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By Patricia J. Owens

July 8, 2004
NewsWithViews.com

General Tommy Frank's comment that, "It's not an Oil-for-Food program, the system should be called Oil-for-Palace program", is right on the money, somewhat facetious' when one learns of the wholesale gutting of the largest program every handled by the United Nations. Members of the United Nations, U.N. Secretary General Kofi Annan, U.N. Assistant Secretary General Benon V. Sevan, and Executive Director of the Oil-for-Food program, and Kofi Annan's son, Kojo Annan, are involved. To what degree, only a true investigation by outside forces, and not by former Federal Reserve Chairman Paul Volcker, could possibly bring out the full extent of the fraud. Volcker, has spent much of his time developing a worldwide United Nations Global tax for the U.N., somewhat akin to the fox in the chicken house. A leading international accounting firm alongside top criminal investigators with no previous ties to the U.N. should be hired to help conduct the investigation,

WHAT'S THE PROGRAM?

The Oil-for-Food program was initiated in 1995 after years of sanctions from the 1st Gulf War that started in January of 1991, and ended in February of 1991. The Security Council established the Oil-for-Food program in 1995, 'as a temporary measure to provide for the humanitarian needs of the Iraqi people', while economic sanctions remained in place. Of Iraqi's population of 24 million, 60 percent were dependent on food shipments administered through Oil-for-Food. The Security Council five members, U.S., France, Britain, Russia and China, controlled Iraq through their resolutions. .

The sums of money involved should have alerted the U.N. from the start. In examining aid programs, we are accustomed to thinking in terms of millions of dollars, or hundreds of millions. Oil-for-Food was designed to work on a scale of billions, tens of billions. In this context a billion or so in bribes that may have gone to crucial political figures, or in payoffs was treated as pocket change, unsuitable for an operations under U.N. operations.

The Main Players:
"U.N. Secretary General Kofi Annan, U.N. Assistant Secretary General Benon V. Sevan, Executive Director of the Oil-for-Food program, and Kofi Annan's son Kojo. Kojo has received contracts of inspecting good and became a consultant to the company. Sevan has taken a leave of absence and will retire this year. Executive Director Benon V. Sevan collected some $1.4 billion over the course of the program to audit, monitor and administer the program, keep the records, and serve as the main interlocutor. In this context, a billion or so in bribes that may have gone to crucial political figures, or in payoffs to influence business lobbies, was treated as pocket change, or a rounding error, describe as carelessness unsuitable for an operation charged with containing the activities as a tyrant under U.N. sanctions. [Read]

"The U.N. also collects a 2.2 percent commission on every barrel - more than $1 billion to date, that is suppose to cover its administrative costs. According to staff member the program's bank accounts over the past year have held balances upward of $12 billion. The oil-for-food program is no ordinary relief effort. Not only does it involve astronomical amounts of money, it also operates with alarming secrecy. [Read]

The Iraqi Oil Ministry recently released a partial list of beneficiaries: 270 names of individual's political entities and companies across the world who received oil vouchers from Saddam Hussein's regime, allegedly at below-market prices, and who helped kept Saddam in power. No fewer than 46 Russians, 11 French names appear on the Iraqi Oil Ministry list.

The list includes former French Interior Minister Charles Pasqua, the "director" of the Russian President's Office, the Ukraine Communist Party, the Palestine Liberation Organization, the son of Lebanese President Emile Lahud, the son of Syrian Defense Minister Mustafa Tlass and George Galloway, a member of British Parliament.

HOW IT OPERATED

Oil-for-Food was the U.N.'s biggest program anywhere in the world. The U.N. oversaw a flow of funds averaging at least $15 billion a year, more than 5 times the U.N.'s core annual budget. Saddam's dictatorship was able to siphon off an estimated $10 billion through oil smuggling and systematic thievery by demanding illegal payments from companies buying Iraqi oil, and through kickbacks from those selling goods to U.N. The members of the U.N. staff administering the program have been accused of gross incompetence, mismanagement, and possibly complicity with the Iraqi regime in perpetrating the biggest scandal in U.N. history. [Read]

According the Government Accounting Office (GAO), the oil was smuggled by pipeline into Syria by ship through the Persian Gulf, and by truck across the borders of Turkey and Jordan. Oil purchases were charged a surcharge of up to 50 cents per oil barrel, with an added commission of 5 percent to 10 percent of the commodity contract. A U.S. Department of Defense study cited by the GAO evaluated 759 contracts administered through the Oil-for-Food program and found that nearly half had been overpriced by an average of 21 percent.

The GAO reports states that Iraq gained $10.1 billion in illegal oil revenues and kickback, but $5.7 billion of that - well over half was due to oil smuggling, the remaining $4.4 billion in kickbacks. Undercharging some buyers, who then made excess profit on resale and shared with Saddam.

The U.N. Security Council approved roughly 36,000 contracts over the life span of the program. Every member had the right to hold up contracts if they detected irregularities, and the U.S. and U.K. were among the most vigilant when it came to technology concerns, However, not a single solitary one was ever held up by any member when it came to pricing. The U.N. is a government, they make the rules, and the Secretariat is held accountable to having to approve all contracts. Kofi Annan seems to deliberately turn a blind eye for the corruption and criminal activity. [Read]

HOW IT WAS EXPOSED

What finally flushed the Oil-for-Food program into the open was that Saddam's regime fell. It is obvious that there were many parties to Saddam's business who expected him to remain in power, protecting the confidential records of corrupt deals, and it's no coincidence that some of his business partners, notably Russia and France, and UN Secretary General Kofi Annan lobbied to keep Saddam in power. In the 12 months since the fall of the Iraqi dictatorship a clear picture has emerged of how Saddam abused the U.N. Oil-for-food program. The Iraqi Governing council has begun to release critical information detailing how this program ran.

