UN Oil for Food: Conflicts of Interest and Institutional Corruption

CNSNEWS.com ^ | 12/16/04 | Jeff Johnson with Kathleen Rhodes

[kattracks]

(CNSNews.com) - Critics of the United Nations who hold Secretary-General Kofi Annan responsible for failing to identify and halt corruption in the U.N. Oil for Food Program, say he also showed poor judgment in selecting former U.S. Federal Reserve Chairman Paul Volcker to investigate the allegations of fraud and bribery.

Volcker's previous and extensive relationships with the United Nations and its affiliated agencies could appear to be conflicts of interest, sources told CNSNews.com, and they said Annan should have chosen someone else.

Political figures and career civil servants in and out of the U.S. government said Volcker is a man "above reproach." Nevertheless, those sources wondered why Annan did not choose someone less involved with the U.N. and the international finance community to chair the "Independent Inquiry Committee into the United Nations Oil for Food Program."

"It appears, based on [those relationships], he probably should have," said U.S. Rep. Howard Coble (R-N.C.), who chairs the House Judiciary Subcommittee on Crime, Terrorism and Homeland Security, is one of 59 House members to co-sponsor a resolution calling on Annan to resign.

But Coble was quick to point out that he does not question Volcker's integrity - just the decision by Annan to appoint the former Federal Reserve Board chairman.

"I hold Volcker in very high regard. Unfortunately, I do not have the same sterling endorsement for the United Nations," Coble said. "I'm not that high on the U.N., but I am that high on Volcker."

The Oil for Food scandal, Coble said "is as bad as it has been portrayed.

"I'm very disappointed," he added, "and I think some heads should roll at the U.N."

Danielle Pletka, vice president for foreign and defense policy studies at the conservative American Enterprise Institute (AEI), said she has doubts about Volcker's potential for success in the U.N. probe.

"The Volcker commission is intended to remedy the problems by being, quote, 'independent,'" Pletka said at a forum on the Oil for Food Program sponsored by AEI. "But the sense of many people who have spent more time looking at how they are operating is that this is a commission that is intended not to be so much independent as to bolster the United Nations itself."

Some members of Congress have also questioned Volcker's ability to conduct a thorough investigation, given the constraints placed on the committee.

"They set it up in such a way that the chairman does not have the ability to do what his commission is charged with," said U.S. Rep. Scott Garrett (R-N.J.). "He lacks subpoena power and he lacks the power of contempt to force people to do what they have to do."

Is Volcker the Right Man?

No one interviewed by CNSNews.com

disputed Volcker's qualifications to conduct such an investigation. He has spent more than three decades in international banking in both the private and public sectors before becoming Fed chairman and since leaving the post. His educational resume includes studies at Princeton, Harvard and the London School of Economics.

In addition to working with former U.S. senator and U.N. ambassador John Danforth in the restructuring of the Andersen accounting firm, Volcker has specific investigative experience tracking down hidden assets. He helped recover millions of "lost" dollars as head of an international committee established to investigate the Swiss bank accounts of victims of the Nazi holocaust.

Edward Mortimer, who is with the U.N. secretary-general's office said Volcker and fellow committee member Richard Goldstone are conducting a probe so thorough it is intimidating some U.N. employees.

"Anybody who thinks that Paul Volcker and Richard Goldstone are patsies who are going to provide the U.N. with a nice soothing report doesn't know these gentlemen," Mortimer said at the AEI forum. "I can assure you that almost everyone in the secretariat who's had to deal with them has come away shaken by their vigor, their determination, their insistence on seeing documents, hard drives of computers; things that you might think have nothing to do with this program. They're not taking anything for granted."

Mortimer added that U.N. officials "are all worried about what their first report in January will show."

However, newly discovered evidence indicates that Volcker may be too close to the U.N. to conduct a truly independent inquiry into an international financial scandal involving the U.N.

CNSNews.com has learned that Volcker has various relationships with at least one Non-Governmental Organization (NGO) that lobbies the U.N., another independent agency of the U.N., and an indirect connection to at least one energy corporation that has billions of dollars worth of oil development contracts pending in Iraq.

