, 
and we need to go abroad and convince people to follow suit, 
because most of the assets we are concerned about are abroad, 
most of the cash flow we are concerned about capturing is 
abroad, and most of the records we hope to exploit are abroad.
    It is all the more reason Tony and I have a direct line. 
The Treasury Department can't do this without the State 
Department, and vice versa.
    Mr. Hensarling. Mr. Wayne?
    Mr. Wayne. I would just add that this is exactly what we 
have been working on since 2001 in the area of terrorist 
financing, where we have the same team essentially working all 
around the world. What is very key is having the bilateral 
agreements and building in, as we can, the multilateral 
agreements to get other jurisdictions to cooperate with us 
without using, as David said, the nuclear weapon of our 
sanctions.
    In this connection, the work that has been done in the 
Financial Action Task Force, for example, has been extremely 
important in building up money laundering best practices, and 
now, over the past year and a half, terrorist financing best 
practices.
    Again, this work that is going on in the U.N. Convention 
Against Corruption is exceptionally important. We have also 
been trying to work in the G-8 process to come up with a 
multifaceted attack on corruption and promotion of 
transparency, which is all part of this same problem.
    Then we have been working in regional institutions like the 
Organization of American States, where they have put in place 
for the first time a very thorough anticorruption convention. 
Now, the challenge is to actually implement it. So the effort 
is part using our own tools, but also building that network and 
building up that base of cooperation.
    Mr. Hensarling. Thank you, gentlemen.
    Chairwoman Kelly. Thank you. Mr. Lynch.
    Mr. Lynch. Thank you, Madam Chair.
    Gentlemen, thank you for your willingness to help the 
committee with this important work.
    Most of the members of the committee are aware of a report 
from back on May 6, and there was a related story in the New 
York Times, where at about 4 o'clock in the morning on March 
18, one of Saddam Hussein's sons, accompanied by one of his 
chief advisers, went to the central bank of Iraq and withdrew 
about $1 billion, $900 million in U.S. Currency, $100 bills, 
and about $100 million in Euros, and put them all in three 
semi-tractor/trailers.
    Then we have a corresponding report from the U.S. Military 
that intelligence tells us that a convoy of three semi-tractor/
trailers pulled into Syria at the same time, shortly after the 
seizure of money. We have the U.S. Treasury that confirms that 
that happened.
    I just wanted to know specifically what we are doing about 
that incident. If you can't speak to that specific incident for 
security reasons and, I hope, for recovering the money, maybe 
you can give me an example of how we respond to large 
robberies, if you will, like the one I have just described.
    Mr. Aufhauser. Congressman, the incident you described is 
an astonishing example of the plunder of the Hussein family. 
Perhaps with serendipity and perhaps with some pretty good 
forensic work by DOD and others in Iraq, we may well be on 
being able to confirm that a substantial amount of the found 
money is indeed the plundered money. Let me be more specific.
    This is all subject to confirmation. There is no certainty 
to this, but it is more likely than not. Some 236 boxes of 
cash, either Euros or U.S. Dollars, were packaged that night by 
central bank personnel, but they were very meticulous in the 
records they kept. They indexed the boxes and numbered them, 
and they put certificates in the boxes indicating how much 
money had been placed in them.
    Out of the 236 boxes, we may well have found 191, 
constituting $850 million U.S., give or take, and $100 million 
of Euros, leaving still an unbelievable amount of wealth 
unaccounted for in that theft. But if this information is 
correct, a substantial amount of the found money that you have 
been reading about in Iraq is indeed the plundered money.
    Mr. Lynch. That is great. That is good news. I hope we can 
confirm that. Thank you.
    Chairwoman Kelly. Thank you, Mr. Lynch.
    Mr. Shadegg?
    Mr. Shadegg. Thank you, Madam Chairman. Thank you for 
holding this very, very important hearing.
    Gentlemen, I appreciate the job you are doing. I wish you 
the best in doing it, but I have grave concerns. I listened to 
you read and stress that the current Executive Order says that 
the purpose of this is only to assist the people of Iraq and in 
the reconstruction of Iraq. For political purposes, I fully 
understand that, and think that it is important that Iraqi 
assets be used for that purpose.
