LONDON (AP) – A charity watchdog criticized fiery British lawmaker George Galloway Friday, saying a campaign he set up to fight sanctions against Iraq received money diverted by Saddam Hussein.

The Mariam Appeal, which the lawmaker set up in 1998 to help a 4-year-old Iraqi girl with leukemia and to fight the sanctions, received at least $376,000 dollars in improper donations, according to a report published by the Charity Commission.

The campaign’s chairman, Jordanian businessman Fawaz Zureikat, received illegal payments from the former dictator’s regime in return for a major contract under the U.N.’s oil-for-food program, the report said.

Mr. Galloway said the report was false.

The commission said it would take no action against the charity, which has been disbanded, and prosecuting agencies said they were not planning to follow up the report.

The commission’s findings follow a 2005 U.N.-backed investigation that said Saddam’s government had allocated 18 million barrels of oil to Galloway, directly and through Mr. Zureikat, to support his campaign for the lifting of sanctions on Iraq.

Mr. Galloway has always denied the allegations.

“The commission is also concerned, having considered the totality of the evidence before it, that Mr. Galloway may also have known of the connection between the appeal and the (oil-for-food) program,” the commission said in its conclusion.

It said that as founder and trustee of the charity, Galloway had not been sufficiently vigilant over where its funding came from, but all the money was spent on humanitarian causes.

Mr. Galloway said in a statement that the allegations against him were “palpably false”.

He called the report “sloppy, misleading and partial”.

The yearlong investigation found that Mr. Zureikat donated $880,000 to the appeal – more than half of which was linked to the oil-for-food program.

Though no enforcement action will be taken, the commission’s chief executive, Andrew Hind, said the issues raised in the report were “not just a technicality.”

“It is not acceptable for charities to receive funds from improper sources,” he told BBC radio. “It has been up to us to look at the flow of money from the oil-for-food-program to the charity. It is for other agencies to assess, frankly, whether the U.N. sanctions were broken in this case.”

Police and counter-fraud officials said they were not investigating the issue.

“We had a look at it and determined that the matter was not something for us to take forward as a criminal investigation,” said a spokesman for the Serious Fraud Office, which has the power to prosecute financial crime.

“Mr. Galloway is not the subject of an investigation or of any criminal or justice agency .”

The 2005 U.N. report said Zureikat had received nearly $1.9 million from the oil trading consortium Taurus and gave $775,000 to the Mariam Appeal.