Volcker is:

• Chairman of the board of trustees of the Group of 30, "a private, nonprofit, international body" that studies and attempts to influence decision makers in the areas of international economics and finance. The Group of 30 is a registered United Nations NGO. The Department of Public Information at the U.N. credits NGOs with "giving the U.N. invaluable links to people around the world."
  
• A member and former co-chairman of the Bretton Woods Committee. The BWC was founded, "to increase public understanding of international financial and development issues and the role of the Bretton Woods institutions." One of those institutions is The World Bank Group, which is "an independent specialized agency of the U.N. as well as a member and observer in many UN bodies." According to the World Bank Group website, "In addition to a shared agenda, the Bank and the U.N. have almost the same membership."
  
• Former chairman and CEO of Wolfensohn & Co., Inc., an international investment firm previously headed by James D. Wolfensohn. Wolfensohn is now president of the World Bank Group, which, as previously reported, is a U.N.-affiliated agency.
  
• A member of the international advisory council of Montreal-based Power Corporation of Canada. Power Corporation Chairman and Co-CEO Paul Desmarais, Jr., serves on the board of directors for French oil conglomerate TotalFinaElf. The company holds $4 billion worth of contracts to develop the Majnoon oil field in Iraq.

Richard Lessner, executive director of the American Conservative Union, told CNSNews.com that despite the appearance of a number of potential conflicts of interest, he is giving Volcker the benefit of the doubt.

"I think he's sincere in wanting to get to the bottom of the scandal," Lessner said. "I'm sure that he feels as though he's committed his personal integrity to the outcome of this investigation."

But Lessner echoed other critics of the limitations under which Volcker must operate.

"Without subpoena powers, he will never know if he's gotten to the bottom of the investigation," Lessner continued. "No matter how far he follows this, he'll never know for certain that he's run down every lead, followed every trail and dug out every mole that's burrowed into the bureaucracy of the United Nations."

Lessner said he believes the limitations placed on Volcker were purposely designed to handicap the investigation.

"I don't think this is a matter of mismanagement. I don't think Kofi Annan's problem is one of incompetence," Lessner concluded. "This [investigation] is all for show. This is to give Kofi Annan cover. I think this was all intentional."

Potential for Oil for Food Program Corruption Inherent

U.N. detractors say the Volcker Committee's first finding should be that the design of the Oil for Food Program facilitated corruption.

A reportby the General Accounting Office (GAO), the investigating agency for the U.S. Congress, determined that Saddamm Hussein's government was able to "acquire" billions of dollars in "illegal revenues" by charging "illicit commissions" to suppliers of food, medicine and other goods, and by adding illegal "surcharges" to oil sales.

That could only happen, the GAO concluded, because the Iraqi government was allowed to negotiate contracts for those sales and the procurement of needed supplies.

"This structure was an important factor in enabling Iraq to levy illegal surcharges and commissions," according to the GAO.

Christopher Preble, director of foreign policy studies at the libertarian Cato Institute, agreed.

"Allowing Iraq to essentially manage the Oil for Food Program has the effect of allowing Iraq to manage the sanctions," Preble told CNSNews.com. "Because they were then empowered to interpret how various firms would be able to do business and they used that to strengthen themselves politically.

"It simply doesn't make any sense," he continued. "It doesn't make any sense for U.N. sanctions to be administered by the sanctioned government. Sanctions are a punishment."

Some people have accused the American and British delegations to the U.N. of doing nothing to police the Oil for Food Program or to stop rampant oil smuggling by Saddam Hussein's regime, even though they had the power to do so through the world body's oversight committee. The U.S. and the U.K., Annan's defenders said, are trying to make him a scapegoat for their failures.

The AEI's Pletka conceded that "many contracts were seen by the member governments of the Security Council, and many were also recognized to be overpriced. It was fully within the discretion of the Office of the Iraq Program to actually stop a contract - they didn't have to go running with a note to the 661 Committee and say, 'I'm a little worried' - but they didn't do it."