    But I am here concerned about a different issue. As you 
gentlemen I think know, particularly in the State Department 
and at the Treasury, in the first Gulf War as a result of 
Iraq's invasion of Kuwait, millions of dollars in property 
losses were suffered by American citizens.
    A procedure was put in place to compensate those American 
citizens. It was structured to go through the United Nations 
Compensation Commission, UNCC.
    As I understand the process, a group of Americans litigated 
their claims in the United States in front of the United States 
Foreign Claims Settlement Commission, and actually a case was 
pending. There were more claimants that came forward. A judge 
made a decision to bifurcate the cases. One set of cases went 
to judgment and was concluded. A second set of cases involving 
other claimants with claims and losses that were every bit as 
legitimate has not been resolved as a result of that judge's 
decision to bifurcate the two cases.
    Where we stand at this point has been that it has been some 
12 years since these people suffered losses, losses in the 
millions of dollars. Only a small handful of Americans are 
aware of this circumstance. Only a small handful of Members of 
Congress are aware of this circumstance.
    Nonetheless, those U.S. Citizens who lost millions of 
dollars in property claims in the first Gulf War have been 
totally frustrated by the UNCC process and have not received 
any compensation. I can tell you that personally because I have 
met and sat with them. Some of them have had their financial 
lives ruined, and some have had their personal lives ruined 
because their families have fallen apart as a result of the 
economic pressure. I can take you to people who are divorced 
and whose children are now raised in single-family homes 
because of the consequences of this.
    My concern is, given that right now we are focused on the 
current war, and given that we are as a Nation focused on 
rebuilding Iraq, as we should be, I am deeply worried about 
this other small subset of claims of people who are not Iraqi 
citizens, but American citizens. They are not even Kuwaitis; 
they were American citizens who were in Kuwait at the time of 
the first Gulf War and who lost homes, cars, businesses, and 
property.
    As I read the language of the President's Executive Order, 
it precludes or could be read to preclude that any of those 
assets be used to take care of those claims.
    I must tell you before I put the question to you, number 
one, I am convinced that the UNCC's process is a joke. It has 
not worked or functioned to help those American families. I am 
interested in what you can do to help solve that problem.
    Second, I would like your answer today, and if not, if you 
can get a better answer at a subsequent time. I am intensely 
interested in the Administration's plan to help these American 
victims obtain compensation for the property they lost in the 
first Gulf War.
    I suppose that question is directed both at you, Mr. 
Aufhauser, and you, Mr. Wayne.
    Mr. Aufhauser. There were a lot of questions there. Let me 
see if I can capture most of them.
    Mr. Shadegg. Please do. Take your best shot. If you want to 
submit more in writing later, that is good.
    Mr. Aufhauser. I will pick the ones I think I can answer.
    First, a little background. The assets that were invested 
previously had been frozen. Those frozen assets, by law, were 
beyond the reach of judicial process to anybody, with one 
exception: holders of victims' judgments, the shield people. 
But property, property judgment holders could not access those 
funds under TRIA, the Terrorist Risk Insurance Act.
    So the funds that were invested were funds that were never 
historically available, and this is not a perfect answer to 
your question, I understand, but never historically available 
for judicial process and award to property claimants. That is 
point one, okay?
    Point two, the President's first desire in applying the 
funds here is to make sure that there are no more victims of 
terror and the like. The $1.7 billion really represents the 
kickstart to the Iraqi economy.
    I think it was Congresswoman Maloney who asked how we can 
account for this. The ambition is that the lion's share of that 
money will go back into the reserves of the central bank, 
because it was the reserves of the central bank; $1.1 billion 
of the vested funds were held by the central bank up at the New 
York Fed. It is absolutely necessary to kickstart the economy 
there in Iraq.
    In terms of whether the UNCC process is frustrating these 
claimants, I confess I am unaware of it, and I am happy to look 
into it for you and reply to you in writing. I will say, 
although still uninformed, the receipt of claims against the 
State of Iraq is one of the necessary things the Treasury 
Department, our economic team under Ambassador Bremer right now 
in Baghdad, and ultimately the interim Iraqi Authority, is 
going to have to deal with in some setting, dealing with 
everybody's claims and using the wealth of the nation, which is 
the oil generated, the oil generated, to try to satisfy those 
claims in a sensible fashion.
