Bloomberg.com
April 15, 2004

Former U.S. Federal Reserve Chairman Paul Volcker is United Nations Secretary-General Kofi Annan’s choice to investigate allegations of corruption in the UN-administered oil-for-food program in Iraq, UN envoys said.

Volcker, 76, will head a three-person panel investigating reports that former leader Saddam Hussein used money from the program, which allowed Iraq to sell oil and buy food and medicine, to bribe hundreds of companies and people, including UN officials. Annan today told six Security Council members of his pick, Russian Deputy Ambassador Gennady Gatilov said.

Volcker, chairman of the U.S. central bank from 1979 to 1987, operates his own business consulting office in New York. He is chairman of the International Accounting Standards Committee and is participating in an investigation of money lost by Holocaust victims in Swiss banks.

“He is an independent, highly respected personality,” said Ambassador Gunter Pleuger of Germany, who attended the meeting with Annan. “I think he will be able to assemble a team of people who are specialists, who know what they are doing. With his reputation, we can expect a very good report.”

The other two panel members are Mark Pieth, professor of criminal law at Basel University in Switzerland, and Richard Goldstone, former Constitutional Court of South Africa judge and former chief prosecutor of the UN International Criminal Tribunals for the former Yugoslavia and Rwanda.

Volcker didn’t immediately return a telephone call asking for a comment.

Security Council Cooperation

The Security Council released a statement on March 31 saying the 15 members would cooperate with the investigation. Annan sought council support because companies and individuals from Security Council members France and Russia were on a list of 270 recipients of bribes that an Iraqi newspaper published in January. Benon Sevan, 65, the former UN director of the oil-for- food program, was also on the list.

Beginning in 1997, Iraq was allowed to export oil under an exception to UN sanctions imposed after the country’s 1990 invasion of Kuwait. About 3.4 billion barrels of oil valued at $65 billion were shipped from Iraq under the program, which Annan suspended when the U.S.-led war against Iraq began.

While there were regular audits of the program and the Security Council monitored contracts for the sale of oil and purchase of humanitarian aid, Iraq’s violation of UN sanctions was reported for several years. The General Accounting Office, the auditing arm of the U.S. Congress, said two years ago that oil smuggling and illegal surcharges imposed on companies buying oil generated $900 million annually from 2000 to 2002 for Hussein’s regime.

Volcker, who was born in Cape May, New Jersey, worked for five U.S. presidents in more than 30 years in government. He recently led a private Commission on the Public Service, which recommended changes in personnel practices by the U.S. government.