U.N. Will Probe Its Oil for Food Program Phil Brennan
Tuesday, Mar. 16, 2004
"Mother's-milky though it sounds, the oil-for-food program has enough graft, mismanagement, and Saddam strengthening patronage to turn one permanently against both oil and food. A real critique could occupy volumes -- and does, in fact, occupy much of an exhaustive analysis, titled "Sources of Revenue for Saddam and Sons," recently issued by the Washington-based Coalition for International Justice, a group that monitors human-rights abuses around the world.
So wrote Tish Durkin way back in the October 7, 2002 National Journal in a blistering critique of the U.N.’s graft-ridden oil for food program supposed to provide aid for Iraq’s people devastated by the U.N. embargo.
Nobody paid much attention then, but new revelations are now proving there was much more to the story than the facts she presented in her article in which she complained that nobody was minding the store.
"Through regular but vague accounting practices, the members of the Security Council are kept apprised of how much money has been earned through the program, and how much has been allocated to each sector," she wrote.
"But they do not know how much has been spent, or on what. Incredibly, the oil-for-food program has never been audited. Yes: one madman, 10 agencies, 15 independently self-interested Security Council members, more than 50 billion smackers, zero audits," she added.
It now develops that instead of providing help for innocent Iraqi’s, the Oil for Food program became a gigantic multi-billion slush fund which Saddam Hussein, Durkin’s "madman" used to reward his supporters abroad, including, it is now alleged, the program’s top U.N. executive.
It is now clear that Saddam Hussein bribed his way around the world, buying the support of presidents, ministers, legislators, political parties and Christian churches, documents published in Iraq show.
In a report on March 1, 2004, "U.N. Oil-for-Food Scam: Time for Hearings," the Heritage Foundation’s Nile Gardiner, Ph.D., and James Phillips cited a New York Times story which reported, "Saddam Hussein’s government systematically extracted billions of dollars in kickbacks from companies doing business with Iraq, funneling most of the illicit funds through a network of foreign bank accounts in violation of United Nations sanctions."
Confirming Suspicions
According to Heritage, "The evidence emerging from Baghdad confirms the suspicions of the U.S. General Accounting Office (GAO), which had earlier estimated that the Iraqi regime generated several billion dollars in illicit earnings through surcharges and oil smuggling in the period between 1997 and 2001."
Just how Saddam Hussein abused the United Nation’s oil-for-food program is becoming clear with the release by the Iraqi Governing Council charging that the program was systematically looted by Saddam.
"In effect the program," Heritage noted, was little more than "an open bazaar of payoffs, favoritism and kickbacks. The seriousness of these charges warrants investigation by the U.S. Congress and an independent, Security Council-appointed commission."
And "Monday Morning," a Lebanese magazine summed up the emerging scandal when they reported that Iraq’s suppliers included Russian factories, Arab trade brokers, European manufacturers and state-owned companies in China and the Middle East. It estimated that Saddam Hussein’s government would have collected as much as 2.3 billion dollars of the 32.6 billion dollars’ worth of contracts it signed since mid-2000, when the kickback system began.
The system was in operation at the same time when Saddam’s government and its supporters were complaining that U.N. sanctions against Iraq were causing starvation and misery among its people, the paper indicated.
"Everybody was feeding off the carcass of what was Iraq", Ali Allawi, a former World Bank official who is now interim Iraqi trade minister, told the Times.
U.N. officials told the newspaper they were unaware of the systematic skimming of oil-for-food revenues, saying they were focused on running aid programs and assuring food deliveries.
Not surprisingly, Benon Sevan, director of the U.N. Office of Iraq Programs, declined to be interviewed about the oil-for-food program.
In written responses to questions sent by e-mail, his office said he learned of the kickback scheme from the occupation authority only after the end of major combat operations in Iraq last year.
After refusing demands that it investigate its Oil For food program the United Nations has now given into international pressure and says it will look into the scandal ridden operation run by one of its top officials who himself has been implicated in the alleged corruption surrounding it.
U.N. Caves In
According to Britain’s Telegraph newspaper, the U.N. caved in and agreed to an investigation on the heels of charges by Iraq’s governing council that U.N. officials were involved in what amounted to a bribery set-up by Saddam, which apparently granted proceeds from the sale of million of barrels of oil to friendly politicians, officials and businessmen around the world.
The Iraqis have hired KPMG an accounting firm and an international law firm, Freshfields Bruckhaus Deringer, to investigate claims that huge sums of money meant to buy food and medicine for ordinary Iraqis - were diverted through oil "vouchers" to line pockets abroad, the Daily Telegraph reported.
"It will not come as a surprise if the Oil-for-Food Program turns out to have been one of the world's most disgraceful scams, and an example of inadequate control, responsibility and transparency, providing an opportune vehicle for Saddam Hussein to operate under the U.N. aegis to continue his reign of terror and oppression," wrote Claude Hankes-Drielsma, a British businessman in a March 3 letter to Kofi Annan, the U.N. Secretary General.
