* Iraq says companies conspired with Saddam Hussein regime
* Citizens said to be deprived of food, medicine, supplies
* Kickbacks, surcharges found in 2005 report led by Volcker
NEW YORK, Feb 6 (Reuters) - A U.S. judge on Wednesday
dismissed Iraq's lawsuit accusing dozens of companies of
conspiring with Saddam Hussein's regime to frustrate the United
Nations' oil-for-food program, and depriving Iraqis of roughly
$10 billion of essential aid.
U.S. District Judge Sidney Stein in Manhattan said the
government of Iraq could not recover damages and other remedies
under an anti-racketeering law because most of the wrongful
conduct took place in foreign countries.
He also said Iraq failed to allege the companies' conduct
was a key reason for the injury, and that laws governing
sovereign nations did not let the current government escape
responsibility for Hussein's abuses.
"The court rejects Iraq's view that it may sidestep
responsibility because the conduct was illegal or the actors
held power illegitimately," he wrote.
More than 90 companies, subsidiaries and affiliates were
named as defendants in the 2008 lawsuit over the $64.2 billion
oil-for-food program, which ran from 1996 to 2003.
Among them were French bank BNP Paribas SA, which
administered a U.N. escrow account for the program; Swiss
engineering company ABB Ltd ; Dutch chemicals company
Akzo Nobel NV ; U.S. oil company Chevron Corp ;
German automaker Daimler AG ; British drugmaker
GlaxoSmithKline Plc , and German electronics
company Siemens AG.
"It is clearly the right decision," said Robert Bennett, a
lawyer representing BNP Paribas. "I am enormously pleased."
Lawyer James Gillespie, representing ABB, said Stein
"followed the arguments in the defendants' papers very closely,
and in our view correctly applied the law."
Christian Siebott, a lawyer representing Iraq, did not
immediately respond to requests for comment.
SURCHARGES AND KICKBACKS
The U.N. program let Iraq sell oil to finance the purchase
of food, medicine and other goods for citizens hurt by
international trade sanctions.
Many of the current government's allegations had been drawn
from a scathing October 2005 U.N. report by a panel led by
former U.S. Federal Reserve Chairman Paul Volcker.
According to the report, Iraq had sold $64.2 billion of oil
to 248 companies under the oil-for-food program, while 3,614
companies sold $34.5 billion of humanitarian goods to Iraq.
Oil surcharges were paid in connection with the contracts of
139 companies, and humanitarian kickbacks in connection with the
contracts of 2,253 companies, the report said.
RACKETEERING ALLEGED
In its lawsuit, Iraq said the Hussein regime defrauded the
program by selling oil at below-market prices in exchange for
kickbacks, and paying too much for food and medicine in exchange
for side payments.
It said the defendants' involvement deprived Iraqi citizens
of essential supplies that should have been paid from the escrow
account.
While noting the parties' agreement that Hussein had been
responsible for the alleged injustices, Stein rejected Iraq's
effort to hold corporate defendants liable under the federal
Racketeer Influenced and Corrupt Organizations Act, or RICO.
The judge said the alleged racketeering took place outside
the United States, even though the United Nations is
headquartered in New York, and that applying RICO to such
"extraterritorial" activity would be improper.
Stein also rejected Iraq's effort to recover under the
Foreign Corrupt Practices Act, saying federal law does not
afford a private right of action.
Hussein lost power in 2003 and was executed in 2006.
The case is Iraq v. ABB AG et al, U.S. District Court,
Southern District of New York, No. 08-05951.