October 27, 2005

STRIP THEM OF THEIR SEATS:

U.N. to Detail Kickbacks Paid for Iraq's Oil (WARREN HOGE, 10/27/05, NY Times)

More than 4,500 companies took part in the United Nations oil-for-food program and more than half of them paid illegal surcharges and kickbacks to Saddam Hussein, according to the independent committee investigating the program.

The country with the most companies involved in the program was Russia, followed by France, the committee says in a report to be released Thursday. The inquiry was led by Paul A. Volcker, former chairman of the Federal Reserve Board. [...]

Mr. Hussein received $1.8 billion in illicit income from surcharges and kickbacks on the sales of oil and humanitarian goods during 1996-2003, when the program ran, the committee concluded in its last report in September.

Earlier Volcker committee reports summarizing the year and a half of inquiries have examined the activities of the United Nations, finding the institution's management inept and corrupt, and providing evidence that the program's former director, Benon V. Sevan, received kickbacks himself. He has denied any wrongdoing.

The $64 billion program was set up by the Security Council to help ease the effects of United Nations sanctions on the 27 million Iraqis by supplying food and medicines in exchange for letting the Hussein government export oil.

The investigators said Thursday's report would detail how Mr. Hussein first steered the program to gain political advantage with political allies and countries in a position to ease the United Nations sanctions. Both Russia and France are veto-bearing members of the Security Council.

"Then it got corrupted with a capital C when Saddam figured out how to make money off of it by putting on the surcharges and kickbacks," one investigator said.

At first, he said, companies balked at paying the extra fees, and the oil sales slowed. At that point, "less orthodox companies" came forward and accepted the terms, opening the way for the program's full scale exploitation and allowing legitimate companies to buy oil from illegitimate ones.

Another investigator noted that in the years immediately preceding the program, smuggling of Iraqi oil in much larger amounts had been going on for years to the benefit of the economies of American allies, including Jordan and Turkey. In his last report, Mr. Volcker said this smuggling amounted to $10.99 billion.

This investigator suggested that this had a compromising effect on the Security Council's willingness to step in and stop the practice. "Three years, four years already, letting the oil flow into Jordan and Turkey, so now you're going to be very strict about this smaller volume of oil?" he asked. "Unlikely."

Posted by Orrin Judd at October 27, 2005 6:38 AM
Comments
« SETTING THE PINCERS: | Main | AN END TO REALISM?: »