WHERE'S THE MONEY

"Until 2001, all Iraqi oil revenues were held in an escrow account run solely by the Banque Nationale de Paris. Several unnamed international banks, all approved by Saddam's regime later kept the money. The program was shrouded in secrecy with no or little public accountability. There was no system of external auditing or publishing of accounts. The identify of the banks holding the Iraqi funds was kept secret, and the program became a cash cow for the U.N. and a lucrative source of contracts for Russian and French companies. The Times of London calculated that from 1996 to 2003, Russian companies received $7.3 billion of business, and French firms earned $3.7 billion."

"The public was denied access to vital information about the $100 billion and more worth of business. One could add in the United Nations Commission in Geneva, with another $18.2 billion to largely confidential lists of claimants for damage done by Saddam in Kuwait. The U.N. treats as confidential such vital details as the identities of Oil-for-Food contractors, the price, quantity, and quality of goods involved in the relief deals, and the identities of the oil buyers and precise quantities they receive. The bank statements, the interest paid, the transactions, all were secret."[1]

HOW THEY MANIPULATED THE RULES, OIL

It is noted the United Nations has no effective mechanisms of checks, balances and disclosure. What finally began to bring some daylight to this program were the documents seized in Iraq. Annan and his senior staff at every turn sought to continue and expand Oil-for Food. The project of funneling relief through sanctions quickly became a huge funnel for corruption-laden businesses between Iraq and UN players as France Russia and China

Annan was one of the chief negotiators. The U.N. allowed Saddam to pick his oil buyers and relief supplies. The U.N. let Saddam draw up his lists, and deferred as he added to his list of middlemen in places such as Panama, Liechtenstein and Cyprus, as well as over countries. The conflict of interest came when the U.N. dipped into Saddam's oil revenues, obvious conflict of interest that the Secretariat was getting paid by Saddam on commissions, no less to monitor Saddam.

The public was denied access to vital information. The U.N. treated as confidential such vital details as the identities of Oil-for-Food contractors, the price, quantity and quality of goods involved in the relief deals, the identities of the oil buyers, quantities received. All bank statements, interest paid and transactions were kept secret by the U.N.

WHAT'S HAPPENING TODAY!

UN Secretary General Kofi Annan called for an 'independent inquiry", appointed by Annan himself. He has appointed a three-man commission headed by former US Federal Reserve Chairman Paul Volcker, with South African Judge Richard Goldstone and Swiss lawyer Mark Pieth as the other two members. The U.S. and the U.K.,, should put forward a joint resolution calling for an exhaustive independent investigation, and France, Russia and China, should support the resolution. Volcker Monday 6/20/04, commented that subpoena's are ready to serve, but doubts if it'll work because they don't have to accept them. Volcker has worked for years for the UN, developing a global tax for the world.

The Security Council should appoint an independent investigation into Oil-for-Food completely separate from the U.N. bureaucracy and staffed by non-U.N. personnel. Annan's handpicked commission of inquiry, while led by distinguished figures, lacks real power and credibility. Annan should not be in a position to select members of a commission investigating allegations against his own organization.

A leading international accounting firm with no previous ties to the UN, should be hired to help conduct the investigation, alongside top criminal investigators, Investigators should be drawn from the FBR, Interpol Scotland Yard, and other leading criminal investigative units.

U.S. Congress

"May 24th, 2004 - Allegations of mismanagement of the United Nations Oil-for-Food program have prompted Congress to introduce bills on Capitol Hill that would withhold a portion of United States assessment to the U.N. May 5th, 2004 Sen. John Ensign (R-NV) introduced Senate Bill S. 2389 while Rep. Jeff Flake (R-AZ) introduced H.R. 4284 in the House. The bills are referred to as the "United Nations Oil-for-Food Accountability Act". Under the terms of this legislation, the United States would withhold 10 percent of assessed contributions to the United Nations regular budget in Fiscal year 2005 and 2006."

"The bills would give the GAO access to all U.N. documents relating to safeguarding from alteration any papers or documents relevant to the investigation, releasing documents to member state law enforcement agencies; waiver of immunity from legal action of U.N. officials involved: and reimbursement to the Iraqi government by those who were involved."[2]

"Since the creation of the U.N., in 1945, the U.S. has been the biggest contributor. U.S. - 22% France 6.4%, Britain 5.54%, China 1.53%, and Russia 1.2%. US Contributions to the U.N. system in 2001 totaled $3.5 billion, including $612 million in assessed contributions to the U.N. regular budget $712 million toward U.N. peacekeeping, and $2.2 billion in voluntary contributions."[3]

Conclusion:

"The abuse of the Oil-for-Food program was the result of a staggering management failure by the United Nations and has raised troubling questions about the U.N.'s credibility and competence. The Oil-for-Food debacle reinforces the need for sweeping reform of the U.N. bureaucracy and the need for annual external audit of its accounts. The Bush Administration backed by Congress, should launch its own separate investigation into the United Nations' handling of the Oil-for-Food program."[4]

Footnotes:

1, Claudia Rosett - Anatomy of a Scandal, The Oil-for-Food Story, April 26, 2004
2, United Nation Association

3, United Nations Association of the United States of America & the Business Council of the U.N.
4, Nile Gardinder PH.D & James Phillips, Investigate the United Nations Oil-for-Food Fraud

� 2004 - Patricia J. Owens - All Rights Reserved

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The oil-for-food program is no ordinary relief effort. Not only does it involve astronomical amounts of money, it also operates with alarming secrecy.