SADDAM HUSSEIN rewarded Russia with oil for protecting Iraq from key British and American initiatives in the United Nations Security Council, US Senate investigators report today.

The Senate Permanent Sub-committee on Investigations found evidence that the Russian Presidential Administration and the political party that backs President Putin were among those who were paid off with oil allocations in what Iraqi officials knew as the “Saddam Bribery System.”

At one point, Saddam gave Russia additional oil and food contracts under the UN’s Oil-For-Food scheme, specifically to “show gratitude” to Moscow for vetoing a plan by the United States to crack down on cross-border smuggling by Iraq, the report says. Russia was also rewarded for derailing a British and American plan to restrict Iraqi oil sales to an approved list of recognised oil traders, the report says.

Taha Yassin Ramadan, Saddam’s Vice-President. told investigators last month that the pro-Putin Unity Party, now known as United Russia, got the largest number of allocations in Russia because it dominated parliament and was the President’s main support base.

Tariq Aziz, the former Iraqi Deputy Prime Minister, said that the party had received so many allocations because Moscow was taking positions favourable to Iraq in the UN Security Council.

Russia received about 30 per cent of all Iraqi oil contracts, although virtually no Iraqi oil ended up in Russia. Instead, Russians traded their lucrative contracts for profit.

Investigators found that the Russian Presidential Administration, which is responsible for devising policy and drafting presidential decrees, was allocated 90 million barrels of oil by Iraq. Iraqi documents name Alexandr Voloshin, its powerful head, and Sergei Issakov, his close confidant. Mr Voloshin resigned in late 2003 in a move widely seen as being linked to the legal assault on Yukos, the oil company.

“The sub-committee estimates that $2,982,984.28 [£1.6 million] was ultimately paid to the benefit of the Russian Presidential Council, through either Sergei Issakov or the former head of the council, Alexandr Voloshin,” the report concludes. Neither Mr Voloshin nor Mr Issakov was available to comment.

Five of the presidential administration’s nine oil allocations were allegedly handled by Bayoil, an American company. David Chalmers, its owner, was indicted last month, with John Irving, a Briton, and Ludmil Dionissiev, a Bulgarian, for paying illegal kickbacks to Iraq. All three deny the charges.

• George Galloway, the MP for Bethnal Green & Bow, will tell US senators tomorrow that the evidence against him in the Oil-for-Food scandal was faked by the CIA. Mr Galloway has been told that he risks up to five years in prison if he lies under oath to the Senate’s 13-member Permanent Subcommittee on Investigations.

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