    Mr. Shadegg. Maybe Mr. Wayne can add greater clarity. But 
let me tell you this much. These claims have been submitted to 
the State Department, were submitted years ago to the State 
Department, and have been submitted to the UNCC and have not 
been paid. I can assure you that people are frustrated.
    Not only have I introduced legislation, but other Members 
of the House have introduced legislation and several Members of 
the Senate have introduced legislation to try to get these 
victims compensated.
    Chairwoman Kelly. I am sorry, Mr. Shadegg, you are out of 
time. If you want, we can go to the adjacent hearing, or you 
can ask Mr. Wayne to submit his answer in writing.
    Mr. Shadegg. If he would submit his answer in writing, 
Madam Chairman, that would be fine.
    [The following information can be found on page 94 in the 
appendix.]
    Chairwoman Kelly. Thank you.
    Mr. Garrett.
    Mr. Garrett. I will begin by yielding to Mr. Murphy.
    Mr. Murphy. I just have one question. I thank the gentleman 
for yielding.
    I have a question which relates back to the March 11 
hearing on efforts to stop terrorist financing, and we have 
talked about groups such as al Qaeda, Hamas, and Hezbollah. At 
the time, the President's critics didn't seem to want to face 
the truth of those links; but weren't those alliances further 
proven during the liberation and with some of the 
investigations you have done?
    Mr. Wayne. Well, we have no doubt that there were very 
strong links between Saddam's regime and terrorist 
organizations. Ansar al Islam, the Mujaheddin, al-Aqsa, the 
Abu-Nidal organization, the Arab Liberation Front, and the 
Palestinian Liberation Front are among those that enjoyed safe 
haven and various levels of support from the Iraqi regime.
    The U.S. Government is in the process and the people on the 
ground are in the process of gathering and assessing 
information from captured terrorists such as the PLF leader, 
Abu Abbas. We expect to gain from this effort a great deal of 
additional information, but right now we are still in the 
process of gathering this all together.
    We might be able to add a little bit in the next session.
    Mr. Murphy. Thank you. I appreciate it.
    I yield back, Mr. Garrett.
    Mr. Garrett. Just following up on Mrs. Maloney's question, 
one of the answers we received was going back to the 1991--the 
term used was a linkage occurred back then. I wondered if in 
the time remaining if you could just briefly explain what was 
the nature of that linkage.
    I know the initial question by the Chairwoman was who was 
on the ground, who was in charge. So the question is, who was 
in charge when the past linkage occurred, what have we learned 
since then, and what will be implemented differently?
    Mr. Aufhauser. I am trying to count the countries by orders 
of magnitude. There are about 30 countries outside of the 
United States back in 1991 that froze approximately $2.35 
billion, according to our estimates, including United Kingdom, 
Switzerland, Germany, Bahrain, Italy, and France, by way of 
example.
    By today's date, if you take out the close to $1.2 billion 
of new money that has been found since Secretary Snow announced 
in March this effort of outreach of finding hidden assets, if 
you take out that $1.2 billion, that had been reduced down to 
about $1 billion. I am reading from a chart now.
    So the differences in accounting--by way of example, in 
Germany in 1991, they reported $359 million was frozen. Today, 
we have been unable to identify from them whether any of those 
frozen assets remain. It is zero right now, just by way of 
example.
    Now, back to your question of who was in charge in 1991, I 
confess I was in private practice and I don't know.
    Mr. Wayne. In that accounting, that is part of what we are 
doing right now in going out and asking people, what is the 
difference between this money and what happened to it?
    I know in the case of Switzerland they have told us 
recently, when they turned their number in in 1991 they 
included the assets of Swiss banks that were in the United 
States. So there was a double counting, they are telling us, 
that went on. When we froze that money we counted it in our 
total.
