BRITAIN’S intelligence agencies have been ordered by the prime minister to look into alleged French profiteering from the discredited United Nations scheme which allowed Saddam Hussein’s regime to sell oil in return for food.

Intelligence sources say both MI5 and MI6, the home and overseas spy agencies, are gathering information on French businesses which benefited from the scheme.

It is understood that Tony Blair is keen to discover whether the French government’s strong opposition to the Iraq war may have been partly to defend its businesses’ financial links with Saddam’s regime.

At the centre of the intelligence service’s inquiries is likely to be BNP Paribas, the French bank which administered the programme on behalf of the UN.

More than $40 billion (£22 billion) of Iraqi oil money passed through the bank’s New York branch in the six years before the war. The contract was originally handled by BNP bank before it merged with Paribas, another French bank, in 2000.

The UN oil-for-food programme allowed Saddam to trade oil to buy food and other humanitarian supplies.

The reputation of the programme has been undermined by a string of allegations that bribes and backhanders were routinely paid to Saddam and his henchmen for oil contracts. Saddam is also alleged to have used the oil-for-food scheme to “buy” political influence around the world.

Such is the controversy that the UN, the US Senate and the Iraqi government are all carrying out their own inquiries into how the oil money was used.

The intelligence gathered by British spy agencies may also be used to influence UN reforms which are being discussed following the fallout from the war in Iraq.

A source said: “Tony Blair wants to demonstrate and understand the forces behind decisions in the security council to prevent problems in future. The whole mechanism of the UN oil-for-food scheme was a wonderful economic opportunity for some countries.”

In answer to a recent parliamentary question about the oil-for-food scheme, Blair said: “One thing that will happen under the new Iraqi government is that there will be a great uncovering of what took place. It will be very educative to allow people to see just how much corruption there was inside Iraq and to see the links between what happened inside Iraq and outside.”

The role of BNP Paribas has recently come under increased scrutiny. Last week, investigators for the Manhattan district attorney were in London making inquiries. The district attorney has launched a criminal investigation into alleged “improper banking practices” at BNP Paribas over the oil-for-food accounts.

The bank was responsible for issuing “letters of credit” to guarantee payments by companies, governments and individuals trading with Iraq through the UN scheme. It also converted the money between different currencies and invested the deposits which funded the oil-for-food deals.

The size of the funds flowing through the bank would potentially have made the contract extremely profitable and the UN would have been one of the bank’s biggest customers, according to accountants.

Documents unearthed in Baghdad and interviews with officials at the Iraqi central bank since the fall of Saddam have raised serious questions about the conduct of some officials in the French bank.

When the oil-for-food programme began, the UN provided the central bank with internal audit reports for the first phases of the scheme. One insider said: “These reports raised serious questions about what had happened to interest earned on the account, what exchange rates the bank was offering on currency transactions and whether the money was being efficiently handled.”

By 2000 the Iraqis had become so concerned that they asked the UN for the money to be split among several banks, but the organisation vetoed the plan. Investigators are now trying to determine if BNP Paribas acted improperly or whether political pressure was brought within the UN to ensure that it kept the contract.

Separately, the US Congress has subpoenaed all records on the bank’s UN accounts for its own inquiry. The bank says that it was simply acting on UN orders. The new Iraqi government is also attempting to ascertain exactly what happened to the oil-for-food cash.

Yesterday BNP Paribas declined to comment on the specific allegations but said: “Under its contract with the United Nations, BNP Paribas provides non-discretionary banking services to the oil- for-food programme and in so doing acts upon the instructions of the UN.

“It is understandable, given the publicity surrounding the UN oil-for-food programme, that US authorities would wish to understand details about the programme. As is customary, BNP Paribas will fully co- operate with the authorities.”

A spokesman for the UN said: “We have an independent investigation looking into all the allegations. We have no objections to BNP Paribas releasing documents to those who have subpoenaed the information.”

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