The U.N. Oil-for-Food program spawns the Mother of all Kickback Scandals.

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The revelation that billions of dollars from the U.N.’s “oil-for-food”
program ended up in Saddam Hussein’s coffers has all
the makings of a major international scandal. Richard Lugar Republican chair of
the U.S. Senate Foreign Relations Committee, which is
investigating the matter, said that Saddam
relied on:

“…members of the U.N. Security Council who were
willing to be complicit in his activities, and he required
U.N. officials and contractors who were dishonest, inattentive
or [willing] to make damaging compromises.”

The U.N. was in charge of supervising the sale of Iraqi oil and the Iraqi regime’s purchase of food and medicines with the
proceeds. The program was designed to alleviate the
humanitarian crisis exacerbated by the international
sanctions imposed on Iraq following the Gulf War. Some $10.1 billion dollars was diverted possible in part because of a
UN policy that set the prices for the oil shipments before
they were delivered — a policy vulnerable to corruption. As
the Guardian reports, the U.S. General Accounting Office found — and presented its findings to the Senate Foreign Relations Committee — that:

“…the Iraqi government pocketed $5.7 billion
by smuggling oil to its neighbors and $4.4 billion by
extracting illicit surcharges and kickbacks on otherwise
legitimate contracts.”

It gets worse. As United Press International points out:
“beyond the skimming itself, 87 percent of the contracts for
delivering food were overpriced.”

U.N. Secretary-General Kofi Annan announced this week that
the U.N. will investigate the misappropriations, but some are
rightly skeptical of the organization’s ability to conduct
an investigation that may implicate some of its high-ranking
members in a kickback scandal.

In his testimony to the U.S. Senate Foreign Relations
Committee, The U.S. ambassador to the UN, John Negroponte,
said that previous U.S. and British attempts to ensure the
transparency of the oil for food program were resisted by France, Russia, and China.


Radio Free Europe/Radio Liberty reports:

“Negroponte said U.S. and British
diplomats on the council finally succeeded in 2001 to
initiate a retroactive pricing system in which oil would be
exported first and the price set later, reducing the chance
for corruption. The program ran from 1997 to the start of
the war in Iraq one year ago.

The ambassador said
Russia, France, and China may have been driven by commercial
considerations to protect companies involved in oil deals.
All three states also had abstained from the 1999 resolution
revamping the sanctions regime against Hussein.”

France, Russia, and China must explain why they resisted
changes that would have made the program more transparent.
Protection of their “commercial interests,” as Negroponte
suggests, may have been indeed a motive for blocking reform.
It is far from clear, though, that the U.S. and
Britain made the passage of these changes — and by extension
the program’s transparency — a priority. This also raises
the question of how U.S. and British companies profited from
the misappropriations along with their French, Chinese, and
Russian counterparts.

Jean-David Levitte, the French Ambassador to the U.S.,
argues in a commentary in the Los Angeles Times that the
suggestion that French companies and banks
were the main beneficiaries of the oil-for-food program —
and thus had the most to gain from looking the other way —
are false, and that the United States and
Britain could have rejected any of the contracts that the UN
considered if they suspected any financial improprieties.
They did not. As Levitte writes in his “First ‘Freedom
Fries,’ Now Oil-for-Food Lies:

Give France a Break“:

“The complete contracts were only circulated to the U.S. and
Britain, which had expressly asked to see them and would
have been in the best position to have known if anything
improper was going on. Though a number of contracts were put
on hold by the American and British delegations on
security-related grounds, no contract was ever held up
because malfeasance, such as illegal kickbacks, had been

France was never a major destination for Iraqi oil during
the program. In 2001, 8% of Iraqi oil was imported by
France, compared with 44.5% imported by the U.S., which was
the No. 1 importer all along.”

During the Senate hearings, Democratic Senator Joseph
Biden asked Negroponte to provide the Senate with a list of
the U.S. companies that did business under the
“oil for food” program. Negroponte said that he would return
with that answer because there is no such list — so much
for promoting the virtues of transparency. As Biden said:

“The United States of America has all that
information – release it… I see no rationale for it being
classified, nothing in the law, nothing in terms of U.S.

Further investigations into the U.N.’s
oil-for-food program are needed by the U.N. and in the
countries whose companies were contracted by the program. In
this regard, the U.S.’s Senate investigation has set a good
precedent and should continue its work.

The U.N. should fire those implicated in any wrongdoing
and take measures to insure that similar improprieties are
not repeated. Whether the U.N. likes it or not, the way its
investigation is conducted will reflect on the
organization’s transparency and integrity as a whole. But
as is often forgotten in U.S. debates about the UN’s role,
the U.S. is a member of its Security Council and, as such, it
bears more responsibility than most for whatever happens in
that organization. This goes double for the U.N.’s
oil-for-food program, because U.S. companies were the main
beneficiaries of whatever improprieties that transpired.

Ambassador Levitte has a legitimate point when he
criticizes the scapegoating of France, but that’s not to say that France is entitled to a free pass in the oil-for-food scandal. No one on the UN Security Council — the U.S.
included — should.


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