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





                      U.S. AND FOREIGN EFFORTS TO
                      RECOVER IRAQ'S STOLEN MONEY

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 18, 2004

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 108-72



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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 Chair   JULIA CARSON, Indiana
RON PAUL, Texas                      BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio                GREGORY W. MEEKS, New York
JIM RYUN, Kansas                     BARBARA LEE, California
STEVEN C. LaTOURETTE, Ohio           JAY INSLEE, Washington
DONALD A. MANZULLO, Illinois         DENNIS MOORE, Kansas
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 FOSSELLA, 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            CHRIS BELL, Texas
TIM MURPHY, Pennsylvania              
GINNY BROWN-WAITE, Florida           BERNARD SANDERS, Vermont
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                JIM MATHESON, Utah
SCOTT GARRETT, New Jersey            STEPHEN F. LYNCH, Massachusetts
TIM MURPHY, Pennsylvania             ARTUR DAVIS, Alabama
GINNY BROWN-WAITE, Florida           CHRIS BELL, Texas
J. GRESHAM BARRETT, South Carolina


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 18, 2004...............................................     1
Appendix:
    March 18, 2004...............................................    29

                               WITNESSES
                        Thursday, March 18, 2004

Christoff, Joseph A., Director of International Affairs and 
  Trade, United State General Accounting Office..................    20
D'Agostino, Davi M., Director of Financial Markets and Community 
  Investment, United States General Accounting Office............    22
Simons, Paul E., Deputy Assistant Secretary for Energy, Sanctions 
  and Commodities, Bureau of Economic and Business Affairs, 
  United States Department of State..............................     9
Zarate, Juan, Deputy Assistant Secretary for the Executive Office 
  of Terrorist Financing and Financial Crimes, United States 
  Department of the Treasury.....................................     7

                                APPENDIX

Prepared statements:
    Kelly, Hon. Sue W............................................    30
    Oxley, Hon. Michael G........................................    33
    Hensarling, Hon. Jeb.........................................    35
    Christoff, Joseph A..........................................    37
    D'Agostino, Davi M...........................................    37
    Simons, Paul E...............................................    53
    Zarate, Juan.................................................    56

              Additional Material Submitted for the Record

Christoff, Joseph A. and D'Agostino, Davi M.:
    Written response to questions from Hon. Sue W. Kelly.........    70
Simons, Paul:
    Written response to questions from Hon. Sue W. Kelly.........    82
Zarate, Juan:
    Written response to questions from Hon. Sue W. Kelly.........    99

