India to probe FM's alleged links to Iraqi oil-for-food scandal

NEW DELHI, Friday (AFP) - The Indian government promised to probe reports that its foreign minister and the ruling Congress party secretly benefited from shady deals linked to the UN oil-for-food programme for Iraq.

Prime Minister Manmohan Singh's office described as "unverified" references to Foreign Minister Natwar Singh and the Congress party in an October 27 report by former US Federal Reserve chairman Paul Volcker, who probed the scandal.

"The government is deeply concerned about the unverified references made in the Volcker Committee report to the Congress party and Singh," said a statement by the premier's media advisor Sanjaya Baru.

"The Volcker committee report, as it stands today, is insufficient to arrive at any adverse or definitive conclusion.

"Therefore, the government is determined to go to the root of the matter and establish the truth or otherwise of these references.

"The matter is under the serious consideration of the government and a decision will be announced shortly," it added.

The Volcker report said it found that Saddam Hussein's regime manipulated the programme to extract about 1.8 billion dollars in surcharges and bribes, while an inept UN headquarters failed to exert administrative control.

The government's statement came amid strident demands from opposition parties as well as allies of Singh's Congress party to clear up the issue ahead of parliament's winter session starting next month.

The main opposition Bharatiya Janata Party (BJP) called for the foreign minister's resignation after Volcker named him as a non-contractual beneficiary of four million barrels of oil allotted to a firm named Masefield AG.

"It is bad enough that the minister who represents India in world affairs is implicated in a murky international scandal and what compounds the offence is that he continues to remain foreign minister with your full backing", BJP general secretary Arun Jaitley said in a letter to the premier Thursday.

The Congress party, India's oldest political entity, is listed as beneficiary of a separate allotment of four million barrels of oil as part of the transactions.

The party, smarting under opposition demands for Singh's scalp, meanwhile said it was mailing a "comprehensive legal notice" to the United Nations to demand a full disclosure of the Volcker committee report.

"And failing disclosure of the relevant material, the Congress party demands an unconditional apology for wrongly and maliciously making a reference to it," the party said in a statement.

According to the 500-page report, 139 companies paid illegal oil surcharges to Baghdad and 2,253 firms gave Saddam's regime kickbacks on humanitarian-related goods shipped to Iraq.

Foreign Minister Singh has denied any wrongdoing and said the allegations were aimed at discrediting his ruling party, which had friendly ties with Baghdad until 2003 when US-led forces toppled the Iraqi regime.

On Thursday The Indian Express newspaper published details of various trips made by the foreign minister's son, Jagat Singh, to Jordan and Iraq, which it said coincided with large deposits made by an Indian into an Amman-based bank.