Aide says McDermott wasn't aware of Saddam link

Congressman Jim McDermott this week returned a $5,000 contribution made to his legal defense fund by an Iraqi-American businessman who has admitted to financial ties with Saddam Hussein's regime.

Shakir al-Khafaji, a Detroit-area businessman who had been active in the anti-Iraq-war movement and who accompanied McDermott, D-Seattle, on his highly publicized trip to Iraq in 2002, acknowledged to the Financial Times of London this week that he received lucrative vouchers for Iraqi oil from Saddam's government.

The oil-voucher story surfaced in January, when a Baghdad newspaper published what it said was an Iraqi government document naming 270 recipients of oil vouchers from around the world. Al-Khafaji was one of two Americans on the list, which included French, British and Russian political and business leaders and many prominent opponents of the war.

In 2002, Al-Khafaji accompanied McDermott and Reps. Mike Thompson, D-Calif., and David Bonior, D-Mich., on a trip to Iraq, during which McDermott gained national attention for criticizing President Bush and calling for an alternative to war.

After the trip, Al-Khafaji donated $5,000 to McDermott's legal defense fund set up by the congressman to pay expenses from an unrelated lawsuit.

A nonprofit organization, Life for Relief and Development, paid McDermott's $5,510 travel expenses for the Iraq trip, according to a disclosure form filed with the House clerk. Al-Khafaji has been named as a financial supporter of the organization, though the extent of his support is not known. The group says it ships humanitarian aid, including food and medicine, to Iraq.

Mike DeCesare, McDermott's spokesman, said the congressman was spending "private time" with his family yesterday and would not be available to comment.

DeCesare said McDermott decided to return the contribution immediately upon hearing of the Financial Times report this week. He said McDermott was unaware of al-Khafaji's business dealings with the Iraqi government at the time of his trip to Iraq.

"They met literally for the first time on that trip. They did not know each other prior to that," DeCesare said, adding that McDermott's opposition to the war in Iraq remained as strong as ever.

Bert Sacks, a Seattle activist who accompanied McDermott on the Iraq trip, said al-Khafaji appeared to have contacts within the Saddam government and helped arrange for them to travel to various sites in the country and meet with top government officials. But Sacks said the trip would have happened anyway.

"This trip did not come about because of this man's initiation. It was going to happen whether or not he was involved," Sacks said.

Al-Khafaji could not be reached for comment at his home or at his business yesterday.

Corruption in the Iraqi oil-for-food program, which before the war was operated by the United Nations, is now the subject of multiple investigations by Congress, the United Nations and the Iraqi governing council.

In addition to the oil vouchers, there have been reports of kickbacks paid to Saddam and his allies for the right to do business in the country.

Saddam's regime skimmed more than $10 billion in illegal revenues from the oil-for-food program between 1997 and 2002, according to a report this month by the General Accounting Office, the investigative arm of Congress.

The oil vouchers, which could be sold to international traders for cash, were part of an apparent effort by Saddam's regime to influence foreign political leaders and business officials to secure support for the regime, said Nimrod Raphaeli, a senior analyst for the Middle East Media Research Institute, which monitors and translates Arab-language newspapers.

Use of vouchers also could have allowed Saddam's government to purchase goods, including weapons, in violation of U.N. sanctions against Iraq, he said.

Al-Khafaji also paid $400,000 to finance a documentary film by former U.N. weapons inspector Scott Ritter that was highly critical of the U.S. government's stance toward Iraq. Ritter has stated he knew nothing of al-Khafaji's connections to oil money.

Al-Khafaji, who owns a real-estate development business, also contributed to the campaigns of Bonior and U.S. Rep. John Conyers, also a Michigan Democrat. Bonior has since left Congress.

Some commentators already have seized upon the connection between anti-war Democrats and al-Khafaji.

Wall Street Journal editorial writer Robert Pollock slammed Ritter, McDermott and the other Democrats connected to al-Khafaji in a column titled "Saddam's Useful Idiots" last month.

The oil vouchers that al-Khafaji received gave him the rights to 1 million barrels of oil, according to the government documents cited by al-Mada, the Baghdad newspaper.

Al-Khafaji told the Financial Times that he sold the vouchers to an Italian executive who then resold them to a Houston oil-trading company. The newspaper estimated the deal was worth $1.1 million to al-Khafaji.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com

Alex Fryer of the Times' Washington bureau contributed to this report.