 
                      U.S. AND FOREIGN EFFORTS TO
                      RECOVER IRAQ'S STOLEN MONEY

                              ----------                              


                        Thursday, March 18, 2004

             U.S. House of Representatives,
      Subcommittee on Oversight and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 10:10 a.m., in 
Room 2128, Rayburn House Office Building, Hon. Sue Kelly 
[chairman of the subcommittee] presiding.
    Present: Representatives Kelly, Oxley (ex officio), 
Hensarling, Garrett, Gutierrez, Inslee, Lynch and Maloney. Also 
present were Representatives Ose and Renzi.
    Chairwoman Kelly. [Presiding.] This hearing of the 
Subcommittee on Oversight and Investigations will come to 
order.
    This morning the subcommittee continues its examination of 
the efforts by our nation and others to suppress the flow of 
illicit money used to finance terrorist networks, and 
specifically to track down the money Saddam Hussein stole from 
the Iraqi people. Terrorists have no boundaries, nor do they 
exhibit any regard for peace, liberty or human life. Terrorists 
will never stop trying to find ways to secure the resources 
needed to carry out their extremist agendas.
    An unwavering commitment to shattering the underground 
financing networks upon which they rely is critical and is a 
critical part of our effort to prevent future acts of terrorism 
here and abroad. The subcommittee will continue to examine 
efforts to pursue illicit money and help eradicate the threat 
of international terrorism.
    The capture of Saddam Hussein was a great day for the Iraqi 
people and for freedom and democracy throughout the world. The 
Iraqi people are now free from this reign of terror, and it is 
appropriate that the pilfered fortune once used to oppress them 
now be directed toward initiatives that will help to build a 
country and a government of the choosing of the Iraqi people.
    There still remains difficult work ahead. It is imperative 
that we work with our foreign counterparts and the Iraqi people 
to rebuild the country's infrastructure, financial systems and 
overall economy. Last week, the Iraqi governing council 
completed the transitional administrative law for Iraq. This 
new constitution is an important step toward a free Iraq with a 
democratic election and this new constitution created for and 
by the Iraqi people. As the law was approved, we are reminded 
of the steadfast leadership of our president and this 
administration, as well as our brave soldiers and sailors and 
our brave coalition troops, who have provided throughout the 
liberation of this oppressed nation.
    Along this difficult journey, our armed services have 
continued to earn the admiration and respect of the American 
people and of many others throughout the world. Our thoughts 
and our prayers are with the men and women who serve our 
country, and we will continue to give them support and the 
resources that they need to complete this important mission. As 
we continue this work with our allies and the Iraqi people to 
rebuild their country, it is going to take a great amount of 
resources. We have to do everything we possibly can to retrieve 
the money Saddam Hussein stole from the Iraqi people and to 
assist them in reconstruction efforts.
    This money belongs to the Iraqi people. It belongs to them. 
It was never Saddam Hussein's money to begin with. He stole it 
from them. The assets needs to be found and returned to the 
people of Iraq to build schools, to reopen the businesses, to 
help resupply the hospitals and repair the country's 
infrastructure, all of it maliciously destroyed by the tyranny 
of Saddam Hussein and his inner circle. Since the start of our 
military intervention in Iraq one year ago, the United States 
has led a worldwide hunt for the money Saddam Hussein 
systematically looted from the Iraqi people over the last few 
decades.
    The focus of these efforts has been to retrieve and return 
Saddam's money that has already been located and frozen. 
Simultaneously, we are searching to uncover new money, accounts 
and front companies that the former dictator and his associates 
used to siphon money out of the country and use it for their 
own nefarious purposes. Last May, this subcommittee held the 
first congressional hearing on efforts to freeze, seize and 
repatriate assets of the corrupt Saddam Hussein regime.
    Witnesses from the Treasury, State and Defense Departments 
who are leading the search for Saddam's assets inside Iraq and 
around the world testified before the subcommittee. In that 
hearing, the subcommittee learned of the complex schemes used 
by Saddam Hussein's regime to steal from the Iraqi people, 
including kickbacks, phony front companies, hidden trusts, 
hidden accounts and other accounts in financial institutions 
with front names throughout the world.
    We also examined how our government works with other 
relevant international agencies, counterparts in foreign 
governments and the financial services industry to identify, 
seize and repatriate the worldwide financial assets of this 
dictator.
    Given the significance of these issues, the committee 
requested the General Accounting Office to assist Congress in 
this important investigation. This subcommittee will receive an 
update on the GAO efforts today, including how much money has 
been found and transferred to the development fund for Iraq by 
the United States and other foreign countries. We are also very 
interested in U.S. efforts to locate new accounts and to 
convince foreign countries to freeze and transfer the money 
back to Iraq.
    Our government has given the United Nations Sanctions 
Committee the names of numerous entities and dozens of 
individuals with ties to Saddam Hussein and the corrupt 
dictator's regime. As we continue to provide evidence to the 
United Nations, there have been questions about the ability and 
willingness of countries to use and share intelligence 
information. Foreign entities must proactively contribute to 
these efforts and we need to know what can be done to encourage 
their participation.
    It is their safety. It is our safety. It is the 
reconstruction of a new nation of Iraq that is run by and for 
the Iraqi people. We expect nothing less than the highest level 
of cooperation from all foreign governments and financial 
institutions. Congress was very clear and unwavering in the 
passage of the Patriot Act. The willingness to share cross-
border information is a license required to do business in 
America. I am going to repeat that. That is something people do 
not realize about the Patriot Act. We spelled it out in the 
Patriot Act. The willingness to share cross-border information 
is a license required to do business in the United States of 
America.
    Now, Congress and the American people need to know who is 
cooperating and whether any action may be necessary by our 
government or the United Nations. We know the money is out 
there and we plan to find it and we plan to return it to Iraq. 
We expect foreign entities to do the same.
    The subcommittee thanks the witnesses for being here with 
us today. We have key witnesses from Treasury, the State 
Department and in addition, we have representatives from the 
General Accounting Office to discuss the preliminary findings 
of their investigation. Congress has an important role to play 
in making clear to countries across the world that the United 
States will be unrelenting in its pursuit of those who finance 
terror. This subcommittee is going to continue to place a sharp 
focus on fulfilling this important obligation.
    With that, I turn to my ranking member, Mr. Gutierrez.
    [The prepared statement of Hon. Sue W. Kelly can be found 
on page 30 in the appendix.]
    Mr. Gutierrez. Good morning and thank you for calling this 
hearing today, Madam Chair.
    Last May, we held the first congressional hearing on the 
recovery of Saddam's stolen assets. Subsequently, we requested 
the GAO investigate how the U.S. Government works with its 
foreign counterparts and the banking industry to identify and 
recover the assets of dictators. I am pleased that the GAO will 
present their preliminary findings and update us on the 
structures that have been put in place to accomplish our goals.
    However, I was very troubled that a number of obstacles 
were originally placed in the path of the GAO. At the end of 
last year, it came to my attention that the Departments of the 
Treasury and State had imposed significant limitations on the 
GAO's work. Apparently, the departments have precluded the GAO 
from traveling to key European countries to discuss their 
practices for identifying, seizing and returning foreign regime 
assets. They were also precluded from discussing these issues 
with European embassy officials in Washington or United Nations 
officials in New York. Treasury officials indicated that 
approval for travel to foreign countries would not be granted 
for 4 to 6 months, which would be after the report was 
scheduled to have been completed.
    Additionally, the departments were failing to provide the 
GAO with important documentation that was requested in 
September 2003. Specifically, this included, one, information 
on other countries's laws and processes for recovering assets; 
two, official diplomatic communications sent to foreign 
governments related to asset recovery efforts; three, documents 
related to U.S. efforts to recovery assets in Afghanistan and 
the former Yugoslavia; four, minutes from the meetings of the 
Iraqi assets working group; and five, updated financial data on 
the amount of frozen Iraqi assets housed in foreign countries 
and the amounts transferred to the development fund for Iraq.
    Apparently, Treasury Department officials have expressed 
their willingness to provide this information, but stated that 
they were receiving direction from the State Department and the 
White House. This is deeply disturbing, not only because the 
administration is being less than forthcoming about such an 
important issue, but also raises separation of powers concerns.
    However, over the last several months, I have been informed 
and told that the GAO's access to information has improved 
dramatically. That is a good thing. I would hope that this 
continues and that the reasons for these roadblocks have been 
addressed, and that future efforts are not impeded by similar 
actions.
    I look forward to the testimony of the witnesses and thank 
the Chair for calling the hearing.
    Chairwoman Kelly. Thank you, Mr. Gutierrez.
    Chairman Oxley, thank you for being here.
    Mr. Oxley. Thank you, Madam Chairwoman. I commend you and 
the subcommittee for undertaking this leadership and commitment 
to repatriating assets for the people of Iraq. This is our 
second hearing on the issue and our goals are to support the 
U.S. Government effort and to ensure that it is working as 
effectively as it can to return stolen Iraqi funds.
    The United States has a long and proud history of 
liberating nations from tyranny and supporting new democracies. 
An important part of supporting the new democracy in Iraq is 
returning Hussein's pilfered cash. In today's hearing, we look 
forward to testimony from the U.S. Department of the Treasury, 
the U.S. Department of State, and the General Accounting Office 
regarding our progress in this area.
    The behavior of the former Iraqi government officials with 
respect to the Oil for Food Program displayed complete 
disregard for basic human need and total contempt for the 
United Nations. Iraqis starved while Saddam spirited billions 
of United Nations funds out of Iraq for personal gain. We 
cannot permit those funds to remain frozen in bank accounts 
throughout the world.
    Some of those funds may also have been invested in 
companies in violation of the United Nations sanctions and 
occasionally in companies created expressly for the purpose of 
evading United Nations sanctions. Banks and other 
intermediaries should not be permitted to hold assets 
indefinitely on their balance sheets without returning them to 
their rightful owners, the people of Iraq.
    Those assets are needed urgently to help rebuild Iraq. Our 
purpose today is to assess our progress toward that goal. I 
understand that the coalition provisional authority in Iraq, 
the Iraqi ministries and various U.S. Government entities are 
working hard to ensure that funds illegally diverted from Iraq 
are returned forthwith. Many of these people are civilians 
placing their lives on the line each day in Iraq. I commend 
their efforts and, together with Vice Chairman Kelly, I am 
working with a CPA and today's witnesses to help ensure the 
identification, isolation and repatriation of these assets. Our 
commitment to due process creates a number of challenges in the 
worldwide financial system. I believe these challenges can be 
met, especially if the different parts of the U.S. government 
can work together collaboratively.
    Much progress has been made on the interagency issue 
identified in last year's hearing, but I understand more 
progress is needed. Just as we need interagency cooperation, we 
need international cooperation. Our representative to the G-7, 
Secretary Snow, is doing everything he can to foster that. Make 
no mistake, though, without President Bush's commitment, this 
project never would have been undertaken.
    While much remains to be done in returning assets to Iraq, 
let's not forget that much has been accomplished against great 
odds. Madam Chairlady, if I could point out, when I was in Iraq 
in November, and we met with various commanders there, they 
talked about the Commanders Fund. That was money that had been 
discovered within Iraq that had been stolen by Saddam and his 
two sons. It amounted to some $300 million.
    That money was used very effectively by the commanders in 
the field for helping rebuild schools, rebuild roads, 
infrastructure and the like. When we met with General Odierno 
up in Kirkuk, he made the point, this was right before 
Thanksgiving in November of last year, that they were rapidly 
going through that $300 million and that is of course partly 
because we needed to do the supplemental when we did, to 
provide that gap.
    At the same time, this effort that you are undertaking with 
our friends at Treasury and State, can really repatriate that 
money where it belongs. So your efforts in this against great 
odds are quite commendable. I think that the progress will 
start to pick up over the next several months as we focus 
attention on this issue. Indeed, if anybody could go to Iraq 
and see the results of this program, which was supposed to be 
oil for food, and was really oil for Saddam and oil for 
palaces, this is an opportunity to correct that wrong in a very 
meaningful way.
    So again, I commend you for this series of hearings and I 
yield back.
    [The prepared statement of Hon. Michael G. Oxley can be 
found on page 33 in the appendix.]
    Chairwoman Kelly. Thank you very much.
    Mr. Lynch?
    Mr. Lynch. Thank you, Madam Chair. Thank you, Ranking 
Member Gutierrez, and thank you, Chairman Oxley, for organizing 
this hearing and continuing your good work.
    I want to thank the panel for attending as well, helping 
the committee with its work.
    I also traveled to Iraq, although last May shortly after 
the invasion. I also visited Kirkuk and was with General 
Odierno not that long after he and his forces had actually 
apprehended friends of the family of Saddam Hussein and 
recovered major amounts of melted-down gold and also American 
currency that was being pilfered from the Iraqi people.
    In those days and weeks and actually hours prior to the 
invasion on March 19, we had reports of members of Saddam 
Hussein's family taking trailer-loads of cash from Iraqi banks 
and following those trucks up into Syria. There is a great need 
here for us to lower as much as possible the cost to the 
American people of the effort in Iraq. Every dollar that we can 
recover will be one dollar less that we do not have to come up 
with through supplementals and other measures in this Congress.
    The particular area that I would like to hear from when we 
get to questioning are surrounding the Oil for Food Program and 
the mismanagement or the administration of that program, and 
also the siphoning off of money for improper purposes. I think 
there is a very focused reason why you are here today, but I do 
not want to ignore the fact that there is a wider purpose here 
as well.
    For the past two centuries, wars on this earth have 
basically been waged by nations, so it allowed diplomacy to 
prevent wars. Now we have the privatization of war, which is 
terrorism, and we need, if we are going to prevent the gravest 
dangers to the American people and to freedom-loving people 
everywhere, we need to choke off the funds for this 
privatization of war against private citizens being conducted 
by various terrorist organizations all over this earth. So it 
is very, very important, the work that we are doing here, even 
though we are just looking at Saddam Hussein and trying to 
recover those monies.
    There is a network of money that is being used to fund, as 
I say, the privatization of war against innocent civilians. So 
we hope that we can use some of the progress that is 
accomplished here in that wider effort.
    I yield back. Thank you, Madam Chair.
    Chairwoman Kelly. Thank you.
    Mr. Hensarling?
    Mr. Hensarling. In the interests of time, Madam Chairman, I 
would just ask unanimous consent that my opening statement be 
entered into the record.
    [The prepared statement of Hon. Jeb Hensarling can be found 
on page 35 in the appendix.]
    Chairwoman Kelly. So moved.
    Without objection, all Members's opening statements will be 
made part of the record. This is a very busy day on Capitol 
Hill, and Members who do have questions and I am sure have 
opening statements they want to put in the record, so we will 
make them a part of the record.
    Now, we will turn to our first panel. Testifying on the 
first panel are two key witnesses leading the U.S. efforts to 
recover and return Saddam Hussein's assets to the Iraqi people. 
The subcommittee welcomes back Mr. Juan Zarate, the Deputy 
Assistant Secretary for the Executive Office of Terrorist 
Financing and Financial Crimes at the U.S. Department of the 
Treasury. That is a very long title, sir.
    Last week, the Bush administration announced the creation 
of a new Office of Terrorism and Financial Intelligence at the 
Treasury Department, which will include a new under secretary 
and two assistant secretaries. Mr. Zarate, I would like to 
congratulate you on your nomination for that position of 
assistant secretary. The creation of this new office, coupled 
with the President's proposal to increase the budget to help 
fight terrorist financing and financial crime, signals this 
administration's commitment to the war on terror. The committee 
looks forward to having you back at a later time in your new 
role to discuss this new endeavor.
    Also here today is Mr. Paul E. Simons, Deputy Assistant 
Secretary for Energy, Sanctions and Commodities at the Bureau 
of Economic and Business Affairs at the U.S. State Department. 
That is a good long title, too, there, but we know what you do. 
Mr. Simons has launched U.S. police training efforts in post-
conflict Iraq and Afghanistan. He has also previously served as 
Deputy Chief of Mission at the U.S. embassy in Israel, which 
involved work on Arab-Israeli peace negotiations.
    The subcommittee thanks both of you for your testimony 
today. Without objection, your full written statements will be 
made part of the record. You will be recognized for a 5-minute 
summary of your testimony. The lights in the boxes on the table 
will indicate when you have the time. Green, you have 5 
minutes; yellow, you have 1 minute left; and red, we would ask 
you to summarize quickly.
    Thank you very much. We go now to you, Mr. Zarate.

