Nile Gardiner, Ph.D
BIGGEST SCAM IN HISTORY: The UN Oil-for-Food Scam:
Mon Jun 28, 2004 16:18
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BIGGEST SCAM IN HISTORY:
$8.1 Billion Transferred to Development Fund for Iraq
The UN Oil-for-Food Scam: Time for Hearings
The U.N. Oil-for-Food Scam: Time for Hearings
by Nile Gardiner, Ph.D., and James Phillips
In the ten months since the downfall of the Iraqi dictatorship, a clear picture
has emerged of how Saddam Hussein abused the United Nation’s oil-for-food
program. The Iraqi Governing Council has begun to release critical information
detailing how, in the words of The New York Times, “Saddam Hussein’s government
systematically extracted billions of dollars in kickbacks from companies doing
business with Iraq, funneling most of the illicit funds through a network of
foreign bank accounts in violation of United Nations sanctions.” In effect the
program was little more than “an open bazaar of payoffs, favoritism and
kickbacks.” The seriousness of these charges warrants investigation by the
U.S. Congress and an independent, Security Council-appointed commission.
The evidence emerging from Baghdad confirms the suspicions of the U.S. General
Accounting Office (GAO), which had earlier estimated that the Iraqi regime
generated several billion dollars in illicit earnings through surcharges and oil
smuggling in the period between 1997 and 2001.
A mosaic of international corruption is also emerging in the patchwork of
politicians and businesses across the world that benefited from the oil-for-food
program and helped keep Saddam in power. The Iraqi Oil Ministry recently
released a partial list of names of individuals and companies from across the
world that received oil from Saddam Hussein’s regime, allegedly at below-market
prices. Unsurprisingly, French and Russian names dominate the list, with former
French Interior Minister Charles Pasqua and the “director of the Russian
President’s office” listed as beneficiaries. The list also implicates U.N.
Assistant Secretary-General Benon V. Sevan, executive director of the
oil-for-food program, who has stringently denied any wrongdoing.
History of the Oil-for-Food Program
The oil-for-food program was established by the United Nations Security Council
through Security Council Resolution 986 in 1995 "as a temporary measure to
provide for the humanitarian needs of the Iraqi people" while economic sanctions
remained in place. Of Iraq's population of 24 million, 60 percent were dependent
on food shipments administered through oil-for-food.
Between 1996 and 2003, the program generated over $63 billion in revenues for
the Iraqi regime. With little oversight from the U.N., the Iraqi dictatorship
was able both to circumvent and to exploit the oil-for-food program. It is
suspected of selling its oil at bargain basement prices that benefited numerous
middlemen while overpaying for various imports, which allowed it to reward
suppliers. The program was officially brought to an end in November 2003.
The charges being leveled against the United Nations over its handling of the
oil-for-food program are of such a serious nature that they warrant
congressional hearings by both the House and Senate. The hearings should
investigate how Saddam Hussein was able to exploit a vast U.N.-operated
sanctions program to enrich his family, influence foreign governments, and prop
up his brutal regime. The hearings should investigate and expose the vast
network of politicians and companies that helped keep Saddam Hussein in power.
Congress should also examine the close ties between the Russian and French
governments and the Iraqi regime, and how this influenced the international
debate over Iraq.
A Security Council Commission of Inquiry
In addition to congressional hearings, as a key member of the U.N. Security
Council, the United States should lead the way in calling for a wide-ranging and
in-depth independent investigation into the way in which the U.N. handled the
The Commission should be appointed by the Security Council, but should be
completely independent of the United Nations and made up of non-U.N. employees.
Great care should be exercised by the United States and Great Britain to prevent
such a Commission from being unduly influenced by other Security Council members
who may have a vested interest in protecting their own officials.
The abuse of the oil-for-food program was the result of a staggering management
failure on the part of the United Nations and has raised troubling questions
about the credibility and competence of the world organization. Several
conclusions can be drawn:
* The oil-for-food debacle reinforces the need for sweeping reform of the United
Nations bureaucracy and the need for an annual external audit if its accounts.
* Senior U.N. bureaucrats with responsibility for running the oil-for-food
program should be investigated and held accountable for their actions. In
particular, the role played by Benon V. Sevan, executive director of the Office
of Iraq Programs, should be carefully scrutinized. If the allegations against
Mr. Sevan are true, he must be prosecuted.
* Overall responsibility for the program’s failure should lie with U.N.
Secretary General Kofi Annan, who in effect turned a blind eye to one of the
biggest financial scandals of modern times. The U.N.’s inability to successfully
manage the oil-for-food program represents a spectacular failure of leadership
on the part of Mr. Annan.
* The mismanagement of the oil-for-food program raises serious doubts about the
U.N.’s ability to manage future programs of a similar scale. The United Nations
should never again be placed in charge of the administration of an international
* The links between Saddam Hussein’s regime and leading European companies and
politicians were extensive. The United States should call for those who violated
the sanctions regime to be prosecuted by their governments.
* The United States was right to exclude the U.N. from a key role in
administering post-war Iraq – the U.N. was clearly incapable of performing such
* The Pentagon was right to bar companies from nations who had opposed regime
change in Iraq, such as France and Russia, from bidding for U.S.-funded
contracts for the rebuilding of Iraq. Russian and French companies in particular
benefited from the exploitation of the oil-for-food program.
Nile Gardiner, Ph.D., is Fellow in Anglo-American Security Policy, and James
Phillips is Research Fellow in Middle Eastern Affairs, in The Kathryn and Shelby
Cullom Davis Institute at The Heritage Foundation.
 See Susan Sachs, “Hussein’s Regime Skimmed Billions From Aid Program,” The
New York Times, February 29, 2004.
 The names were published in January in the Arabic Iraqi newspaper Al Mada
and subsequently reported on by Therese Raphael in her article “Saddam’s Global
Payroll,” published in The Wall Street Journal, February 9, 2004.
 For further background on the Oil for Food program, see Claudia Rosett,
“Oil, Food and a Whole Lot of Questions,” The New York Times, April 18, 2003.
Office of the Iraq Programme Oil-for-Food
the image in its original context on the page:
Independent Oil-for-Food probe will separate allegation from fact, Annan says
17 June – Secretary-General Kofi Annan today stressed the comprehensive nature
of an independent inquiry into allegations of corruption within the now-defunct
United Nations Oil-for-Food programme for Iraq, and urged critics to allow the
panel to reach its conclusions before pronouncing judgement. FULL STORY>>
The biggest kickback scheme in world history ($10.1 billion_ Debra J. Saunders, Mon Jun 28 16:25
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