    They also reported it because it was in the accounts of a 
Swiss bank, even though it was in the United States. So there 
is part of that that we are doing--we are trying to sort the 
numbers through now.
    Also, as David Aufhauser mentioned earlier, a number of 
countries in their legal systems allowed claims to be paid off 
over the years, claims against Iraq. Their courts would make a 
judgment. So we are trying to figure out exactly what the 
tallies were of each of these right now.
    Mr. Garrett. The GAO says about $61 billion in the Oil for 
Food program, and they have only spent about $41 billion. Does 
that mean there is $20 billion in the bank?
    Mr. Wayne. There is about $10 billion in the pipeline and 
about $3 billion unencumbered in the OFF program. That is as 
of--our estimate now.
    Mr. Garrett. And the other seven?
    Mr. Wayne. I can only tell you what our estimates are right 
now. Sorry.
    Chairwoman Kelly. Thank you very much, Mr. Garrett.
    Ms. Brown-Waite?
    Ms. Brown-Waite. Thank you very much.
    This question is for Mr. Aufhauser. Last year, this 
committee heard testimony about the successful effort to 
recover funds misappropriated by Nigeria's former dictator. The 
effort actually involved private attorneys working on behalf of 
the people of Nigeria.
    If the U.N. is ineffective at this, should we try to set up 
a permanent asset recovery system in the financial action task 
network?
    Mr. Aufhauser. I don't think they are mutually exclusive. 
We should try, in my judgment, every alternative means to 
facilitate the repatriation of stolen wealth to people so 
kleptocrats cease to have a motive to steal.
    Ms. Brown-Waite. I like the term ``kleptocrats.'' so you 
obviously would support such a privatization and attempts to 
recover the money?
    Mr. Aufhauser. I want to be careful. The devil is in the 
details. I don't support anything I haven't written, read, and 
perhaps even edited. But the concept--the concept, the concept 
of an alternative to a U.N. mechanism, is very attractive.
    Ms. Brown-Waite. I think the follow-up question is, are you 
as frustrated as many of us are at the current U.N. 
ineffectiveness?
    Mr. Aufhauser. Our government has tabled a resolution at 
the U.N. that puts the responsibility right back at the U.N. in 
repatriating these assets. So right now I back our government's 
efforts to infuse more legitimacy, authenticity, effectiveness, 
in that mechanism through the U.N..
    Ms. Brown-Waite. Thank you.
    Chairwoman Kelly. Thank you, Ms. Brown-Waite.
    Mr. Paul.
    Mr. Paul. Thank you, Madam Chairman.
    I have a question somewhat related to Congressman Shadegg's 
question dealing with property ownership, because I think we 
drift away from our goals, at least what I think our goals 
should be. Those are not only to defend here the private 
property principle, as well as the market, but--we talk glibly 
about bringing democracy to Iraq, but we very rarely see many 
comments dealing with what are we going to do about private 
property ownership.
    I think terminology is so important. Earlier on it was 
referred to that the Halliburton money came from USAID, but 
more accurately what we should say is that money came from 
American taxpayers. I know that is just a technical detail, but 
it makes a big difference if we know what we are dealing with.
    You know, we have a lot of financial assests recovery going 
on. We are talking about the oil assets. It has been conceded 
here several times today that these assets belong to the Iraqi 
people, but we never talk like that in this country. We don't 
talk like that in Texas. We don't say, the oil belongs to the 
people. I live in Texas, but I don't have any oil.
    Why do we make these assumptions--the President has these 
extraordinary powers which, quite frankly, frighten me. We have 
the U.N. that is in the oil business. They are making the 
profits and they store the money. They have controls. Nothing 
is going to be done without the U.N. making some deal somewhere 
along the way. We don't talk about, you know, who owned this 
stuff once.
    Cuba, it is so much different. We have a Helms-Burton Act 
that emphasizes the fact that once Castro and communism is 
gone, the rightful owners will get their property back again. 
But there were at one time rightful owners and property owners 
of the oil wells over there. It may be because it might have 
been that the French owned a little bit that we have to drop 
those ideas. The French and the Germans and the Americans--we 
never seem to emphasize the importance of returning this to the 
owners. Contracts are a form of property.