 STATEMENT OF JUAN ZARATE, DEPUTY ASSISTANT SECRETARY FOR THE 
 EXECUTIVE OFFICE OF TERRORIST FINANCING AND FINANCIAL CRIMES, 
            UNITED STATES DEPARTMENT OF THE TREASURY

    Mr. Zarate. Madam Chair, thank you very much and thank you 
for your kind words. I very much appreciate them.
    Chairwoman Kelly, Congressman Gutierrez and distinguished 
members of the Subcommittee on Oversight and Investigations, 
thank you for inviting me to testify today about the U.S. 
Government effort to identify, freeze and recover Iraqi assets 
worldwide. I am pleased to be here this morning with Deputy 
Assistant Secretary of State Paul Simons, with whom we work 
closely on this and other efforts of global magnitude.
    Madam Chair, this week marks the 1-year anniversary of our 
campaign to free Iraq. In that year, we have liberated the 
Iraqi people, ousted a ruthless tyrant, captured members of the 
fallen regime, and helped the Iraqi people begin rebuilding 
their country. This is also the anniversary of Secretary Snow's 
bold call for the world to find, freeze and repatriate to the 
Iraqi people the assets plundered by Saddam Hussein and his 
regime. I am here today, Madam Chair, to report on our 
significant and steady progress since then.
    In this effort, we have found the Hussein regime was as 
fiendish in its thievery as it was terrible in its tyranny. 
Hussein and his cronies abused the good will of the 
international community to fortify and enrich the regime with 
kickbacks, skimming schemes and smuggling operations. While the 
Iraqi people suffered, Hussein and his sons paid for pleasure 
palaces and armaments.
    We have been on the hunt for Iraqi assets around the world, 
whether official Iraqi assets held in the name of Iraqi 
entities or the assets looted and hidden by the Hussein regime 
and their family members. Make no doubt, this is a daunting and 
complicated mission, Madam Chair. Even so, on a daily basis 
through interviews, diplomacy, and analysis, we are unmasking 
the financial web used by the regime and returning money to the 
Iraqi people.
    Allow me to provide a brief snapshot of the success we have 
seen to date. With the cooperation of our allies abroad, we 
have frozen nearly $4.5 billion of Iraqi assets worldwide. This 
past year, almost $2 billion of Iraqi assets has been newly 
identified and frozen outside the U.S. and Iraq. Since last 
year, the United States, foreign countries and the Bank for 
International Settlements have transferred back to Iraq over 
$2.5 billion in frozen Iraqi funds.
    As this chart demonstrates, we have seen increasing 
transfers into the Development Fund for Iraq. To date, 
approximately $750 million have been transferred from foreign 
sources to the DFI. Within Iraq, we have seized approximately 
$1.3 billion in cash and valuables, including most of the money 
stolen from the Central Bank of Iraq by Hussein immediately 
before the war.
    In Iraq and throughout the world, our financial 
investigators have interviewed key detainees as well as 
bankers, lawyers and accountants who acted as financial 
facilitators for the regime. These efforts have yielded 
countless leads. Madam Chair, an example of this occurred when 
our agents determined that the former Iraqi ambassador to 
Russia had stolen approximately $4 million in Iraqi assets. As 
a result, that amount has been frozen and we are working to 
repatriate it.
    Working closely with the governments of Liechtenstein, 
Switzerland and Jordan, we have secured one of Hussein's Falcon 
50 corporate jets seen in the graphic here. As a result of this 
collaboration, we are also uncovering a financial network that 
had been used by the Iraqis to move money and people in the 
heart of Europe. The Departments of the Treasury and State have 
provided identifying information on over 570 identified Iraqi 
bank accounts to 41 countries for review and follow-up. Madam 
Chair, we continue to identify key individuals and entities 
whose assets should be frozen.
    All of these efforts are guided by the strong recognition 
that this mission is critically important for both old and new 
reasons. Iraqi assets must be recovered so that they can be 
used to pay pensioners, construct schools, equip hospitals, and 
rebuild Iraq. It is equally imperative to recover Iraqi assets 
to prevent them from being used to fund the Iraqi insurgency 
and to keep them out of the hands of terrorists. The United 
States and the international community cannot permit that these 
assets be used against our troops, coalition partners and 
innocent civilians in Iraq.
    Finally, our successful prosecution of this hunt serves as 
a strong warning to other rogue regimes which might seek to 
loot their countries and hide the stolen assets in the 
international financial system. Our commitment, Madam Chair, to 
the people of Iraq is unwavering. Our efforts to find and 
return Iraq's money are critically important in the transition 
to a free and prosperous Iraq.
    Thank you, Madam Chair, for this opportunity to testify, 
for your consistent support in these efforts, and for the 
attention of this committee.
    [The prepared statement of Juan Zarate can be found on page 
56 in the appendix.]
    Chairwoman Kelly. Thank you very much.
    I am happy that you mentioned the fact that kleptocracy was 
not the province of Saddam Hussein alone.
    We go now to Mr. Simons.

   STATEMENT OF PAUL SIMONS, DEPUTY ASSISTANT SECRETARY FOR 
   ENERGY, SANCTIONS AND COMMODITIES, BUREAU OF ECONOMIC AND 
      BUSINESS AFFAIRS, UNITED STATES DEPARTMENT OF STATE

