Margaret Wente
The Globe and Mail
April 20, 2004
In 1996, after brutal sanctions had wreaked enormous hardship on the Iraqi people, the international community found a better way. Under the watchful eye of the United Nations, it launched the oil-for-food program, which would allow Iraq to sell limited amounts of oil, as long as the proceeds were used to buy food and medicine for the Iraqi people. The oil money would flow through the UN, which would monitor the spending. It was to be the largest humanitarian-aid effort ever undertaken.

So much for theory. In reality, the oil-for-food program was one of the larger rip-offs of all time. Under the UN’s nose, Saddam Hussein skimmed off billions. He sold oil to friendly firms at deep discounts, which then resold it for huge profits. They paid him kickbacks of 10 per cent. He also paid inflated prices (in return for more kickbacks) for inferior food and medicine. That was easy, because Saddam’s regime had the power to approve all the suppliers. He spent some of the proceeds on bigger palaces and fleets of new Mercedes for his goon squads. He also paid out generous bribes to foreign friends, friends who were politically connected and opposed sanctions or military action against Iraq.

It’s now estimated that Saddam stole at least $5-billion, money that was meant to feed hungry Iraqis and save sick babies. He made another $5-billion from smuggled oil. The biggest victims of this massive fraud were the Iraqi people.

The extent of the corruption is common knowledge in Iraq, where the program is derisively known as “oil for palaces.” And it is a rude wake-up call for people who imagine Iraq would be better off under UN administration.

The UN’s position is that it’s not to blame for the abuses, and that it didn’t know about them until after the war. Those who were there say otherwise. Arthur Millholland, a Calgary oil executive, runs a small company that signed two contracts to buy oil from Iraq. He got out when the Iraqis began demanding kickbacks. He says the bribes were common knowledge among UN officials. “Everybody had it figured out who were the fellows paying the kickbacks.”

Michael Soussan used to be a co-ordinator with the oil-for-food program. “The small minority who sought to hold the regime accountable were overruled, sidelined and sometimes branded spies by our own leadership,” he said. And long before the war, The Times of London and other papers were already reporting on the “total anarchy” and “flagrant disregard of UN Security Council resolutions” that prevailed.

Were UN officials on the take as well? The oil-for-food program (which itself raked in huge commissions for its administrative work) was run by Benon Sevan, a senior official who is close to Kofi Annan. There are suggestions (denied by Mr. Sevan) that he, too, was on the take, and his name appears in an Iraqi list of oil giveaways that are alleged to have been bestowed on friends of the regime. Even Mr. Annan’s son, Kojo, is connected to this mess. He did consulting work for a large Swiss firm that landed a big contract with the program.

But the real stinker is the leading role played by Chinese, French and especially Russian firms, which made out like bandits. One leading French beneficiary is politically close to French Prime Minister Jacques Chirac. You may recall that these nations strongly opposed any military action against Iraq. And now they strongly oppose any investigation into the oil-for-food scandal.

Kofi Annan has finally caved in to demands for an inquiry, and has asked Paul Volcker, the former U.S. Federal Reserve chairman, to lead it. Mr. Volcker has not said yes, yet. Word is that he’s holding out until he thinks he’ll get some co-operation.

Meantime, Iraq’s Governing Council has hired some international experts to conduct its own investigation. Among them is a prominent London-based management consultant, Claude Hankes-Drielsma. Last month, in a scathing letter to Mr. Annan, he called the oil-for-food program “one of the world’s most disgraceful scams.” He also said that “based on the facts as I know them at the present time, the UN failed in its responsibility to the Iraqi people and the international community at large.”

At best, the UN is guilty of gross mismanagement. At worst, it’s guilty of colluding with one of the most bloodthirsty tyrants of all time.