Nick Wadhams and Edith M. Lederer
The Guardian (UK)
September 7, 2005
In a devastating assessment of the U.N. oil-for-food program in Iraq, investigators strongly criticized Secretary-General Kofi Annan, his deputy and the Security Council for allowing Saddam Hussein to bilk $10.2 billion from the giant humanitarian operation and oil smuggling operations.

The Independent Inquiry Committee’s definitive report on the oil-for-food program said those managing the program – including U.N. member states and the world body’s staff – failed the ideals of the United Nations, ignoring clear evidence of corruption and waste that flourished after it was created in 1996 to help ordinary Iraqis.

“The inescapable conclusion from the committee’s work is that the United Nations organization needs thorough reform – and it needs it urgently,” the report said.

The report’s conclusions and its strong urging for change came a week before world leaders gather for a summit in New York to consider a host of Annan’s own reform initiatives. Many of his proposals have stalled – including some similar to the committee’s – because of deep divisions among member states. The United States and other supporters of U.N. reform hope the report will provide much-needed impetus.

“This report unambiguously rejects the notion that business as usual at the United Nations is acceptable,” U.S. Ambassador John Bolton said. “We need to reform the U.N. in a manner that will prevent another oil-for-food scandal. The credibility of the United Nations depends on it.”

Former Federal Reserve chairman Paul Volcker, who headed the investigation, presented the report at a Security Council meeting attended by Annan.

“In essence, the responsibility for the failures must be broadly shared, starting, we believe, with member states and the Security Council itself,” Volcker said.

The committee said the corruption that reached the top of the $64 billion program reflected the absence of a strong institutional ethic in an organization that should exemplify the highest global standards because of its “unique and crucial role.”

Yet it also acknowledged that the program was partly successful, providing minimal standards of nutrition and health care for millions of Iraqis trying to cope with tough U.N. sanctions imposed after Saddam Hussein’s 1990 invasion of Kuwait. It also helped keep Saddam from obtaining weapons of mass destruction, the report said.

And it said that the United Nations is essentially the only organization of its kind in the world that is capable of taking on such daunting tasks.

One of the largest humanitarian programs in history, oil-for-food was a lifeline for 90 percent of the country’s population of 26 million. But Saddam was allowed to choose the buyers of Iraqi oil and the sellers of humanitarian goods, and used that power to curry favor by awarding oil contracts to former government officials, activists, journalists and U.N. officials who opposed the sanctions.

“The findings in today’s report must be deeply embarrassing to us all,” Annan said in a briefing to the 15-nation council. “The Inquiry Committee has ripped away the curtain, and shone a harsh light into the most unsightly corners of the organization. None of us – member states, Secretariat, agencies, funds and programs – can be proud of what it has found.”

Despite the criticism, Annan told reporters afterward “I don’t anticipate anyone to resign. We are carrying on with our work.”

The report, more than 800 pages long, was highly critical of the almost total lack of oversight of the program by the secretary-general and Deputy Secretary-General Louise Frechette, who was the direct boss of Benon Sevan, the program’s executive director who is being investigated for allegedly accepting kickbacks.

It said lax oversight of the program allowed Saddam’s regime to pocket $1.8 billion in kickbacks in the awarding of the contracts.

The committee also accused top U.N. officials and the powerful U.N. Security Council of turning a blind eye to the smuggling of Iraqi oil outside the oil-for-food program in violation of U.N. sanctions. That poured much more money – $8.4 billion – into Saddam’s coffers from 1997-2003.

Saddam pocketed an additional $2.6 billion before the program started from illegal oil sales in violation of sanctions, the report said.

Volcker’s team repeated previously known charges that the five permanent members of the U.N. Security Council – Britain, China, France, Russia and the United States – repeatedly looked the other way as the smuggling took place – and sometimes even actively supported the practice – as a way to compensate Iraq’s neighbors, who suffered too from the tough trade sanctions against Baghdad.

The report is not shy about assigning blame among those five. It said that France and Britain cooperated with the investigation, but Russia and China refused requests for information or access to state-owned companies implicated in the probe. While some branches of the U.S. government were helpful, notably the U.S. mission to the U.N. and the State Department, others were not, the report said.