    Mr. Simons. Madam Chair, Congressman Gutierrez, and 
distinguished members of the subcommittee, thank you very much 
for the opportunity to testify this morning on our efforts to 
recover Iraqi assets and to return them to the Development Fund 
for Iraq. I would ask that my full statement be entered into 
the record and I will just make a few very brief opening 
remarks.
    First, let me associate myself completely with Secretary 
Zarate's opening statement. We very much have a seamless, 
cooperative and productive interagency process on the Iraq 
asset issue. I think the results speak for themselves: more 
than $750 million transferred over the past year into the 
Development Fund for Iraq from international sources, and in 
our view, good prospects for additional transfers prior to the 
June 30 target date for the transfer of authority to an Iraqi 
interim government.
    For our part, the State Department is very much committed 
at the highest levels, both in Washington as well as overseas, 
to the continued recovery of Iraqi assets. We engage on a 
weekly basis in Washington at the assistant secretary and the 
under secretary level on this issue. Our International 
Organizations Bureau, our folks in New York, have been very 
active in crafting the U.N. resolutions, including Resolution 
1483, that has really been the linchpin of bringing the 
international community behind this effort.
    Overseas, I think it is very important to stress that our 
ambassadors handle this issue as an item of highest priority. 
Diplomacy really has changed after 9-11. We are very much more 
involved in the State Department in working together with the 
law enforcement community, the intelligence community, the 
financial community, on issues such as terrorist financing, 
recovering assets, and homeland security. This is all part of 
the new diplomacy and the State Department is very much 
committed to this.
    Juan mentioned that already we have shared information on 
more than 570 accounts with more than 41 countries worldwide in 
the effort to secure the return of Iraqi assets. We have 
exchanged within the past year more than 400 telegrams with our 
embassies in the field. We are in daily E-mail contact with 
them and it really is a tremendous effort.
    Let me also say that there is a great degree of 
collegiality in the interagency process on this issue--all of 
the key players, Treasury, State, Justice, Defense, Homeland 
Security, and the very brave individuals that are working out 
in the CPA, the Coalition Provisional Authority. Our 
intelligence and law enforcement agencies, all are working 
together in a very collaborative fashion. You mentioned, Madam 
Chair, that I did have the opportunity previously to work on 
the law enforcement side in Iraq, where we also have a strong 
interagency effort, but this effort I think is particularly 
collegial and effective.
    So we have made tremendous strides in the recovery and the 
return of these assets. We still have a long way to go. There 
are obstacles. I look forward to your questions and perhaps we 
can have a more open dialogue here, as well as in our private 
session later. The U.N. has broken new ground. The notion of 
asset freezing as well as asset transfer is something that is 
new to a lot of our colleagues in the international community; 
it is a new concept. We are bringing them along, but this is a 
post-9-11, cutting edge idea. But we are working with them, we 
are making a strong effort inside the government, interagency, 
as well as internationally, and we look forward to the 
committee's support as we move ahead.
    Thank you.
    [The prepared statement of Paul Simons can be found on page 
53 in the appendix.]
    Chairwoman Kelly. I thank you very much.
    I am going to ask a couple of questions. Let me just ask 
Mr. Zarate, what challenges do you face in identifying Iraqi 
accounts? It is reported that Iraqi money is frozen or held in 
financial entities by a number of countries, including France, 
Germany, Switzerland, Luxembourg, Panama, and Russia, among 
others. Apparently, these countries give reasons for not 
releasing the money by saying that they cannot be sure that it 
belonged to Saddam Hussein's regime.
    To the extent that it is possible in an open session, can 
you discuss which countries have taken this approach, as well 
as which countries have actually cooperated with us in doing 
what they can to get that money released?
    Mr. Zarate. Madam Chair, if I could, I would like to 
address your first concerns, which are the obstacles that we 
are seeing. Certainly, there are legal complications based on 
the novelty of this effort, both the novelty in terms of 
freezing and immediately repatriating assets to Iraq. There are 
also complications with respect to competing claims and other 
legal issues related to that.
    One of the challenges and one of the efforts underway in 
the interagency group is to compile information in a way and 
analyze information in way that makes it useful for foreign 
governments to help prod them to take the right decisions on 
this, to freeze the assets and to repatriate them. As we have 
said, we have seen very good progress to date, increasing 
progress in terms of transfers to the DFI. We expect to see 
even more progress in the coming weeks.
    That being said, there are challenges. There are countries 
that have to make legal reforms and have to reform the way that 
they look at this issue. There are countries that perhaps have 
not given the attention to this or the political will to this 
that they should. But in general, this is something that we 
have been pushing at the top of our agenda, as Paul indicated. 
It is a major agenda item for our ambassadors around the world. 
It is certainly top of the agenda for Secretary Snow and I know 
for Secretary Powell as well.
    So we are working on a daily basis with countries around 
the world. Perhaps in the closed session, we can speak more 
specifically about some of the challenges that we are facing 
and some of the countries with whom we are having greater 
difficulty.
    Chairwoman Kelly. Thank you very much.
    I would like to also ask you, the administration and the 
Treasury Department have been very active in locating 
individuals and entities that are not cooperating. I know that. 
How are we moving forward in our efforts to surface and disable 
those who support terrorism and seek to undermine the progress 
in Iraq? How will this contribute to our efforts in the war 
against terror? That is a double question. I hope you will 
answer that, Mr. Zarate.
    Mr. Zarate. Absolutely, Madam Chair. First, we have been 
sharing information as freely and as quickly as possible. The 
unprecedented efforts to get account information, as we 
discussed, to foreign governments, frankly, is an unprecedented 
effort by the intelligence community, the treasury department 
and the state department to enlist our foreign counterparts, to 
have them act against those accounts and to follow up with 
investigations.
    We are also engaged, Madam Chair, in a process of listing 
and designating known supporters, known family members, known 
entities who are part of the financial infrastructure of the 
Hussein regime. Today in fact, Madam Chair, the Treasury 
Department is announcing the designation of 16 family members 
related to the Hussein regime, people who are critical to the 
financial underpinnings and workings of the regime, such as 
Barzan al-Tikriti and his family. Those names are being 
notified to the U.N. to make that part of the mandatory freeze 
list, if you will, to allow our counterparts around the world 
to freeze those assets and to repatriate them.
    In addition, we are notifying 191 parastatals. These are 
quasi-government entities controlled by the Iraqi government 
which may still have accounts worldwide. This announcement 
today, Madam Chair, I think is the first step of the unveiling 
of our good work over this past year, the good, brave work of 
our investigators in the field; the great work of the 
intelligence community; the good work of the military; and the 
phenomenal diplomatic work of the state department.
    Chairwoman Kelly. I thank you. I think that sends a clear 
message to the world that the U.S. and our allies are going to 
demand cooperation from foreign countries and their financial 
institutions. I am very glad to hear you report that today.
    I would like to ask you, Mr. Simons, I think I have a bit 
more time here, I wondered if you would elaborate more on the 
challenges faced and the need to coordinate U.S. laws, 
regulations and capabilities with those of other countries. To 
what extent has State compiled information on other countries's 
laws and regulations about freezing. You mentioned this in your 
testimony, freezing and seizing and releasing the assets, and 
how that works with the applicable U.N. resolutions.
    Mr. Simons. Thank you, Madam Chair. I think I would like to 
cite three areas that we are working internationally to try to 
address some of the limitations that other countries have in 
terms of both seizing and freezing assets, as well as 
transferring them. I think up front, it is also useful to keep 
in mind that the U.S. does have as a matter of legislation and 
regulation a very flexible legal structure in place.
    We have the International Emergency Economic Powers Act, 
IEEPA, which forms the basis for our ability in the case in 
which the President declares a national emergency, to provide a 
very flexible kind of a vehicle. This sort of a vehicle is 
generally speaking not present in the cases of our major 
allies, both in Europe as well as in the developing world. So 
we are starting off with not exactly a level playing field 
here. We have a lot more flexibility to move up front.
    In terms of getting other countries to move, let me cite 
three areas. First, as Juan mentioned, our aggressive effort to 
list countries with the U.N. We discovered in the case of 
terrorist financing where we have a series of U.N. resolutions, 
that our ability to list entities was an extremely important 
factor in getting other countries to move along and to get 
their internal legislative and regulatory gears moving. So we 
are hoping that the designation today that Secretary Zarate 
mentioned will have a catalytic effect in terms of galvanizing 
some movement on the part of countries that have not moved.
    Secondly, we have the Financial Action Task Force, which is 
a multilateral body that issues recommendations with respect to 
money laundering and terrorist financing policy to its members 
and to other countries around the world. The Financial Action 
Task Force, or the FATF, has issued 40 recommendations 
specifically on money laundering; and eight recommendations on 
terrorist financing. Those specifically cover the issue of 
asset seizing and asset freezing, and basically make it an 
obligation for countries that are members to acquire legal and 
regulatory regimes that will enable them to exercise these 
functions. We have fairly aggressively used a name-and-shame 
process in the FATF to get countries to come into compliance, 
both with the 40 recommendations, as well as the eight 
recommendations.
    Finally, and this goes back to the time when I worked in 
narcotics and law enforcement, we have a very active technical 
assistance program on terrorist financing that was put into 
place after 9-11 that also brings countries up to speed; that 
sends our Department of Justice experts out to developing 
countries to show people how to put into place money laundering 
legislation that incorporates asset freezing. So we are doing 
this on the technical assistance side as well.
    So I think we have a number of areas where we are working 
actively. Thank you.
    Chairwoman Kelly. Thank you.
    Mr. Gutierrez?
    Mr. Gutierrez. Mr. Zarate, in your testimony you identified 
$6 billion in recovered Iraqi assets. What do you think the 
total amount might be?
    Mr. Zarate. Congressman Gutierrez, one of the conundrums of 
this effort has been trying to understand and get a hold on the 
full universe of assets pilfered by the Hussein regime. Part of 
the complication results from the Stalinist-like economy that 
was run by Hussein in which the economy was used for his own 
