Turkey denies Saddam money deposited in Turkish banks

"The allegations are not true," Gul told reporters at Ankara’s Esenboga Airport, prior to his departure for Germany for an official visit.

He was referring to claims in a report which, according to Turkish media reports, was prepared by a special advisor to the U.S. Central Intelligence Agency (CIA) and presented to Congress.

The report by Charles Duelfer said Turkish authorities had signed a protocol in 2000 with Iraq under which it sold oil to Turkey at a favorable price as part of the Oil for Food program. The money obtained from the sale of oil was deposited in state-owned Halkbank, according to the report.

By January 2004, the amount of money deposited in the Halkbank account totalled $157 million, the report said.

"There was border trade between Turkey and Iraq at that time that was well known to everybody," Gul said. He said the money in the account was in exchange for goods sold to Iraq as part of that trade by Turkish companies.

It said Turkish State Minister Kursad Tuzmen and then Iraqi Oil Minister Amir Rashid Muhammad al-Ubaydi headed talks between Turkey and Iraq on the protocol. Under the deal, Iraq agreed to sell each barrel of oil six dollars cheaper than the price set for the Oil for Food program.

That cheap price encouraged Turkey to implement the protocol until the start of the U.S.-led war on Iraq in 2003. Under the protocol, Iraq allowed the sale of 2.75 million tons of crude oil to a number of Turkish companies in 2000.

Between 2000 and 2003, the Iraqi regime managed to gain $710 million out of the oil sale to Turkey under the protocol, the report said.

Turkey suffered significant losses as a result of the U.N. embargo on Iraq, which was imposed following the first U.S.-led war on Iraq in 1991 and lifted after the second war that toppled Saddam Hussein in 2004.

Turkish drivers transporting goods to Iraq and U.S. forces deployed there are finding it increasingly difficult to do business in Iraq in the face of mounting attacks and kidnappings at the hands of insurgent groups.