    Is there any concern at all or any interest in talking 
about how we might settle some of this, whether it is financial 
or whether it is the oil, in trying to get it back to the 
rightful owners, and get us away from the idea that we are in 
control and it belongs to the people and we do with it what we 
want?
    It is all fungible, so nobody is going to end up knowing 
where this money goes anyway. Or it might sit in a bank, like 
Congressman Shadegg indicates; it sits there, and nobody 
touches it.
    What about is it worthwhile pursuing this, and emphasizing 
the need to talk about private property ownership in a country 
that once understood private property ownership?
    Mr. Aufhauser. I don't think there is any doubt that the 
long-term strategy of the United States Government is a 
freestanding Iraq that can determine things like what is the 
best way to promote private enterprise and the like. That is 
the surest way to make sure that the U.S. Taxpayer is not 
paying the bill. A thriving and enriched Iraqi economy that 
honors property rights and the like is a central part of our 
strategy. How you get there from here is a complicated 
calculus.
    In direct response to your question about the oil, we were 
both trying to recollect here--the oil has been titled in the 
Iraqi State for the last half of the 20th century. It is not 
like there was a sudden taking from private parties during any 
of our recent lifetimes.
    Mr. Paul. But may I interject, it has been probably a half 
a century that Castro has owned the property as well, but we 
still talk about returning it to the original owners.
    Mr. Aufhauser. Now I turn to the State Department.
    Mr. Wayne. Mr. Congressman, I guess I would add that 
certainly the importance of private property can't be 
underestimated as we move forward and work in Iraq.
    In fact, already, as you probably noted, in the north of 
the country there has been a lot of discussion about who has 
title to what land, what apartments, what homes. Sorting these 
issues out has been a very important priority for the Americans 
working in that part of the country.
    Similarly, as we move forward, one of our clear intentions 
is as quickly as possible to move decisions into Iraqi hands 
and to move to an elected government in Iraq so they can make 
some of these decisions themselves.
    In that process, of course, as you know, we will be talking 
of the benefits of a market system and the benefits of private 
property. But we are trying to be very respectful of the need 
for Iraqis to come to these conclusions and to build this 
system themselves.
    Chairwoman Kelly. Thank you, Mr. Paul.
    Before I end this hearing, I would like to read something 
that I find is important for people to think about. It is a 
paragraph from Mr. James Lacey, who is a Times correspondent 
embedded with the 101st Airborne Division.
    He says, ``It was the American soldiers who handed over 
food to hungry Iraqis, who gave their own medical supplies to 
Iraqi doctors, and who brought water to the thirsty.
    ``it was the American soldiers who went door-to-door in a 
slum because a girl was rumored to have been injured in the 
fighting. When they found her, they called in a helicopter to 
take her to an Army hospital. It was the American soldiers who 
wept when a 3-year old was carried out of the rubble where she 
had been killed by Iraqi mortar fire.
    ``It was American soldiers who cleaned up the houses they 
had been fighting over and later occupied, because they wanted 
the places to look at least somewhat tidy when the residents 
returned.
    ``it was these same soldiers who stormed Baghdad in only a 
couple of weeks, accepted the surrender of three Iraqi army 
divisions, massacred any Republican Guard unit that stood and 
fought, and disposed of a dictator and a regime with ruthless 
efficiency.
    ``there is no other army and there are no other soldiers in 
the world capable of such merciless fighting and possessed of 
such compassion for their fellow men. No society except America 
could have produced them.'' .
    I would like to add, and no society but America can lead 
the way to finding the money that rightfully belongs to the 
Iraqi people.
    Now the Chair notes that some members may have additional 
questions for this panel that they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 30 days for members to submit written questions to these 
witnesses and to place their responses, as well as other 
pertinent information, in the record.
    Chairwoman Kelly. This panel is excused with the 
committee's great appreciation for your time and your patience. 
I want to briefly thank all the members and their staffs for 
their assistance in making this hearing possible.
    This hearing is adjourned.
    [Whereupon, at 11:50 a.m., the subcommittee was adjourned.]


                            A P P E N D I X



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