purposes, used for state purposes. In part, that is why we are 
designating the parastatals today to get at those assets that 
may exist abroad.
    Part of the efforts today, in fact, Congressman, is to have 
foreign governments help us identify precisely what the 
universe of assets are that exist out there.
    Mr. Gutierrez. Do you think you will find another $6 
billion?
    Mr. Zarate. Another $6 billion?
    Mr. Gutierrez. Yes.
    Mr. Zarate. I think it is very hard to say, Congressman. I 
think what we saw in the May 2002 GAO report, which estimated 
that it was $6.6 billion that was skimmed off of the Oil for 
Food Program over about a 4-or 5-year period, I think that is a 
very good estimate. It is helpful, but I do not think it tells 
the whole story, in part because we do not know the total.
    Mr. Gutierrez. Do you think you have found most of it?
    Mr. Zarate. Well, we have found $4.5 billion total in the 
U.S. and worldwide. That has been frozen. We have returned over 
$2.5 billion of that to Iraq. As we mentioned, $750 million of 
that has come from foreign sources into the DFI. We expect to 
find more. Yes, Congressman, we think there is more out there. 
As we indicated, there are front companies that have been used. 
There are agents that were facilitators for the regime. Part of 
the efforts today, frankly, in designating the 16 individuals 
is to get at their assets as well, to make sure that the family 
members of these high-level regime members do not have access 
to funds and that they are not in the hands of terrorists.
    Mr. Gutierrez. What have we spent so far in rebuilding 
Iraq?
    Mr. Zarate. Congressman, I would have to get back to you on 
that. I do not have an exact figure. Certainly, expenditures 
are made out of the DFI, the Development Fund for Iraq. All of 
the frozen assets that are found around the world are funneled 
into the DFI, as well as proceeds from oil sales. But 
congressman, I do not have the figure in terms of what has been 
spent.
    Mr. Gutierrez. In relationship to the total costs, what we 
recover will probably be a small relationship of the money in 
terms of rebuilding Iraq.
    Mr. Zarate. I think that is hard to estimate, Congressman, 
in part because this is an ongoing effort.
    Mr. Gutierrez. Maybe you could put what you think, what you 
say we have recovered, what you project we might recover and 
what the total cost is, so that we can gauge what we are doing 
vis-a-vis the total we have been looking at.
    Congresswoman Kelly I thought asked a great question about 
who is cooperating and who is not. For some reason or another, 
you were not specific about the countries that were and were 
not. Let me just ask you, is Germany cooperating, and France? I 
really have difficulty asking for the freedom toast every 
morning here, so I was wondering if we could go back. Are they 
cooperating?
    Mr. Zarate. Congressman, part of the reason I answered 
Madam Chair the way I did was because I think some of this is 
fairly sensitive. That is why I suggested we get into greater 
detail in the closed session. Part of the sensitivity, 
Congressman, deals with the fact that this is an ongoing 
effort. We are in constant discussions with these governments, 
including Germany and France and others, Russia. I gave an 
example of Russian cooperation in my oral statement.
    They are cooperating. Now, there are varying levels of 
cooperation. There are also varying levels of aptitude and 
political willingness. I think that is something better left 
for a closed session.
    Mr. Gutierrez. In the beginning, it was stated by members 
of the current administration, especially from Defense, that we 
would be able to rebuild Iraq and that the costs of the war 
would be minimal to us and to our treasury, both because of 
recovery of assets and more specifically because of the oil 
that would be there, and that would help. That has not turned 
out to be true, so that is why I asked the question so that we 
can in the end make a final evaluation about what the total 
costs were. Because as both of you know, there are differences 
in opinion and they are pretty wide and substantial as to 
whether we need as a question of national security to engage 
Iraq.
    Afghanistan, not a question, what we needed to do there. I 
think we would all agree that there might be questions of 
difficulty. I think, Madam Chair, that they are doing a great 
job, and it also bodes well since we keep talking about, I get 
confused when we keep kind of the U.N. does not matter, but we 
keep talking about the U.N. So maybe in closed session, we 
could figure out, does the U.N. matter; does it have any 
relevance anymore; how much does it matter. I read in the paper 
it does not matter, but then every time I come to one of these 
hearings, the name ``U.N.'' keeps popping up in terms of 
getting cooperation from the world community.
    Thank you very much, Madam Chair, for being so generous 
with the time.
    Chairwoman Kelly. Thank you.
    Mr. Garrett?
    Mr. Garrett. Thank you and good morning.
    I appreciate your testimony. It sounds like a Byzantine 
process and a matrix that you have to deal with as far as 
tracking down these assets. One of the concerns I have had in 
light of other testimony we have had as far as assets that are 
right even here at home and the possibility for a terrorist or 
would-be terrorist, those that you may not even have on any 
list today, the ability of them to take these funds that are 
here in this country and to send them elsewhere so they cannot 
be traced anymore.
    I understand that they basically are still able to use our 
own financial institutions, U.S. financial institutions, banks 
to do that. To that end, what measures should be put in place 
to tighten our financial institutions, our banks, as far as who 
may be using them and what identifications may be appropriate 
as far as a screening process for people using our financial 
institutions in this country.
    Mr. Zarate. Congressman, you raise a very important issue, 
and again I think this points to the importance of the Patriot 
Act and the work of the Congress in putting in place a vigorous 
Title III element of the Patriot Act, which gave us greater 
powers with respect to sharing information, but also with 
respect to tightening of the safeguards within the financial 
system.
    We have an open economy, an open financial system, so there 
is always the danger that criminals, terrorists or others, will 
misuse that system to raise money, to move money, et cetera. 
What our challenge is, is to create efficient and effective 
gateways, if you will, to the financial system that allows us 
to capture at the outset or during transactions nefarious 
activities.
    Mr. Garrett. May I suggest, then that if we wanted to apply 
an appropriate gateway, that gateway would be such that you 
would require some sort of documentation for an individual to 
open up an account, and that documentation would be an official 
documentation issued from this country and not from some other 
country.
    It is my understanding that Treasury is in support of 
allowing an individual, an illegal immigrant, an alien, a 
would-be terrorist who is in this country illegally and has no 
other documentation from this country or another country, but 
would be allowed to use documentation such as a matricula card 
from his country to open up a bank account. Why would be want 
to allow illegal immigrants and would-be terrorists to use that 
sort of documentation and not some sort of official U.S. 
documentation?
    Mr. Zarate. Congressman, under Section 326 of the Patriot 
Act where we set out relevant regulations for the documents 
that are required for account openings, we have applied a risk-
based approach that in large part relies on the financial 
institutions to do proper due diligence and to engage in proper 
identification of the accountholders, and to engage in know-
your-customer principles and practices that are expected of a 
financial institution.
    We work very closely with them to look at precisely what 
types of identifications are appropriate. In the regulation, we 
leave open to them the ability to balance, to see what 
identification is appropriate.
    Mr. Garrett. Is it true, then, if I was to go to my local 
bank and my banker knows me for 40 years, that they would still 
require some sort of identification from me to open that 
account, but if someone else came into that bank for the very 
first time and presented to them a matricula card from another 
consulate, that they would be required to open up an account 
with them.
    The second question is, who would be in this country that 
would not have some form of either American identification such 
as American citizen, or a legal immigrant into this country. 
Who other than those individuals would be needing to use a 
foreign documentation such as that?
    Mr. Zarate. To answer your first question, Congressman, it 
would not be a requirement that the bank actually open an 
account. It would be incumbent upon the bank to ensure 
themselves that the identity presented by the individual hoping 
to open an account is in fact the identity of the individual. 
So in many instances, to use your example, I would imagine that 
a bank would require a second form of identification or would 
require references or would engage in other due diligence in 
order to assuage themselves that the person is who they say 
they are.
    So the first is really a calculus for the financial 
institutions. On that point, I would like to mention that the 
administration is undertaking, along with the Departments of 
Justice and Homeland Security, to look at what forms of 
identification are more susceptible to fraud or fraudulent 
reproduction. Driver's licenses, for example, are often 
counterfeited, and there are problems there as well. So that is 
an important issue.
    On your second point, Congressman, I think it bears 
mentioning, and this is a point that we have raised 
internationally as we have tried to broaden and deepen the 
regulatory expanse of government oversight and transparency, it 
behooves us to have people in the financial system and using 
the formal financial system. It actually becomes easier to 
track financial flows. It becomes easier to track individuals 
if they are actually engaging in financial transactions in the 
formal system.
    It is much more difficult when you are dealing with 
underground banking systems, hawalla systems, et cetera, when 
expatriate workers are trying to transfer money back home and 
there are no records or very little records to speak of. So in 
a sense, having a system that allows for the potential for 
people who are living in the country, making money in the 
country, to access the formal financial system is actually a 
helpful enforcement tool.
    Mr. Garrett. So is the answer to your second question, my 
second point of who would be in this country other than illegal 
immigrants using this indication might be would-be terrorists?
    Mr. Zarate. I think you are asking me to speculate.
    Chairwoman Kelly. Mr. Zarate, you may answer that question 
briefly. Mr. Garrett is actually out of time and this 
subcommittee is aware of the issues that Mr. Garrett raises and 
will address them in a subcommittee oversight of agencies, 
which actually we have these things on the schedule. So we can 
talk about that, but please go ahead.
    Mr. Zarate. I will not speculate as to who potentially is 
using the matriculas. It would obviously be individuals from 
that country who are living and making money in this country 
and who would want to use that identification to conduct 
legitimate transactions.
    Chairwoman Kelly. Thank you.
    Mr. Inslee?
    Mr. Inslee. Thank you.
    I assume that just about at the same time the war started 
in Iraq that your agency swung into action right away to try to 
chase down any of Saddam's assets. Is that a fair statement, 
pretty close to contemporaneous with starting the war?
    Mr. Zarate. That is right. The announcement from Secretary 
Snow launching this campaign was immediately coincident with 
the commencement of actions in Iraq.
    Mr. Inslee. I certainly appreciate that. The question 
arises, if we did that in Iraq, why after September 11, 2 days 
after September 11, did this administration allow a privately 
