Weir faces blacklisting for 'Saddam payments

Engineering group Weir could be blacklisted by the Government's exports agency after becoming embroiled in controversy over possible kickbacks paid to Saddam Hussein's regime.

A ban by the Export Credits Guarantee Department (ECGD) would hinder attempts by the Glasgow-based company to secure lucrative contracts in potentially unstable parts of the world.

The threat comes less than a fortnight after Weir admitted that its Dubai subsidiary had made irregular payments of £4.2 million to an agent in relation to contracts the company had been awarded in Iraq in 2000. Weir has not yet discovered where the money went but is unable to rule out the possibility that it was funnelled to Saddam's regime in illicit kickbacks.

The revelations are likely to expose the firm to the scrutiny of the ECGD, which provides insurance to British companies involved in potentially risky export sales.

A spokeswoman for the agency said it would not be investigating the case until Weir next applied for cover. However she confirmed that any company found to have paid bribes would face an automatic ban.

'According to our rules, past involvement in corruption is a prima facie reason to refuse cover,' the spokeswoman said. 'We would take into account factors such as what remedial action the company took.'

Weir stressed yesterday that no conclusive evidence of corruption had been uncovered. The company has commissioned law firm Herbert Smith to investigate the irregular payments, but that review is still going on and its recent disclosures were based only on the interim findings.

A spokeswoman for Weir declined to comment yesterday on a possibile ECGD ban, but said the company had not applied to the agency for help for several years.

The Weir contracts at the centre of the controversy were not backed by the agency but secured as part of the UN-approved 'oil for food' programme, which lifted sanctions against Iraq to allow the country to import goods and services with a humanitarian purpose. Weir was contracted to help maintain oil and water installations.

The 'oil for food' programme has been widely criticised: the UN general accounting office concluded that Iraqi officials skimmed over £2.2 billion from the scheme.