Iraq's oil is one of its most important resources

Midway Trading was accused of paying $400,000 in bribes to Iraqi officials for oil purchases under the UN scheme.

The scheme was devised to let Saddam Hussein sell oil and buy humanitarian goods while sanctions were in force.

But the Iraqi government, politicians and some UN officials are said to have illegally profited from the programme.

The UN's $64bn oil-for-food programme ran from 1996 until the US-led invasion of Iraq in 2003.

Midway Trading - based in Reston, Virginia - agreed to pay the fine in a plea deal with Manhattan District Attorney Robert Morgenthau, who leads one of several investigations into corruption in the programme.