chartered 737 to fly around America picking up Saudi Arabian 
citizens, including blood relatives of Osama bin Laden, and fly 
the out of the United States back to Saudi Arabia, without 
undergoing a close comprehensive scrutiny to determine whether 
or not they had any relationship to the assets of al Qaeda, as 
has been widely reported.
    If you can shed light on whether in fact that is accurate 
or not, that would be appreciated. If you can explain why the 
U.S. Government did that, at the same time it was grounding all 
the airplanes in America so my constituents could not get home 
from their business trips, it allowed Saudi Arabians, the 
country that had 15 out of 19 members on the planes that 
crashed into the towers, were from Saudi Arabia, and flew them 
out of the country without really scrutinizing the situation 
for assets.
    Mr. Simons. Congressman, I do not know that I can give you 
a detailed answer to that question. I can say, and I think I 
could speak on behalf of my Treasury associates as well, that 
those of us that were involved with the issue of terrorist 
financing in the wake of 9-11 moved very quickly. We had an 
executive order that was in place within the first several 
weeks after 9-11, and the first comprehensive effort to 
identify and to freeze the assets of terrorist financiers was 
put into place in very rapid fashion.
    Subsequently, we sought and obtained U.N. blessing for this 
and we went international. So on the issue of seizing and 
freezing terrorist financing assets, I think the record of the 
administration post-9-11 was a very strong one.
    Mr. Inslee. I appreciate that. Could you shed light on 
whether or not the facts I set forth are accurate or not? Did 
that happen?
    Mr. Simons. I do not have the information on that. I will 
have to get back to you with an answer on that question.
    Mr. Inslee. I would very much appreciate it because as far 
as I can tell, we have not received information from the 
administration. So if you can favor me with a letter 
specifically stating whether those things happened or not, and 
explaining why this administration would allow an airplane to 
pick up Osama bin Laden's relatives to fly them out of the 
United States of America 2 days after 9-11, at the same time 
they are grounding every other civilian aircraft in America, 
without finding out if they had some of al Qaeda's cash with 
them, if you could explain to me a justification why this 
administration let that happen, I would be very appreciative. 
And I will provide you my address.
    The second question I have, could you gentleman, in summary 
form, this is an approximation, could you tell me the 
approximate number of people that are involved in this tracing 
of Iraqi assets now, just in your respective, and then these 
are ballpark figures.
    Mr. Zarate. Congressman, that is a hard number to give you, 
in part because on a daily basis you have----
    Mr. Inslee. Can you give me just ballpark, within a factor 
of three?
    Mr. Zarate. I would say, at least within Treasury, we have 
certainly our investigators on the ground from the criminal 
investigation division at IRS, five of whom will be on the 
ground as of April; we have four on the ground now. They work 
very closely with FBI counterparts and department of defense 
officials. Those numbers are very difficult, at least for me to 
provide. We also have officials in the Coalition Provisional 
Authority who are advising the ministries and also working on 
these issues. There is one particular individual from treasury 
who is focused on this issue and the State Department has some 
individuals as well.
    Then back here at main Treasury, we have a fluctuation of 
about I would say from five to ten experts at any time dealing 
with this issue, as well as people at main headquarters at IRS, 
as well as people at OFAC and FinCEN. So it is hard to give you 
an exact number because on a daily basis, depending on the 
issues, the issues revolving around this are so complicated and 
varied it really depends.
    Mr. Inslee. I am sorry. Mr. Simons?
    Mr. Simons. Yes, from the perspective of the State 
Department, we have at any time from about five to ten 
officials in the building working the issue. At each of our 
embassies, we have identified since 9-11 a terrorist finance 
coordinating officer who has undergone training in Washington 
and who is working not only terrorist financing issues, but 
also these Iraqi assest issues. We have a point person at every 
one of our embassies around the world that is following up on 
the leads.
    I would also like to note, if I could, Mr. Congressman, 
that the leads that are being generated by the Treasury, IRS 
folks in the field, working in Iraq, are truly unique. We have 
never had this kind of effort before. Our ability to take that 
information, to route it through Washington and to get it back 
out to the field again is something that is very unique. When 
we talk about lessons learned, I think it is something that we 
might try to see if we can do again in the future.
    Chairwoman Kelly. Thank you very much, Mr. Inslee.
    I really want to thank this panel. There may be questions 
that will be coming from other members. I want to first of all 
explain----
    Mr. Inslee. Madam Chair?
    Chairwoman Kelly. I am sorry?
    Mr. Inslee. Could I ask you your indulgence? I do not know 
if we could have a possibility of----
    Chairwoman Kelly. Mr. Inslee, I am really sorry, but there 
will be a closed briefing after this meeting. If you have 
further questions, perhaps you can ask them in that closed 
session.
    Mr. Inslee. Thank you.
    Chairwoman Kelly. I want to thank this panel very much. Mr. 
Zarate, I want to congratulate you on the designation of the 16 
family names, as well as the 191 quasi-government entities that 
you have designated to the United Nations to be added to the 
list that requires the members's countries to block and 
transfer any stolen Iraqi assets that are found outside of 
Iraq. That is very significant and that is hard work. It 
represents, I am sure, a great many hours in the back rooms 
looking at very unattractive books.
    So I really do congratulate you on that. And I congratulate 
the panel and I note that some members may have additional 
questions for this panel, which they may wish to submit in 
writing. Mr. Inslee, you may wish to take that route as well. 
Without objection, though, the hearing record will remain open 
for 30 days for the members to submit written questions to 
these witnesses and to place their responses in the record.
    I thank you very much. Now, we will call the second panel.
    Mr. Ose, I am sorry. I have just dismissed this panel.
    Mr. Ose. I have a question for Mr. Zarate.
    Chairwoman Kelly. All right. With unanimous consent, we 
will bend the rules and allow you one question with one quick 
answer, because I have dismissed this panel and actually we are 
going to have a private session after this, and you may ask 
your questions there. But with unanimous consent, I will do 
that, for one question.
    Mr. Ose. I thank the Chair.
    Mr. Zarate, in the early 1990s, certain Iraqi assets were 
frozen in banks, something on the tune of $1.2 billion. I am 
curious as to the rates of return that were paid on those 
assets subsequent to their freezing in terms of whether or not 
they adhered to what is called a commercially reasonable basis. 
I would be happy to take my answer in writing if it pleases the 
chair in order to expedite matters.
    Mr. Zarate. Congressman, we will provide a written response 
which will provide a full accounting. But to give you a very 
quick answer, you are correct that in the early 1990s, $1.261 
billion was frozen in the U.S. with respect to Iraqi assets. As 
of today, the figure of $2.112 billion dollars has been frozen. 
As we have indicated, approximately $1.932 billion of that 
amount has been vested and transferred back to Iraq.
    So the differential between the $1.26 billion and the 
$2.112 billion represents in part the interest accrued. Given 
the varied nature of the accounts, given one of the loan 
elements to the U.N., it presents a complication in the figure. 
We feel that most banks applied a commercially reasonable rate. 
If you actually worked out the numbers, assuming some of these 
things, it works out to about 4 percent as to the rate that was 
applied.
    Mr. Ose. By institution, are you able to break it out in 
terms of what was frozen and what the rate of returns were 
being paid?
    Mr. Zarate. Yes, we are. That is commercially sensitive 
information and the rates varied depending on the type of 
account, as well as the amounts. In the instance where we found 
that banks either did not apply an interest rate that was 
appropriate, we have gone back to those banks and ameliorated 
that problem.
    Mr. Ose. Madam Chair, I would be happy to submit my 
question for further expansion by Mr. Zarate in writing.
    Chairwoman Kelly. Thank you.
    Mr. Ose. I thank the Chair.
    Chairwoman Kelly. In the interests of fairness, since Mr. 
Ose has had a turn, I am going to beg this panel's indulgence 
and return to Mr. Inslee for his final question.
    Mr. Inslee. Thank you, Madam Chair. That is an act of great 
graciousness. Thank you very much. I appreciate it.
    Some of us feel that the greater threat at the time the war 
started in Iraq, to the lives of our constituents, was actually 
al Qaeda, the group that killed thousands of Americans on 
September 11. If the will of the policymakers at that time had 
been to continue to focus on stopping al Qaeda from killing 
Americans, rather than to shift and shift resources into the 
war in Iraq, would the people that you just identified, each 
you talked about a certain number of people who are now chasing 
Iraqi assets instead of al Qaeda assets, would those resources 
have been available to chase al Qaeda assets, the group that 
struck us on September 11? The ones that are now chasing Iraqi 
assets?
    Mr. Zarate. Congressman, this administration, the Treasury 
Department and I know the State Department, has never lost its 
focus on the battle against al Qaeda and other terrorist 
groups. Our campaign to freeze assets and to seize assets 
related to al Qaeda is unabated. In fact, today we are 
announcing the designation of 10 individuals that are part of 
an Italian cell submitted to the U.N. by the Italians. This is 
an ongoing effort. We now have designated 361 individuals and 
entities, frozen or seized approximately $200 million in 
terrorist-related assets, continue to work closely on a 
bilateral basis and multilaterally with our partners abroad to 
address the al Qaeda issue.
    So my answer is that all the relevant resources are being 
applied to the hunt for al Qaeda's finances, and on a daily 
basis we are uncovering those leads as well and taking 
appropriate actions to deal with them.
    Chairwoman Kelly. Thank you very much.
    Mr. Inslee. Thank you.
    Chairwoman Kelly. I again will thank the panel very much 
for their indulgence on this, and I look forward to our having 
a closed session with both of you. With that, you are dismissed 
with our great thanks.
    On our second panel, the subcommittee will hear from two 
witnesses from the General Accounting Office as a follow-up to 
a request that the committee made to the agency last May. With 
us from the General Accounting Office is Mr. Joseph Christoff, 
the Director of International Affairs and Trade, and Ms. 
D'Agostino, the Director of GAO's Financial Markets and 
Community Investment.
    Mr. Christoff spearheads the GAO's work related to the U.S. 
agencies responsible for nonproliferation, export control and 
international security issues, as well as issues related to the 
United Nations and multilateral institutions. Ms. D'Agostino 
directs the GAO's work on a number of issues including anti-
money laundering programs, the SEC's technology and security 
oversight of the markets. Prior to this position, she led and 
managed GAO reviews of counterterrorism and government-wide 
terrorism initiatives and defense, trade and technology 
transfer issues.
    Without objection, your full written statements will be 
made part of the record. You will each be recognized for a 5-
minute summary of your testimony. We will begin with you, Mr. 
Christoff.

