SANCTIONS=BA'ATHISM:

Hussein's Regime Skimmed Billions From Aid Program (SUSAN SACHS, 2/29/04, NY Times)

Iraq's sanctions-busting has long been an open secret. Two years ago, the General Accounting Office estimated that oil smuggling had generated nearly $900 million a year for Iraq. Oil companies had complained that Iraq was squeezing them for illegal surcharges, and Mr. Hussein's lavish spending on palaces and monuments provided more evidence of his access to unrestricted cash.

But the dimensions of the corruption have only lately become clear, from the newly available documents and from disclosures by government officials who say they were too fearful to speak out before. They show the magnitude and organization of the payoff system, the complicity of the companies involved and the way Mr. Hussein bestowed contracts and gifts on those who praised him.

Yet his policy of awarding contracts to gain political support often meant that Iraq received shoddy, even useless, goods in return.

Perhaps the best measure of the corruption comes from a review of the $8.7 billion in outstanding oil-for-food contracts by the provisional Iraqi government with United Nations help. It found that 70 percent of the suppliers had inflated their prices and agreed to pay a 10 percent kickback, in cash or by transfer to accounts in Jordanian, Lebanese and Syrian banks.

At that rate, Iraq would have collected as much as $2.3 billion of the $32.6 billion worth of contracts it signed since mid-2000, when the kickback system began. And some companies were willing to pay even more than the standard 10 percent, according to Trade and Oil Ministry employees.

Iraq's suppliers included Russian factories, Arab trade brokers, European manufacturers and state-owned companies from China and the Middle East. Iraq generally refused to buy directly from American companies, which in any case needed special licenses to trade legally with Iraq.

In one instance, the Coalition Provisional Authority, the American-led administrators in Iraq, found that Syria was prepared to kick back nearly 15 percent on its $57.5 million contract to sell wheat to Iraq. Syria has agreed to increase the amount of wheat to compensate for the inflated price, said an occupation official involved in the talks.

Iraq also created a variety of other, less lucrative, methods of extorting money from its oil customers. It raised more than $228 million from illegal surcharges it imposed on companies that shipped Iraqi crude oil by sea after September 2000, according to an accounting prepared by the Iraqi Oil Ministry late last year. An additional $540 million was collected in under-the-table surcharges on oil shipped across Iraq's land borders, the documents show. [...]

When Dr. Khidr Abbas became Iraq's interim minister of health six months ago, he discovered some of the effects of Mr. Hussein's political manipulation of the oil-for-food program.

After a review of the ministry's spending, he said, he canceled $250 million worth of contracts with companies he believes were fronts for the former government or got contracts only because they were from countries friendly to Mr. Hussein.

They were paid millions of dollars, said Dr. Abbas, for drugs they did not deliver, medical equipment that did not work and maintenance agreements that were never honored. Iraq, he added, was left with defective ultrasound machines from Algeria, overpriced dental chairs from China and a warehouse filled with hundreds of wheelchairs that the old government did not bother to distribute.

"There is an octopus of companies run by Arabs connected with the old regime or personalities like Uday," he said, referring to one of Mr. Hussein's sons who was killed by American troops last July. "Some paid up to 30 percent kickbacks."

Other Iraqi officials said the ministries were forced to order goods from companies and countries according to political expediency instead of quality.

"There would be an order that out of $2 billion for the Trade Ministry and Health Ministry, $1 million would have be given to Russian companies and $500 million to Egyptians," said Nidhal R. Mardood, a 30-year veteran employee of the Iraqi Ministry of Trade, where he is now the director-general for finance.

"It depended on what was going on in New York at the U.N. and which country was on the Security Council," he added. "They apportioned the amounts according to politics."

One result, for Iraqis, was a mishmash of equipment: fire trucks from Russia, earth-moving machines from Jordan, station wagons from India, trucks from Belarus and garbage trucks from China.

"We got the best of the worst," Mr. Mardood said.

Yasmine Gailani, a medical technician who worked at a lab specializing in blood disorders, said the political manipulation resulted in deliveries of drugs that varied in quality and dosage every six months.

At one point, she said, the lab was instructed to only buy its equipment from Russian companies, adding, "So we would have to find what we called a Russian `cover' in order to buy from the manufacturer we wanted."

Her husband, Kemal Gailani, is minister of finance in the interim Iraqi government. Last fall, he said, he confronted a United Nations official over the quality of goods that Iraqis received in their monthly rations during the sanctions.

"We were looking at the contracts already approved and the U.N. lady said, `Do you mind if we continue with these?' " he recalled. "She was talking as if it was a gift or a favor, with our money of course. I said, `Is it the same contracts to Egypt and China? Is it the same cooking oil we used to use in our drive shafts, the same matches that burned our houses down, the same soap that didn't clean?' She was shocked."

Dr. Abbas, a surgeon who left his practice in London to return home to Iraq, said he was preparing lawsuits against some of the drug and medical supply companies he said were allowed to cheat Iraqis. He would also like to stop dealing with any company that paid kickbacks, but he said he realized that might not be practical.

But he would like to give them a message.

"I would say to them, it was very cruel to aid a dictator and his regime when all of you knew what the money was and where it was going," he said. "Instead of letting his resources dry up, you let the dictatorship last longer."

So, when the Left says sanctions were working, do they really mean they were working to enrich our enemies at the expense of the Iraqi people?

Posted by Orrin Judd at February 28, 2004 9:48 PM