The Senate Permanent Subcommittee on Investigations will refer the Respect Party MP for possible prosecution after concluding that he gave “false and misleading” testimony at his appearance before the panel in May.

The sub-committee claimed that, through intermediaries, Mr Galloway and the Mariam Appeal were granted eight allocations of Iraqi crude oil totalling 23 million barrels from 1999 to 2003.

It will also forward the new information to British authorities, saying it raised questions about Mr Galloway’s financial disclosure and the payment of illegal kickbacks to Iraq. “We have what we would call the smoking gun,” said Senator Norm Coleman, the sub-committee’s Republican chairman.

The sub-committee’s report, released today, was provoked by Mr Galloway’s clash with the senators — which he turned into a book entitled Mr Galloway goes to Washington. In that encounter, the anti-war MP vehemently denied receiving oil allocations from Iraq.

But the report provides bank account details tracking payments from an oil company through a Jordanian middleman to Mr Galloway’s nowestranged wife, Amineh Abu- Zayyad, and his Mariam Appeal fund.

“Galloway was anything but straight with the Congress. He was anything but straight with the American people. There was a lot of bombast. There was a lot of sound and fury signifying nothing,” Senator Coleman said. “We take very seriously the importance of testifying honestly before this committee . . .” he said. “We will forward matters relating to Galloway’s false and misleading statements to the proper authorities here and in Great Britain.”

A Senate aide said that Mr Galloway would be referred to the Justice Department for investigation of possible perjury, false statement and obstruction of a congressional proceeding — all “Class A” felonies carrying a sentence of up to five years and a $250,000 fine.

The report says the Jordanian middleman Fawaz Zureikat, a close friend of Mr Galloway and his representative in Baghdad, funnelled $150,000 from Iraqi oil sales to Mr Galloway’s wife and at least $446,000 to the Mariam Appeal. On the same day Mr Zureikat also paid $15,666 to Ron McKay, Mr Galloway’s spokesman. Mr McKay could not be contacted for comment last night.

The saga dates back to Mr Galloway’s Big Ben to Baghdad tour in September 1999 when he took a red double-decker bus to Iraq. An anonymous “oil trader 1” told the Senate investigators that Mr Galloway asked him at the Rashid Hotel, during the tour, how to translate oil allocations into money.

Another individual, known as “oil trader 2”, told the investigators that he learnt in summer 2000 that the Iraqi Government had granted an allocation of oil to someone represented by Mr Zureikat. Oil trader 2 said: “At that time I knew that the individual that Zureikat represented was a British official named George Galloway.”

He added: “Officials of the Iraqi State Oil Marketing Organisation confirmed to me that Mr Zureikat represented Mr Galloway in the sale of Galloway’s allocations of Iraqi crude oil.”

He also told investigators: “The fact that Mr Zureikat represented Mr Galloway with respect to oil allocations and other business in Iraq was common knowledge, understood by many oil traders with whom I had regular contact.”

The investigators spoke to Tariq Aziz, the former Deputy Prime Minister of Iraq, who told them that Mr Galloway asked him for political funding in allocations in the name of Mr Zureikat. The Senate report shows that Mr Zureikat received $740,000 from Taurus Petroleum on July 27, 2000, as commission for its purchase of 2,645,068 barrels of oil.

The report then reproduces money-transfer documents from Citibank showing that Mr Zureikat sent Mr Galloway’s wife $150,000 on August 3, 2000. They conclude that the amount was “largely” Oil-for-Food money because Mr Zureikat’s account contained $848,683 at the time, only $38,000 of which did not come from the programme.

Mr Galloway accused Senator Coleman last night of using congressional privilege to attack and smear him.

He said: “I’ve already comprehensively dealt with these allegations — under oath in the High Court and the US Senate — to the Charity Commission and in innumerable media inquiries.”

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