Scotland Yard is in talks with prosecutors about launching a full criminal investigation into the United Nations (UN) oil-for-food scandal and its possible links to Britain.
For the past year, the Serious Fraud Office (SFO) has been looking into whether to launch its own inquiry on the back of two American-based reports which criticised the oil-for-food (OFF) programme for being riddled with corruption and mismanagement.
Thanks to a promise of £22m funding by the Treasury it has now decided to investigate the humanitarian aspects'' of the OFF scheme.
The highest profile British figure mentioned in the US documents was George Galloway, leader of the anti-Iraq war Respect Party, over claims he received more than 18 million barrels of oil to fund his campaign against Iraq sanctions.
In May 2005, the MP for Bethnal Green and Bow famously testified before the US Senate investigations sub-committee and vehemently denied any wrongdoing. He declared: "I have never seen a barrel of oil, never bought one, never sold one, and neither has anyone on my behalf."
The US-based investigations also detailed alleged banking evidence that Amineh Abu Zayyad, the back bencher's estranged wife, and the Mariam Appeal, his £1m political fund, received large sums from Saddam Hussein via under-the-counter oil allocations.
Again, Mr Galloway forcefully denied the claims as has Ms Zayyad, a 40-year-old scientist and former lecturer at Glasgow University. She said: "I have never solicited or received from Iraq or anyone else any proceeds of any oil deals, either for myself or for my former husband."
However, the general spotlight on the OFF programme appears undimmed.
Last night, the SFO revealed it had received a promise of £22m from the Treasury to launch a full-scale inquiry into allegations of corruption in relation to the provision of humanitarian services to Iraq under the OFF programme.
A SFO spokesman said the agency had, with the support of Attorney General Lord Goldsmith and thanks to the Treasury money, decided to "take on an investigation just a matter of days ago, looking at the OFF programme relating to humanitarian aspects".
He explained this would consider allegations of "underlying fraud" in relation to contracts, say, for the building of bridges and the provision of medical supplies. The spokesman noted how the Volcker report had references to around 70 British organisations which were linked to the provision of humanitarian aid.
However, he made clear the Mariam Appeal, currently the subject of an investigation by the Charity Commission, was not one of them.
The spokesman explained that the second part of the SFO's preliminary inquiries had now passed to the Metropolitan Police.
"The Met are in discussion with the Crown Prosecution Service (CPS) and are seeking their advice. We are considering a request to investigate the matter. We are not investigating at this time", a spokeswoman for Scotland Yard said.
She also revealed discussions with the CPS involved the 1977 Criminal Law Act and how it related to a potential breach of the UN sanctions.
She highlighted two possible offences - "making funds available to the Iraqi regime without a licence granted by the Treasury" and "facilitating" the availability of such funds.
The spokeswoman would not say who made the request for the Met to consider a full investigation or what or who might be investigated.
A CPS spokeswoman confirmed it was in contact with Scotland Yard about the OFF programme but stressed it "won't be discussing the nature of these discussions at this stage".
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