Galloway has always denied accepting cash from Saddam
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MP George Galloway has accepted damages and a public apology over an American newspaper article that alleged he accepted money from Saddam Hussein.
Mr Galloway, expelled by Labour for his stance on the Iraq war, said he had been "completely vindicated".
The Christian Science Monitor admitted a set of documents upon which it based its story were "almost certainly" fake.
The MP, who described the settlement as "substantial", has always denied taking cash from the Iraqi regime.
'Immense distress'
Mr Galloway's solicitor Mark Bateman told Mr Justice Eady at London's High Court that the allegations which appeared in the Christian Science Monitor last April were "false and without foundation".
The Independent MP was in court to hear Mr Bateman say the article, published by The First Church of Christ, Scientist, in Boston, Mass, reported on documents which had been given to a journalist by an Iraqi general.
He said these purported to show that Mr Galloway had received more than $10m in return for his support of Saddam Hussein's regime.
"The allegations contained in the Christian Science Monitor's story that Mr Galloway opposed the UN-imposed sanctions on Iraq and thereafter, opposed the recent conflict in Iraq because he had been paid by the Iraqi regime are false and without foundation," said Mr Bateman.
'Wolves'
Outside the court, Mr Galloway - who is standing in the European elections in London under the banner of his new anti-war party Respect - said the damages were a "complete vindication" of his denial that he had "received one thin dime from the Iraqi regime, from Saddam Hussein".
"This newspaper alleged that I received $10m. Today they have had to come before the High Court and in the humblest possible terms apologise infront of the British people and pay me substantial damages," he said.
Mr Galloway said he wanted Tony Blair to send British embassy officials to Baghdad to interview the Iraqi general to "find out why he forged these documents".
The MP was expelled from the Labour party over comments he made in an interview to an Arab TV station branding Mr Blair and US President George Bush "wolves".