UN accuses Galloway and the Weir Group

• Glasgow-based Weir group accused of paying Saddam for oil

• Foreign and Commonwealth Office warns prosecutions could follow

Key quote

"I have never solicited nor received money from Iraq for our campaign against war and sanctions. I have never seen a barrel of oil, never owned one, never bought one, never sold one." - George Galloway

Story in full THE controversial MP George Galloway and one of Scotland's leading companies were last night facing the threat of prosecution after they were named in a devastating United Nations report into the Iraq oil-for-food scandal.

The report identified Mr Galloway as a political beneficiary of the oil-for-food programme and concluded that thousands of pounds from companies involved in oil deals with Saddam Hussein's regime were paid into the Mariam Appeal which Mr Galloway chaired and which funded his anti-sanctions campaigning.

It accused the Glasgow-based engineering company Weir Group of paying $4.5 million in kickbacks to Saddam's regime in return for contracts, and of refusing to co-operate with the inquiry.

Last night the Foreign and Commonwealth Office warned that prosecutions could follow. The report would be forwarded to HM Revenue and Customs, the Charity Commission and the parliamentary committee on standards.

A Foreign Office spokesman said: "We welcome the work of the Independent Inquiry Committee (IIC). The Foreign Secretary assured the foreign affairs committee that any allegation of wrongdoing by UK individuals or entities would be passed to the relevant UK authorities.

"The government has consistently advised British companies against any payments to or from Iraq outside of the oil-for-food programme."

The Crown Office also said it would consider any allegations of criminality which came within its jurisdiction.

The final report of the UN-backed investigation published yesterday found about 2,200 companies in the $64 billion UN oil-for-food programme, including DaimlerChrysler, Siemens and Volvo, paid a total of $1.8 billion in kickbacks and illicit surcharges to Saddam's government. The investigating committee, led by former US Federal Reserve chairman Paul Volcker, strongly criticised the UN Secretariat and Security Council for failing to monitor the programme.

"The programme left too much initiative with Iraq," the report said. "It was, as one past member of the council put it, a compact with the devil".

The oil-for-food programme was one of the world's largest humanitarian aid operations, running from 1996-2003. It allowed Iraq to sell oil, provided most of the money went to buy humanitarian goods. It was launched to help ordinary Iraqis cope with UN sanctions.

But Saddam, who could choose the buyers of Iraqi oil and the sellers of humanitarian goods, corrupted the programme by giving contracts to - and getting kickbacks from - favoured buyers.

George Galloway has strenuously denied making money from the scheme. When allegations were levelled at him he stated: "I have never solicited nor received money from Iraq for our campaign against war and sanctions. I have never seen a barrel of oil, never owned one, never bought one, never sold one."

But the report listed Mr Galloway under "other political beneficiaries". It said that "over 18 million barrels of oil were allocated either directly in the name of George Galloway... or in the name of one of his associates, Fawaz Abdullah Zureikat... to support Mr Galloway's campaign against the sanctions."

It detailed how Mr Zureikat made payments into the Mariam Appeal.

The report noted that the appeal received at least 434,000 from Mr Zureikat. It reported that Iraqi officials identified Mr Zureikat as acting on Mr Galloway's behalf to conduct oil transactions.

It included an allegation that Mr Galloway discussed the workings of oil sales in Baghdad with an oil trader who encouraged the former Glasgow MP to seek an oil allocation, though it noted Mr Galloway had dismissed this as a "cock and bull story".

The 630-page report also provided evidence that Weir Group made $4.5 million of secret payments to Saddam's regime.

Copies of contracts signed by Weir employee Andrew Macleod were produced in response to the firm's claims that secret payments were made via an agent.

The report said: "Despite Weir's insistence that its agent was to blame and there was no agreement by its own employees, documents obtained ... from Iraq reveal Mr Macleod signed several agreements to pay kickbacks on Weir's behalf."

The committee also interviewed the agent used by the Weir Group, who said the company was aware of the "illegal nature of the payments it made".

Mr Macleod told the committee: "I did as I was told ... I did what was required in Baghdad".

Mark Selway, chief executive of the Weir Group International, said the naming of his company was "not new news".

He said: "We tightened controls. The problem has been cleared up."