The U.N., he charged, appeared to have "failed in its responsibility" to the Iraqi people and to the international community.
Among those implicated in the scandal was Benon Sevan, the Assistant Secretary General - director of Oil-for-Food since 1996. Sevan is on vacation until the end of April, when he is due to retire from the United Nations Secretariat, a U.N. spokesman told the Telegraph.
Sevan's name is among those cited in documents allegedly recovered from Baghdad's Oil Ministry that are at the heart of the investigation launched by the Iraqi Governing Council.
In Receipt of Oil Vouchers
In January, an Iraqi newspaper published a list of 270 individuals and organizations which allegedly received oil vouchers up to 1999. It is not known if the documents on which the list was based are authentic.
The Iraqi Oil Ministry recently released a partial list of names of individuals and companies from across the world that received oil from Saddam Hussein’s regime, allegedly at below-market prices.
Unsurprisingly, French and Russian names dominate the list, with former French Interior Minister Charles Pasqua and the "director of the Russian President’s office" listed as beneficiaries.
The list also implicates Sevan, who has denied any wrongdoing and said he was only following orders when running the program.
Hankes-Drielsma first alerted Annan to the potential scandal last December and asked him to instigate an "independent commission." In a letter dated December 5, he wrote of his belief that "serious transgressions have taken place" and urged the U.N. to start an inquiry to "take the moral high ground and the initiative in demonstrating to the world that those guilty will be brought to account."
He launched the governing council probe after Annan offered no response to the documents from the Oil Ministry. KPMG accountants and the Freshfields law firm have been instructed to investigate a list of irregularities including:
- U.N. approval of oil contracts to "non-end users" - middlemen who sold their stake on for a profit.
- A standard 10 per cent addition to the value of oil invoices, which generated up to £2.2 billion in illegal cash funds for Saddam.
- A fee of two per cent, levied on all oil-for-food transactions to allow the U.N. to inspect all food and medical imports - which does not appear to have been effectively spent since food was rotten and medicines out of date.
- The role of Middle Eastern banks, their auditing and their possible suspected connection to Saddam's secret service.
Hankes-Drielsma described three documents to the Telegraph on which he said Sevan’s name appeared, and said: "Our report will clarify the details." One is headed, "Quantity of Oil Allocated and Given to Benon Sevan," and records 1.8 million barrels allocated to Mr. Sevan.
Sevan issued a denial in response to A Wall Street Journal Feb. 9 article. There is absolutely no substance to the allegations . . . that I had received oil or oil monies from the former Iraqi regime," he said through a spokesman.
"Those making the allegations should come forward and provide the necessary documentary evidence."
The Heritage report concluded that the abuse of the oil-for-food program was the result of a staggering management failure on the part of the United Nations and has raised troubling questions about the credibility and competence of the world organization.
Several conclusions can be drawn:
The oil-for-food debacle reinforces the need for sweeping reform of the United Nations bureaucracy and the need for an annual external audit if its accounts.
Senior U.N. bureaucrats with responsibility for running the oil-for-food program should be investigated and held accountable for their actions. In particular, the role played by Benon V. Sevan, executive director of the Office of Iraq Programs, should be carefully scrutinized.
If the allegations against Mr. Sevan are true, he must be prosecuted.
Overall responsibility for the program’s failure should lie with U.N. Secretary General Kofi Annan, who in effect turned a blind eye to one of the biggest financial scandals of modern times. The U.N.’s inability to successfully manage the oil-for-food program represents a spectacular failure of leadership on the part of Mr. Annan.
The mismanagement of the oil-for-food program raises serious doubts about the U.N.’s ability to manage future programs of a similar scale.
The United Nations should never again be placed in charge of the administration of an international sanctions regime.
Call for Prosecutions
The links between Saddam Hussein’s regime and leading European companies and politicians were extensive. The United States should call for those who violated the sanctions regime to be prosecuted by their governments.
The United States was right to exclude the U.N. from a key role in administering post-war Iraq – the U.N. was clearly incapable of performing such a function.
The Pentagon was right to bar companies from nations who had opposed regime change in Iraq, such as France and Russia, from bidding for U.S.-funded contracts for the rebuilding of Iraq. Russian and French companies in particular benefited from the exploitation of the oil-for-food program.
Added the Wall Street Journal, "There is no doubt that the U.N. relief effort in Iraq has been a global scandal. A monstrous dictator was able to turn the Oil-for-Food program into a cash cow for himself and his inner circle, leaving Iraqis further deprived as he bought influence abroad and acquired the arms and munitions that coalition forces discovered when they invaded Iraq last spring."
This, by the way, is the same United Nations to which John Kerry and his Democrat friends want the U.S. to hand over control of our foreign policy.