The U.N. Oil-for-Food Scam: Time for Hearings
by Nile Gardiner, Ph.D., and James Phillips
WebMemo #438

March 1, 2004 | printer-friendly format |





In the ten months since the downfall of the Iraqi dictatorship, a clear picture has emerged of how Saddam Hussein abused the United Nation’s oil-for-food program. The Iraqi Governing Council has begun to release critical information detailing how, in the words of The New York Times, “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.” In effect the program was little more than “an open bazaar of payoffs, favoritism and kickbacks.”[1] The seriousness of these charges warrants investigation by the U.S. Congress and an independent, Security Council-appointed commission.



Serious Allegations
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.



A mosaic of international corruption is also emerging in the patchwork of politicians and businesses across the world that benefited from the oil-for-food program and helped keep Saddam in power. 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 U.N. Assistant Secretary-General Benon V. Sevan, executive director of the oil-for-food program, who has stringently denied any wrongdoing.[2]



History of the Oil-for-Food Program

The oil-for-food program was established by the United Nations Security Council through Security Council Resolution 986 in 1995 "as a temporary measure to provide for the humanitarian needs of the Iraqi people" while economic sanctions remained in place. Of Iraq's population of 24 million, 60 percent were dependent on food shipments administered through oil-for-food.



Between 1996 and 2003, the program generated over $63 billion in revenues for the Iraqi regime. With little oversight from the U.N., the Iraqi dictatorship was able both to circumvent and to exploit the oil-for-food program. It is suspected of selling its oil at bargain basement prices that benefited numerous middlemen while overpaying for various imports, which allowed it to reward suppliers. The program was officially brought to an end in November 2003.[3]



Congressional Hearings

The charges being leveled against the United Nations over its handling of the oil-for-food program are of such a serious nature that they warrant congressional hearings by both the House and Senate. The hearings should investigate how Saddam Hussein was able to exploit a vast U.N.-operated sanctions program to enrich his family, influence foreign governments, and prop up his brutal regime. The hearings should investigate and expose the vast network of politicians and companies that helped keep Saddam Hussein in power. Congress should also examine the close ties between the Russian and French governments and the Iraqi regime, and how this influenced the international debate over Iraq.



A Security Council Commission of Inquiry

In addition to congressional hearings, as a key member of the U.N. Security Council, the United States should lead the way in calling for a wide-ranging and in-depth independent investigation into the way in which the U.N. handled the oil-for-food program.



The Commission should be appointed by the Security Council, but should be completely independent of the United Nations and made up of non-U.N. employees. Great care should be exercised by the United States and Great Britain to prevent such a Commission from being unduly influenced by other Security Council members who may have a vested interest in protecting their own officials.



Conclusions

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.
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.
Nile Gardiner, Ph.D., is Fellow in Anglo-American Security Policy, and James Phillips is Research Fellow in Middle Eastern Affairs, in The Kathryn and Shelby Cullom Davis Institute at The Heritage Foundation.



Two things might happen from this. The U.N. will capitulate behind the scenes to U.S. interests and their ongoing investigation. Or once the U.S. investigation is finalized (several months from now) it will get blowed-up on the international scene. Whatta yall think?

Further evidence of UN incompetence. Nothing new really, the US has known for a while. "Oil-for-palaces" was a catch phrase used on Capitol Hill for at least 5 or 6 years. But perhaps it will start the ball rolling on some internal changes that need to be made.

Don't expect anything major though - if one diplomat loses his post, and thus loses the opportunity to have nice, expensive dinners in New York - then they'll all get scared and stop making reforms.

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yup...tisk...shame






thanx.

aside from IMPEACH ANNAN

I'll say something solid:

This will make the use of the UN in actual roles the USA wished to delegate responsibility more and more of a challenge.

Although the UN will undoubtedly retain its "neutral" good standing face with the rest of the world when this fiasco is over, it will be hard for pragmatist to actually justify giving valuable operations to the control of the UN.

It basically tells us the UN can't be counted on for pragmatic solutions, not only the political solutions we've known they have been incapable of for years.

The UN, has basically suffered a great blow to its "operations" arena, something the UN was valued for even by neo-hawks. Now that the UN has demonstrated it is worthless in both operations and political arena, justifying allocations to it... even if the world demands it will be harder and harder for the US to comply with. And this will of course look the US look like the bad guy.

... This issue also should bring question to all other operations of the UN, I'm sure investigations would turn up many of their humanitarian initiatives are no less corrupt than the oil for food program was.

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That's why I've always been in favor of moving the UN to Paris, France where it belongs and washing our hands of the ineffectual organization.


