Tear down this U.N. stonewall

The secretary general of the U.N. tapped me on the shoulder at a recent luncheon and said, “May I have a word with you?”

Because several columns of mine zapped the U.N. for its cover-up of the costliest financial rip-off in history – even calling it “Kofigate” – I braced myself for an icy rebuke. But Kofi Annan assured me, in his courteous way, that the committee he had appointed to look into the oil-for-food scandal, headed by former Fed chairman Paul Volcker, would do a thorough job.

I respectfully asked if this included an inquiry into his own potential conflict of interest: when Annan’s son was a consultant to Cotecna Inspections, that Swiss company won the lucrative U.N. contract to monitor the shipments of food and medicine to Saddam’s sanctioned regime. Annan revealed that a competitor had protested undue influence in that contract award, and that an internal U.N. report would be delivered to the Volcker committee.

But that was further evidence of corruption containment. When the International Relations Committee of the U.S. House of Representatives on May 20 requested 55 internal U.N. audit reports on oil-for-food, Annan wrote Chairman Henry Hyde on June 2 that Volcker “believes the policy of the Organization not to release non-public documents is entirely appropriate.”

I suggested that the U.N. was using Volcker, a man of spotless reputation, to control all information about the scandal. The secretary general said “I will look into this further and ask Mr. Volcker to call you.”

Annan was true to his word. In came a call two days later from a very tall former central banker who prefers that his name not be used. “I thought I had a large staff together weeks ago, but they backed out on me. Now we have some top-flight investigators coming on and we’ll announce them soon. The budget crunch hasn’t come yet, but the U.N. will have to come though with the amounts we need.”

A U.N. official tells me the Volcker committee’s first choices were turned off not just by lack of subpoena or oath-requiring powers – which Volcker considers “not fatal” – but by an inadequate budget to dig into the largest financial rip-off in history. As a result, after nearly three months, a foot-dragging bureaucracy has successfully frustrated the independent committee dependent on it. “Some people have indicated eagerness to show us what they have, but we haven’t had the staff, the office space, the administrative structure. I haven’t even had a press person.”

My Nixon-era colleague was a tad testy about any imputation to the secretary general that his retention was being used to block outside inquiries backed by the force of law. “I don’t think it’s a great idea to have parallel investigations of U.N. contracts.” Not even by the House of Representatives? “Henry Hyde wants to be supportive; whether his staff agrees with him is another matter.”

This well-meaning financial wizard is determined to resist all investigative competition. “Take BNP Paribas,” he says of the French-owned bank central to the financing of the U.N.’s oil-for-food debacle. “Government authorities can get their stuff, but to the extent that they’re contractors of the U.N., no bank can give that up without due judicial procedure. That would violate banking law.”

Let’s advance this story. Two BNP Paribas sources tell me this: in a storage facility in Lower Manhattan, the bank had a large room containing some 5,000 oil-for-food file folders.

Each folder contained a copy of the bank’s letter of credit authorized by a U.N. official to pay a contractor for its shipment; a Notice of Arrival monitored by Cotecna at the Iraqi port of Umm Qasr if by ship, or the Jordanian border crossing of Trebil if by truck; and a description of the contract. The original paperwork went to the Rafidain bank in Amman, Jordan; copies of the damning documents are stored by BNP Paribas in New Jersey.

Though the U.N. purchases were supposedly to supply desperate Iraqis with food or medicine, most of this evidence deals with items like construction equipment from Russia, hundreds of Mercedes-Benz limousines from Germany and thousands of bottles of perfume from France.

The money trail grows cold; won’t some lawful authority (Hyde? Snow? Spitzer?) issue a subpoena that would start “due judicial procedure”?

William Safire, The New York Times, June 14, 2004

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