$800m reported stolen from Iraq in corrupt arms deals

NEW YORK -- Iraq's former finance minister alleged in a US television report aired yesterday that up to $800 million meant to equip the Iraqi army had been stolen from the government by former officials through fraudulent arms deals.

The former minister, Ali Allawi, told CBS's "60 Minutes" that $1.2 billion had been allocated to the defense ministry to buy new weapons. About $400 million was spent on outdated equipment, while the rest of the money was simply stolen, he said.

Allawi called the fraud "one of the biggest thefts in history" and said that corrupt former Iraqi officials are now "running around the world hiding and scurrying around."

During the CBS report he did not name the officials who allegedly stole the money . But Iraqi investigators are probing several weapons and equipment deals engineered by former procurement officer Ziad Cattan and other officials including former defense minister Hazim Shaalan.

Most of the fraudulent arms purchases were allegedly made during the term of the former interim prime minster, Ayad Allawi, who took office after occupation authorities turned over sovereignty to Iraqis on June 28, 2004. When new Defense Minister Saadoun al-Dulaimi took office in May 2005, an investigation was opened into several alleged cases of corruption.

Tapes obtained by "60 Minutes" from a former associate of Cattan allegedly captured Cattan talking about paying large bribes to Iraqi officials.

Cattan, wanted by Iraqi authorities and living in Paris, was interviewed in the same "60 Minutes" broadcast and said he can account for the hundreds of millions he used to buy weapons.

"I have documentation. I give it to you in your hands," Cattan said.

He said the tapes, excerpts of which were played on the broadcast, had been doctored and were not authentic.

Experts at Jane's, a leading authority on military hardware, told "60 Minutes" the documentation Cattan provided did not prove whether any of the weapons he ordered -- paid for in advance -- had been delivered to Iraq.

Judge Radhi al-Radhi, chief of Iraq's Public Integrity Commission, told "60 Minutes" he had obtained arrest warrants for some top defense ministry officials in October 2005, and almost all of the suspects fled the country.

Radhi said the arms that did make their way to Iraq -- Soviet-era helicopters, bulletproof vests, and ammunition -- were in such poor shape they could not be used.

Radhi said those accused of the fraud are thought to be hiding mostly in Europe and the Middle East but he is not receiving help from countries there in recovering any of the money or in apprehending the suspects.