[[[smoke]]]

Sorry but one of the main reasons the UN does not work (sometimes) is due to America not giving two shits about any UN rulings (as we see over Iraq and Israel). What on EARTH makes you think that any other country will ever follow any UN resolution when they see America (and Israel) ignoring the ones they dont agree with? And why should they?!

And what would you suggest we replace the UN with? Anything?

quote:

Originally posted by George Smiley Sorry but one of the main reasons the UN does not work (sometimes) is due to America not giving two shits about any UN rulings (as we see over Iraq and Israel). What on EARTH makes you think that any other country will ever follow any UN resolution when they see America (and Israel) ignoring the ones they dont agree with? And why should they?! And what would you suggest we replace the UN with? Anything?

But thats not what we are complaininga bout on the UN this time. The complaint here, is not with the UN as a political entity. But as a operational entity.

Everyone knows that the UN is ineffective politically - we can dwell into why this is, but everyone agrees to this point.

What is 'new' is that UN operations are ineffective as well. Thats the point of argument here. And I belief that has nothing to do with Israel and the USA.

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An interesting editorial tidbit from Barron's this weekend.

Link

quote:

Suspect U.N. Motives Was it always about the oil, after all? ONE YEAR AGO, as the United States went to war in Iraq without permission of the United Nations, we often heard that America's true motivation had nothing to do with freeing Iraqis from their murderous dictator, or with reducing the threat that Saddam Hussein would obtain, use or distribute nuclear, chemical or biological weapons, or with bringing the Iraqis the benefits of democracy. "No war for oil," was the slogan on banners as millions demonstrated against the conflict, against giant international companies, against capitalism and against the country that is capitalism's home base. The slogan rankled because it was so stupid: If America wants oil, it can buy it at a price determined by supply and demand. Using military power just raises the price. Now it appears that oil was hidden at the center of the debate about going to war. Some of those who said "no war" or who insisted that only the United Nations could make the war legitimate were trying to retain their privileged access to Iraqi oil. They achieved that access through the misconceived, misnamed and mismanaged "Oil for Food" program operated under United Nations cover. Cynics posing as sentimentalists had helped Saddam Hussein get around economic sanctions by letting Iraq sell oil to raise money for food and medicine for its citizens. It was, of course, just another way of abusing those citizens. At least $47 billion worth of oil was sold under the program, and the U.S. General Accounting Office estimated last week that at least $10 billion flowed back to Saddam Hussein, his cronies and his partners. Kickbacks and illicit profits flowed in many directions, apparently including French and Russian business figures, international politicians and even the U.N. director of the Oil for Food program. Iraqi documents may indicate who got what; then the world will have to decide whether the U.N. can retain any legitimacy on any topic.

quote:

Originally posted by George Smiley Sorry but one of the main reasons the UN does not work (sometimes) is due to America not giving two shits about any UN rulings (as we see over Iraq and Israel). What on EARTH makes you think that any other country will ever follow any UN resolution when they see America (and Israel) ignoring the ones they dont agree with? And why should they?!

I assume you're referring to the eleven security council resolutions over a twelve year stint that the U.S. ignored? Or was that Iraq? Did the U.S. ignore the U.N. involvement with Kosovo? Did the U.N. do anything about the U.S. embassy bombings in Kenya and Tanzania? come to think of it has the U.N. given two shits or even a hershey squirt about terrorism, Al-Qeda or otherwise, anywhere on this planet? How about nuclear proliferation in less than reputable countries? There still in Kosovo for frikkin sake gettin their asses handed to them. A U.N. ruling is not worth the paper it's printed on and it was that way long before the U.S. invaded Iraq. Hell, they even voted unanimously for us to use force, without their help of course.

We're supposed to be the civilised ones. We're the ones supposed to be setting an example. Without that, there is no legitimacy, and, as you say, UN rulings are not worth the paper they are written on. What happens when governments/states act in any which way they please with no legitimacy? The people revolt and attack. Exacty the same in the international community. When the rulers (America and the West) act any which way the please with no legitimacy, the little countries (the ones we fuck over) will revolt and attack...

quote:

Originally posted by George Smiley We're supposed to be the civilised ones. We're the ones supposed to be setting an example. Without that, there is no legitimacy, and, as you say, UN rulings are not worth the paper they are written on. What happens when governments/states act in any which way they please with no legitimacy? The people revolt and attack. Exacty the same in the international community. When the rulers (America and the West) act any which way the please with no legitimacy, the little countries (the ones we fuck over) will revolt and attack...

hmm odd, history tells us the opposite

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Does it?