  STATEMENT OF JOSEPH A. CHRISTOFF, DIRECTOR OF INTERNATIONAL 
   AFFAIRS AND TRADE, UNITED STATE GENERAL ACCOUNTING OFFICE

    Mr. Christoff. Madam Chairwoman, members of the 
subcommittee, thank you for inviting GAO to this important 
hearing.
    Last year, you asked GAO to examine how the United States 
works with other nations to recover the assets of foreign 
regimes. Today, I will present our preliminary observations on 
U.S. efforts in Iraq. First, I will update GAO's previous 
estimate of the illegal revenues the former regime acquired 
through the Oil for Food Program. Next, I will describe the 
efforts of U.S. agencies to recover Iraqi assets. Finally, I 
will provide some observations on the challenges that the 
United States faces in recovering these assets.
    Let me first begin with the Oil for Food Program. Under 
U.N. sanctions, the former Iraqi regime was allowed to sell oil 
to purchase food and other humanitarian goods. From 1997 to 
2002, the United Nations controlled over $67 billion in Iraqi 
oil revenues. However, the sanctions did not prevent Iraq from 
acquiring billions in illegal revenues from these proceeds. Oil 
was smuggled through Syria, Jordan and the Persian Gulf. The 
government levied surcharges of up to 50 cents a barrel against 
oil purchasers. It extracted commissions of 5 to 10 percent 
against commodity suppliers. Based on this information, we 
estimate that the former regime acquired $10.1 billion in 
illegal revenues.
    I would now like to describe the efforts the U.S. has made 
to recover the regime's assets. Led by the Departments of the 
Treasury and State, more than 20 government entities are 
working to locate, freeze and transfer the former regime's 
assets to Iraq. The United States created a new interagency 
coordinating body called the Iraqi Assets Working Group. This 
group is responsible for exploiting financial documents in Iraq 
and engaging the financial community in the hunt for illicit 
assets.
    In addition, the United States has used recently developed 
domestic and international authorities to recover assets. 
Provisions in IEEPA and the Patriot Act allowed the Treasury 
Department to confiscate and vest Iraqi assets. U.N. Security 
Council Resolution 1483 required all members to immediately 
transfer the regime's assets to the Development Fund for Iraq.
    Now, the results of those efforts. Let me caution that we 
have yet to review the reliability of the data that has been 
provided us by the Department of the Treasury and the Coalition 
Provisional Authority. First, in March 2003, the U.S. 
Government took control of or vested $1.9 billion in Iraqi 
assets held in the United States. This process moved quickly 
because the United States had in place the necessary legal 
authorities to vest and transfer the Iraqi assets. The CPA has 
spent the vested assets on salaries for former Iraqi military 
personnel, civil servants and pensioners, and to pay for the 
operations of Iraqi ministries.
    Second, coalition forces and investigators quickly seized 
over $900 million in Iraq between April and May 2003. These 
assets included hard currency, gold and jewelry. The CPA has 
used $752 million of these assets to fund reconstruction 
projects and to purchase liquefied petroleum gas.
    Third, other countries froze $3.7 billion of Iraqi assets 
in compliance with U.N. Security Council resolutions. As of 
March 2004, over 10 countries had transferred $751 million to 
the DFI. Finally, little progress has been made in identifying 
and recovering assets hidden worldwide. While the total amount 
accumulated by the former Iraqi regime is unknown, estimates 
range from $10 billion to $40 billion.
    The United States faces several challenges in its efforts 
to recover Iraq's assets. First, recovering the former regime's 
assets initially was not a high priority in the overall U.S. 
effort in Iraq. By September 2003, as the need for additional 
resources to rebuild Iraq became apparent, the United States 
placed a higher priority on recovering the former regime's 
assets.
    Second, U.S. expectations for the quick transfer of funds 
may have been overly optimistic given the legal capabilities of 
some countries. U.S. officials believed that the U.N. 
resolutions would require other countries to quickly transfer 
Iraqi assets. However, many countries needed to adopt 
legislation to implement the U.N. requirements.
    Furthermore, U.S. officials assumed that frozen assets were 
immune from new claims. However, some countries have delayed 
transferring assets until all claims are settled. Finally, the 
transfer of sovereignty to an interim Iraqi government could 
complicate U.S. efforts to recover the regime's assets. The 
transitional government has yet to conclude agreements on the 
activities of the multinational force, which may include rights 
to continue to interview Iraqi officials and exploit financial 
documents.
    Madam Chairwoman, that completes my statement. Ms. 
D'Agostino and I would be happy to answer your questions.
    [The prepared statement of Joseph A. Christoff and Davi M. 
D'Agostino can be found on page 37 in the appendix.]
    Chairwoman Kelly. Thank you very much.
    Ms. D'Agostino, I am sorry.

