Publicly, the U.S. State Department said it was discouraging U.S. oil companies from forging deals with Iraqi Kurds last year.

But privately, Bush administration officials may have sent different signals.

Now the State Department's Inspector General has launched an investigation into what exactly was said to whom.

The New York Times reports:

The State Department's internal watchdog division will investigate allegations that department officials did nothing to prevent a Texas oil company with close ties to President Bush from concluding an oil deal with the Kurdistan regional government that undermined both American policy and the Iraqi central government.

The Kurds' deal last year with Hunt Oil Company of Dallas -- and similar contracts between the Kurds and other energy companies -- have infuriated the Iraqi government, which has called them "illegal" attempts to usurp Baghdad's authority.

American officials have also stated publicly that the contracts undermine Baghdad's fragile central government and that they have discouraged such deals until the Iraqi government passes a national oil law.

But earlier this month a Congressional committee released internal e-mail messages and documents from the State Department and Hunt Oil that suggested that State Department officials did not try to dissuade Hunt Oil from signing the deal with the Kurds.

This week, the acting inspector general of the State Department, Harold W. Geisel, disclosed in a letter to lawmakers, which was also provided to The New York Times, that he had "initiated a review of the responses provided to the Congress recently on the issues surrounding oil contracts, oil field development and U.S. policy in Iraq."