March 11, 2004

U.N. Oil-For-Food Scandal

Evidence continues to surface that Benon Sevan, the U.N. official in charge of the Iraq Oil-For-Food program was among those who benefited from Saddam's gifts of oil vouchers, which were worth millions to the recipients. It is now fair to say that the U.N. program was massively corrupt, from the contracts for inspection of oil exports and bribes paid to political allies, to the buying off of the top U.N. official in charge of the program.

Therese Raphael, whose report in today's WSJ is a follow up to another report she filed back on Feb. 9, has produced a devastating and detailed indictment of Oil-For-Food. Sevan had earlier denied published allegations that he had received favors from the Saddam regime, and challenged those making the charges to produce documentary evidence. It appears that Ms. Raphael has called his bluff, producing a letter that is pretty persuasive:

The letter is dated Aug. 10, 1998, and addressed to Iraq's oil minister. It states: "Mr. Muwafaq Ayoub of the Iraqi mission in New York informed us by telephone that the above-mentioned company has been recommended by his excellency Mr. Sevan, director of the Iraqi program at the U.N., during his recent trip to Baghdad." The matter is then recommended "for your consideration and proportioning" and the letter is signed Saddam Zain Hassan, executive manager of the State Oil Marketing Organization (SOMO), the Iraqi state-owned company responsible for negotiating oil sales with foreign buyers. A handwritten note below the signature confirms the request was granted "by his excellency the Vice President of the Republic [presumably Taha Yassin Ramadan, now in U.S. custody] in a meeting of the Command Council on the morning of Aug. 15, 1998." Scrawled below that to one side is another note stating that 1.8 million barrels were allocated to the company two days later, on Aug. 17.

The corruption is far-reaching, and touches on individuals like the son of Kofi Annan, famous pardonee Marc Rich, and a billionaire crony of Jacques Chirac. It makes for compelling, if maddening reading. For background on the story of the Oil-For-Food scandal, check out previous Wizblog posts (and linked articles) here, here, here, and here.

And now we're about to hand over additional powers to the U.N. in the administration of a free Iraq. Raphael suggests we dig a little deeper into this web of corruption before we go much farther down that road.

UPDATE: A wonderful companion piece to the Therese Raphael article is this one by Claudia Rosett, this time at NRO. Here's a sample, but this article needs to be read in its entirety...

...the U.N., during the final months of Oil-for-Food, gave every indication of knowing just where the problems lay. Last May, shortly after the fall of Saddam's regime, the U.N. Security Council voted to end the Oil-for-Food program and gave the U.N. Secretariat six months to tie-up loose ends before handing over any outstanding import contracts to the U.S. Coalition Provisional Authority. With Saddam's regime gone as a contracting party, the U.N. began a frenzied process of "renegotiating" billions in contracts, basically winnowing out the graft component that Oil-for-Food had previously approved.

By the end of this sudden housecleaning, the U.N. had scrapped more than 25 percent of the contracts for which, under Saddam, it had already agreed to release funding from the U.N.-controlled Oil-for-Food bank accounts. Uncharacteristically, the U.N. on its website has posted explanatory notes next to some of the dropped contracts. These do not suggest a U.N. that was living in ignorance of Saddam's 10-percent-overpricing-and-kickback scheme...

...what has to be clear by now is that the U.N. itself was either corrupt, or so stunningly incompetent as to require total overhaul. There are by now enough questions, there has been enough secrecy, stonewalling, and rising evidence of graft all around the U.N. program in Iraq, so that it is surely worth an independent investigation into the U.N. itself — and Annan's role in supervising this program. If Kofi Annan will not exercise his authority to set a truly independent inquiry in motion, it is way past time for the U.S., whose taxpayers supply about a quarter of the U.N. budget, to call the U.N. itself to account for Oil-for-Food — in dollar terms the biggest relief operation it has ever run, and by many signs, one of the dirtiest.

Posted by dan at March 11, 2004 8:48 PM