STATEMENT OF DAVI D'AGOSTINO, DIRECTOR OF FINANCIAL MARKETS AND 
 COMMUNITY INVESTMENT, UNITED STATES GENERAL ACCOUNTING OFFICE

    Ms. D'Agostino. That was our joint statement.
    Chairwoman Kelly. Yes, Mr. Christoff said that was your 
statement as well. Is that correct?
    Ms. D'Agostino. Yes. We worked on this together.
    Chairwoman Kelly. All right.
    The committee heard testimony last year that the most 
effective way to recover nongovernment assets, that is to say 
the plundered assets that are converted to personal use, but 
held outside the plundered country, might be private lawyers 
acting on behalf of a country pursuing civil remedies, and not 
necessarily a government-led criminal effort. Do you have an 
opinion on that effort? It was carried on a trial basis for the 
U.N. to recover plundered Nigerian assets and I would be 
interested in what your feelings are, whether or not you think 
that might be more effective or as effective, or is it good to 
have the two things running in conjunction with each other?
    Mr. Christoff. Madam Chairwoman, we have not looked into 
that particular option. Certainly, I would say that all options 
are important in trying to recover assets, whether it is an 
option working directly with the countries on an official 
basis, or even working with financial institutions to try to 
get the assets back.
    Chairwoman Kelly. I think maybe we should explore that a 
bit, if you are willing to do that. Would you mind looking into 
that and getting back to us and talking with us about it? It 
might be something that would point up places where we can 
amplify private efforts that are going on out there.
    Ms. D'Agostino, did you have something you wanted to say on 
that?
    Ms. D'Agostino. I am aware that we have interviewed a few 
of the private sector entities that have been involved in 
hunting assets for remuneration. We have information about 
their views, but we have not formed any position of our own 
with respect to that.
    Mr. Christoff. Let's add it to our list. We are completing 
our work for you by May, so we will do that.
    Chairwoman Kelly. If you would add that to your list, I 
would appreciate it.
    It is an accepted fact now that the Saddam Hussein regime 
was demanding kickbacks and deliberately mis-pricing oil sales 
and really manipulated the Oil for Food Program by engaging in 
a lot of illegal sales of oil. Can you tell me what efforts 
were made, if any, by the United Nations to make sure that the 
oil for food sales contracts were actually properly priced and 
that there were no bribes and kickbacks? What did the U.N. do 
about that?
    Mr. Christoff. Let's perhaps put some perspective on what 
the United Nations was required to do. The contracts that we 
are talking about that involved commissions, that involved 
kickbacks, were contracts that under the U.N. Oil for Food 
Program, the Iraqi government was allowed to negotiate directly 
with the purchasers and with the suppliers of the commodities. 
So any types of kickbacks or commissions obviously would not 
have been listed in the specific contracts.
    We do know that those type of kickbacks occurred because 
foolishly some of the contracts had line items that said 
``after sale service charges,'' which were in effect kickbacks. 
Any information that the Oil for Food Program might have had 
about some of these problems was referred to the United Nations 
Sanctions Committee. That Sanctions Committee is made up of the 
same members as the Security Council. So according to the U.N., 
it was incumbent upon the Sanctions Committee to take any 
action on allegations of kickbacks or commissions that they may 
have uncovered.
    Chairwoman Kelly. And they did not, is that correct?
    Mr. Christoff. One interesting point is that some of the 
smuggling that occurred, for example to Jordan, the sanctions 
committee noted the occurrence of the smuggling, but nothing 
was done beyond that.
    Chairwoman Kelly. What about other countries in this 
regard? What have any other countries done to report, to stop 
the kickbacks that were going on, the bribes, the kickbacks, 
the money manipulation? Have you uncovered any attempt by 
countries to try to stop this or report it or do anything to 
stop Saddam Hussein from that sort of evil behavior?
    Mr. Christoff. It was a bit of a double-edged sword because 
many of those countries obviously were the recipients of the 
contracts; the key countries that received the majority of the 
contracts were the United States, Russia and France. So I do 
not think we have any specific information about which of the 
countries on the Security Council did report information. We do 
know that the United States and Great Britain were the 
countries that placed the greatest number of holds on 
contracts. The U.S. placed about $5 billion of holds on 
contracts, mostly concerned about the possibility of dual-use 
goods being part of those contracts.
    Chairwoman Kelly. Were there any holds placed by Russia?
    Mr. Christoff. No.
    Chairwoman Kelly. No holds placed by France or Germany?
    Mr. Christoff. None that I am aware of. Again, 90 percent 
were U.S. The remainders I believe were British.
    Chairwoman Kelly. Thank you.
    I am going to turn now to Ms. Maloney.
    Mrs. Maloney. Thank you, Chairwoman Kelly. Actually, one of 
our bills is on the floor right now on regulatory relief, where 
we worked on the business interest accounts. I am going to go 
down there shortly on that.
    But I want to thank you for holding this hearing. I am 
deeply disturbed by the scandal in the papers involving bribes 
to U.N. officials involved in the Oil for Food Program with 
Saddam Hussein. But my question to GAO is, are you getting all 
the access you need to information? Are the Departments of the 
Treasury and State cooperating with you? Are they imposing 
limits on your ability to complete this study? Do you have 
access to everything you need to do a good study?
    Ms. D'Agostino. Representative Maloney, we have been 
working very closely with the Departments of the Treasury and 
State to get all the information that we need. We have recently 
over the past several weeks achieved accommodation with the 
departments and are going to continue to try to obtain some 
follow-on information after the hearing so that we can finalize 
our report to you, hopefully by the end of May.
    Mrs. Maloney. So you do have access to all the information 
you need.
    Ms. D'Agostino. So far, we believe that we are getting the 
access that we need.
    Mr. Christoff. I am really happy with the cooperation that 
we got over the past two weeks, and I want that to continue 
until our report is issued in May. That is an expectation that 
I hope we all have.
    Mrs. Maloney. There was an article yesterday in one of the 
papers about Saddam Hussein accounts in Jordan, and that they 
were not cooperating in telling our government or anyone who 
was making withdrawals from those accounts. Are you familiar 
with that allegation, with that story? Are you familiar with 
trying to get information on these Jordanian accounts? Have 
they cooperated? The paper said they are not cooperating. Can 
you comment on this?
    Mr. Christoff. I am familiar with it, but I think the 
information that you will get will be in the closed-door 
session.
    Mrs. Maloney. Okay. Thank you.
    Do you have any idea of the scope of the amount of money 
involved in these bribes that were reported in the Oil for Food 
Program?
    Mr. Christoff. Sure. The estimate that we just updated, 2 
years ago we said there was $6.6 billion; it is now $10.1 
billion. It is broken down into two parts; about $4.4 billion 
of that total amount is related to what is referred to as 
surcharges, commissions, in effect, kickbacks, that were 
imposed on purchasers or asked from suppliers. The remaining 
amount, the $5.7 billion, was the smuggling that went through 
the Persian Gulf, Jordan, Syria, and Turkey.
    Mrs. Maloney. Do you believe that money from Saddam Hussein 
that he took from the Oil for Food Program is going to 
insurgents who target U.S. troops in Iraq today?
    Mr. Christoff. No, I do not.
    Mrs. Maloney. You do not. You do not.
    I look forward to the closed-door session and the Jordanian 
accounts.
    Thank you.
    Chairwoman Kelly. Thank you, Ms. Maloney.
    Mr. Ose?
    Mr. Ose. Thank you, Madam Chair.
    I want to go back over a couple of things to make sure I 
understand correctly. It is GAO's conclusions that about $10.1 
billion in oil sale revenue was skimmed off the top.
    Mr. Christoff. $10.1 billion that was either skimmed or it 
was the result of illegal smuggling of oil.
    Mr. Ose. Okay. More accurately, $4.4 billion of skimming 
and $5.7 billion of smuggling.
    Mr. Christoff. Correct.
    Mr. Ose. And that is comprised based on surcharges of up to 
50 cents per barrel or commissions ranging from 5 percent to 10 
percent in the form of surcharges and the like.
    Mr. Christoff. Right. In our analysis, actually, we used 25 
cents per barrel, trying to be a bit more conservative.
    Mr. Ose. Okay. You highlighted Syria, Jordan and 
generically the Persian Gulf as the source or the end-countries 
for this oil.
    Mr. Christoff. Smuggling.
    Mr. Ose. For the smuggling portion of that.
    Mr. Christoff. Correct.
    Mr. Ose. Were there countries beyond Syria, Jordan or the 
Persian Gulf to which this oil was sent?
    Mr. Christoff. The oil ultimately ended up in the 
international market. The conduits for actually getting it out 
of Iraq were through pipeline via Syria; truck over towards 
Jordan and Turkey; and then through the Persian Gulf by ship.
    Mr. Ose. Okay. GAO's position, then, is that the conduits 
for the oil departing Iraq were Syria, Jordan and Persian Gulf.
    Mr. Christoff. Correct.
    Mr. Ose. And the end-users, do you have any evidence as to 
who the end-users of this oil, other than just the generic 
international markets?
    Mr. Christoff. No, not the smuggled.
    Mr. Ose. Okay. Do you have any evidence as to the payola on 
the $4.4 billion worth of revenue that is estimated to be in 
the form of surcharges or commissions?
    Mr. Christoff. The United Nations has all of the contracts. 
At the end of March, there were over 6,000 contracts that were 
pending. All of this information has been turned over the 
Coalition Provisional Authority, so that will list all of the 
pending contracts in terms of the purchasers, as well as the 
suppliers of commodities; who they were; which countries they 
were coming from; and the total amounts.
    Mr. Ose. Some of the press reports I have read indicate 
that certain individuals who are actually associated or 
affiliated directly with the United Nations in one form or 
another were the beneficiaries, either directly or by virtue of 
relationships with corporate entities of having received some 
of these oil shipments. Does GAO have any such information?
    Mr. Christoff. No.
    Mr. Ose. You also talked a little bit about holds on 
contracts. Ms. Kelly touched on this. I just want to make sure 
I go back on this. There were any number of countries with whom 
there were contracts for provision of service to the Hussein 
regime in Iraq; the United States, Germany, France, Russia. 
Were there others?
    Mr. Christoff. Your question again?
    Mr. Ose. You talked earlier about holds on contracts.
    Mr. Christoff. Correct.
    Mr. Ose. And that the United States had placed holds on up 
to $5 billion worth of contracts.
    Mr. Christoff. Correct.
    Mr. Ose. Your earlier testimony was, in answer to Ms. 
Kelly's question, was that no holds had been placed on any 
contracts that you were aware of from Russia, France or 
Germany.
    Mr. Christoff. We will certainly go back and check on that. 
Two years ago when we did this work, 90 percent of the holds 
were U.S.; the remainder were British.
    Mr. Ose. Okay. In terms of the accounts into which money 
from the sale of oil under the Oil for Food Program occurred, 
the funds were placed in custodial accounts in U.S. banks or 
other banks?
    Mr. Christoff. A U.N. escrow account held in Paris.
    Mr. Ose. What bank in Paris controlled the funds?
    Mr. Christoff. The Bank National de Paris.
    Mr. Ose. Paribas?
    Mr. Christoff. Yes.
    Mr. Ose. Okay. Do you have any information as to what sort 
of fees or assessments or rates of return were paid on the 
monies deposited into that account?
    Mr. Christoff. I do not know. As part of the Oil for Food 
Program, however, the United Nations was given approximately 3 
percent of the total oil proceeds that would be for their 
administrative expenses to administer the Oil for Food Program.
    Mr. Ose. My question is, in their custodial nature, the 
U.N. was acting as an escrow or a fiduciary and they were 
placing funds into BNP Paribas in Paris.
    Mr. Christoff. Right.
    Mr. Ose. Was that an interest-bearing account?
    Mr. Christoff. I do not know. We can check on that.
    Mr. Ose. I see my time has expired. Thank you.
    Chairwoman Kelly. Thank you. That was an interesting line 
of questioning and I hope we can get some answers.
    It just kind of blew me away there when you said 3 percent 
of the Oil for Food Program monies were siphoned off by the 
United Nations?
    Mr. Christoff. No, no, no. Not siphoned off.
    [Laughter.]
    Chairwoman Kelly. Let me understand this.
    Mr. Christoff. Yes, please. That was part of the 
arrangement in establishing the Oil for Food Program, to 
administer the program as part of the agreement, 72 percent of 
the oil sales went to Iraq to be used for purchases; 3 percent 
was overhead to allow the United Nations to administer the 
program; and 25 percent was returned to Kuwait as part of war 
reparations.
    Chairwoman Kelly. Thank you. I appreciate that clarity. I 
also appreciate the very direct manner in which you have 
answered our questions with facts. It is refreshing to have 
someone here that does not dissemble; that just says what it 
is. I appreciate that.
    The Chair notes that some members may have additional 
questions for this panel, which they may wish to submit in 
writing. So without objection, the hearing record will remain 
open for 30 days for the members to submit written questions to 
these witnesses and to place their responses in the record.
    Mr. Ose. Madam Chair, if I may? I want to follow up on the 
line of questioning you just brought up for a moment.
    Chairwoman Kelly. Could you do that please in the closed 
session?
    Mr. Ose. Certainly.
    Chairwoman Kelly. Thank you.
    This hearing is adjourned.
    [Whereupon, at 11:39 p.m., the subcommittee was adjourned.]


                            A P P E N D I X



                             March 18, 2004


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