Investigation of UN Oil-for-Food Scandal

March 29th, 2004 - by admin

IraqNet / Iraq Information Network – 2004-03-29 10:36:04

(March 29, 2004) — What would you call an international scam that involves nearly $11 billion in bribes and payoffs, the involvement of corrupt officials in very high places, the diversion of funds intended for starving and sick children into private pockets and the reluctance of top U.S. allies and partners to cooperate with an investigation of it all?

Well, you could call it the most underreported story of the year, and you would be right. Or you could call it what it is: The brewing United Nations scandal over Iraq’s oil-for-food program.

It’s a scandal that has engulfed the administration of the respected UN chief, Secretary-General Kofi Annan, and is threatening to erode the international organization’s credibility as an honest overseer of humanitarian projects for the world’s neediest people. And the unraveling scandal also shows that influential people in Russia and France were being paid off by Saddam Hussein in kickback schemes, possibly explaining why both nations were so opposed to military action to oust Hussein.

The scandal involves the $67-billion oil-for-food program the UN ran for Iraq until the invasion last year. The UN administered the proceeds from the oil that Iraq was allowed to sell under restrictive trade rules, with the money intended to purchase food and medicines for needy Iraq citizens who would otherwise suffer from the effects of the economic embargo.

What documents seized from the Iraqi oil ministry show, however, is that nearly $11 billion was siphoned off between 1997 and 2002 through various schemes involving payoffs, bribes, favoritism, kickbacks to Hussein, illegal surcharges, inflated port fees and widespread smuggling – all without effective oversight by UN agencies overseeing the program.

A Boondoggle of Collosal Proportions
The story first emerged earlier this year in reports published by an independent Iraqi newspaper, al Mada, based on lists kept by the oil ministry of several hundred individuals and corporations who benefited from the scheme.

The way it worked is that Hussein told suppliers to inflate their charges for food or medicine by the biggest possible margins. The excess would be skimmed off, part going to Hussein’s bank accounts in Syria, Jordan and Lebanon, the rest divvied up through oil vouchers handed out to officials and corporations from more than 46 countries. Those vouchers would be turned over to one of several Hussein-controlled companies in the United Arab Emirates, in exchange for commissions of up to 30 cents a barrel.

The most damning of the documents — and testimony from former Iraqi oil officials — point to the alleged involvement of Benon Savan, the executive director of the Office of the Iraq Program at the UN. He was said to receive vouchers for close to 1 billion barrels of oil.

Also named in the list of beneficiaries were a British Labor MP hostile to Tony Blair’s support for the war, George Galloway; former French Interior Minister Charles Pasqua; an Iraqi-American businessman, Shaker al-Kaffaji, who contributed $400,000 to produce a film by ex-UN inspector Scott Ritter discrediting the weapons searches; and a score of Russian companies with Kremlin ties, among others.

Annan has finally done the honorable thing, starting a formal probe of UN ties to the kickback schemes, over French and Russian objections. The U.S. Office of Management and Budget is starting an investigation and House hearings of possible UN abuses are expected next month.

This is a boondoggle of colossal dimensions that must be sorted out fully, if nothing else to recoup some of billions of dollars in payoffs and return it to the Iraqi people. But why has this scandal been ignored for so many months?