When the first wave of American soldiers swept out of the desert and headed north toward Baghdad, the Iraqis weren't the only ones who experienced shock and awe. In the thick of battle, U.S. commanders discovered that the Iraqi army was able to jam the global-positioning systems the military uses to pinpoint everything from cruise missile attacks to the location of troops on the ground. "It was a technological preemptive strike," says a senior military source.

It was also a prime example of how private companies violated the embargo that the U.S. and the United Nations imposed on Iraq more than a decade ago. Russian firms supplied the jammers to Iraq in the past few years--they didn't exist during the first Gulf war--prompting a personal protest from President Bush to Russian leader Vladimir Putin.

The news about the GPS-blocking devices is just the beginning of what's likely to be a series of revelations detailing how companies--including American ones--helped supply Saddam Hussein's war machine during the past decade.

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Despite both U.S. laws and UN sanctions that prohibited all but a handful of commercial dealings with Baghdad, there have been persistent reports that companies from Russia, France, and China, among others, were breaking the embargo. And when the evidence in Iraq is analyzed, says a top Washington official who deals with trade policy, it's likely that at least a few U.S. companies will face fines or perhaps even criminal prosecution.
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Because of Iraq's oil riches, Saddam had a far easier time of evading the embargo than did former dictators like Manuel Noriega and Slobodan Milosevic. Fixing blame can be tough, however. Business transactions with embargoed nations are usually conducted through intermediaries, with China and the United Arab Emirates as common transshipment points.

To further complicate matters, U.S. companies might innocently sell something to a Chinese buyer, only to learn later that it ended up in Iraq.
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It's going to take time to determine just who did business with Iraq. But the military, for one, seems eager to shine a light in some otherwise dark corners. "We will have everything at our disposal," says Maj. Max Blumenfeld, an officer with Army's V Corps in Kuwait. Documenting Iraq's deals, he says, "will justify this operation and show the world what we've been saying all along about Saddam Hussein and his efforts to acquire weapons of mass destruction." It could also cause a lot of companies to wish they'd never done business with Baghdad.

» Fortune.com - Investing - Who Sold What to Iraq?