However, Pletka added, the Security Council members who comprised the 661 committee should not be held entirely to blame either for failing to challenge the questionable contracts.

"The secretary general and the secretariat made the lives of the Foreign Office in Britain and the State Department in the United States a living hell for every single hold they put on every single thing," Pletka argued. "So yes, there's some fault with the member governments for being gutless, but that gutlessness was 100 percent incentivized by the secretary-general of the U.N."

Pletka said the decision not to challenge an obviously overpriced contract often came down to a choice between allowing price gouging on harmless goods moving into Iraq or focusing on requested goods that might be used for military purposes.

President Bush was asked by a reporter last week whether he thought Annan should resign.

"On this issue, it's very important for the United Nations to understand that there ought to be a full and fair and open accounting of the Oil for Food Program," Bush responded. "In order for the taxpayers of the United States to feel comfortable about supporting the United Nations, there has to be an open accounting, and I look forward to that process going forward."

When a reporter repeated the question, "Should he resign, sir?" the president restated his call for "full disclosure of the facts," again without addressing the question.

Coble said simply removing the individuals responsible for the U.N.'s most recent scandal will not change the culture of the United Nations, which, he believes, fosters corruption.

"I think there were too many people at the U.N. who were cozying up to Saddam and who were probably getting money illegally," Coble explained. "That's my belief, I can't prove it."

Coble also scoffed at those who criticize the American-led coalition's intervention in Iraq.

Often times, folks say we shouldn't have gone after Saddam, we should have waited awhile -- the U.N. would have helped us. The U.N. was Saddam's personal dancing bear, as far as I'm concerned. I don't think they would have done anything.

Stephan Dujarric with the office of the spokesman for Secretary-General Kofi Annan told CNSNews.com

Thursday that he was drafting a response to this report. A representative from the office of Oil for Food Program inquiry leader Paul Volcker said Thursday that she would have to ask permission to accept a detailed request for a response to the article. Neither of the representatives responded prior to the submission of this report for publication.

E-mail a comment or news tip to Jeff Johnson.

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[backhoe]

My 2¢'s about the UN?

Neal Boortz has the right idea- kick them off US soil, plop them down in Haiti, and tell them, "when you get this straightened out, give us a call..."

Moreover:

--Sex abuse charges rock UN in Congo-
-- Interesting this is being posted today. Talk show host Dennis Prager had the Israeli Ambassador to the UN, Doree Gold, on his show today. Mr. Gold has just written a book about the UN called the Tower of Babble(i think this was the title). Some of the things he was saying about the UN were unbelievable.

--TV campaign urging: Kick U.N. out of U.S.-
"I say we just give the entire country of Haiti to the UN."--or move them to Zimbabwe or another country in Africa. Let them see what the really do for the world.

--UN knew of Saddam's oil-for-food thefts: BBC-
The sooner we resign from this corrupt organization and kick them off our soil, the better.

Click this picture & goto "last" for the latest UN scandals:

American Policy Center on-line Declaration of Independence from the U.N.

[mewzilla]

Volker could have all the integrity in the world and it wouldn't matter. He still doesn't have subpoena power. This investigation will end up being a lot of sound and fury signifying nothing.

[GailA]

UN MASTER LIST OIL/SEX FOR FOOD SCANDALS

[backhoe]

Volker could have all the integrity in the world and it wouldn't matter. He still doesn't have subpoena power. This investigation will end up being a lot of sound and fury signifying nothing.

You are absolutely correct- it's a Show Trial, ala the old Soviet Union. Nothing more.

[purpleland]

In addition, please note the United Nation's covert agenda for a One World Government!

BTW, retired TV anchor Walter Cronkite exposed his pro-OWG ideological belief when he addressed the UN's One World Government adjunct entity (Brotherhood) - a meeting Hillary Clinton also attended. (!!!)

[purpleland]

In addition, please note the United Nation's covert agenda for a One World Government!

BTW, retired TV anchor Walter Cronkite exposed his pro-OWG ideological belief when he addressed the UN's One World Government adjunct entity (Brotherhood) - a meeting Hillary Clinton also attended. (!!!)