David Kay, who heads the Iraqi Survey Group (ISG) hunting for weapons of mass destruction in Iraq, said Saddam's regime handed over 10 million dollars to North Korea for missile technology that was never delivered.

"The Iraqis actually advanced the North Koreans 10 million dollars. In late 2002, the North Koreans came to the Iraqis as a result of the Iraqis' inquiry: 'Where is the stuff we paid for?'"

The North Koreans said "'Sorry, there's so much US attention on us, that we cannot deliver it,'" Kay added.

"The Iraqis said 'well, we don't like this, but give us our 10 million dollars back.'"

When the US-led invasion of Iraq started on March 19, the North Koreans were still refusing to give back the 10 million dollars, Kay said.

"It's a lesson of negotiating with the North Koreans," Kay joked on a telephone conference call with reporters.

He said Saddam had attempted several times to get the money back.

Records found by teams working for Kay's group described a high level dialogue between Iraq and North Korea that began in Decmeber of 1999.

The records indicated Iraqi interest in the transfer of technology for surface-to-surface and land-to-sea missiles.

Kay said a contract for the missile technology was concluded, but no technology was ever shipped from the North, which is a member of President George W. Bush's "axis of evil" alongside the former Iraq and Iran.

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