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House lawmakers to subpoena Fed bank

Probe tracks $20 billion in Iraqi oil money

From Paul Courson

Bremer: Iraq comments hindsight
• Interactive: Who's who in Iraq
• Interactive: Sectarian divide
Federal Reserve
Halliburton Company
Accounting and Audits

WASHINGTON (CNN) -- What began as a congressional hearing on a U.N. oil-for-food program during Saddam Hussein's regime has become an effort to investigate whether the Bush administration properly handled a postwar program involving $20 billion in Iraqi funds.

A House panel plans to send a subpoena Wednesday to the Federal Reserve Bank of New York, seeking documentation of the money flow through the Development Fund for Iraq, managed by the postwar Coalition Provisional Authority led by Bush appointee L. Paul Bremer.

The fund was a successor to the U.N. aid program and was run by the United States from November 2003 until June, when Iraq's interim government took control.

Separately, panel Chairman Rep. Chris Shays, R-Connecticut, and ranking Democrat Rep. Henry Waxman of California have signed and sent a letter to the Pentagon asking Defense Secretary Donald Rumsfeld about the management of Iraqi oil revenue during the same time frame, including the activity of contractors involved with the sale, transport and measurement of crude oil.

The contractors include Halliburton Co., once led by Vice President Dick Cheney.

The two developments sprang from opening remarks by Waxman at a hearing Tuesday of the national security subcommittee of the House Government Reform Committee. The subcommittee has been exploring whether U.N. sanctions imposed on Saddam were undercut by the world body's humanitarian aid to Iraq, known as the oil-for-food program.

Waxman said he supported that probe but added that "our first priority should be to investigate our own conduct," referring to the Development Fund for Iraq.

He then expressed concern that "the Bush administration failed to properly account for Iraqi funds" coming through the program, according to independent auditors and the CPA's inspector general.

Waxman's office Wednesday said nearly $9 billion was unaccounted for as the Iraqi interim government came into office.

The Democrat on Tuesday moved to ask the panel to issue subpoenas to Rumsfeld and the Federal Reserve since, in his words, "the Bush administration is now actively blocking efforts to account for these funds."

Shays, while declining to accept Waxman's suggestion of wrongdoing, agreed there is merit in obtaining more information. The Federal Reserve of New York, a banking agent for the fund, had asked for a "friendly subpoena" that would satisfy nondisclosure requirements.

Shays and Waxman agreed to that subpoena, but the Republican said the panel should first try a letter to Rumsfeld, asking for information at issue. If the letter fails to achieve that, Waxman said, he has obtained assurances Shays would follow through with a possible subpoena.

The letter to Rumsfeld carries a deadline to respond by November 5 and seeks information on a dozen matters, including Halliburton's activities, bookkeeping for Iraqi oil revenue, production and exports, financial accounting for the Development Fund for Iraq and documents related to audits and performance reviews for that fund.

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