Skip to comments.UN caves in on inquiry into its Iraq oil-for-food 'scandal'
Posted on 03/14/2004 4:03:29 AM PST by Cincinatus' Wife
The United Nations has bowed to international pressure to investigate allegations of corruption surrounding its oil-for-food programme, under which Iraqi oil was sold on behalf of Saddam Hussein's regime.
The move follows claims that UN officials were caught up in a reward system set up by Saddam, which apparently granted proceeds from the sale of million of barrels of oil to friendly politicians, officials and businessmen around the world.
UN official Benon Sevan Iraq's new governing council has hired the accountants KPMG and the international law firm, Freshfields Bruckhaus Deringer, to investigate claims that large sums of money - which should have been spent on food and medicine for ordinary Iraqis - were diverted through oil "vouchers" to line pockets abroad.
In a letter to Kofi Annan, the UN Secretary General, an adviser to Iraq's interim governing council warns that the UN appeared to have "failed in its responsibility" to the Iraqi people and to the international community. "It will not come as a surprise if the Oil-for-Food Programme turns out to have been one of the world's most disgraceful scams, and an example of inadequate control, responsibility and transparency, providing an opportune vehicle for Saddam Hussein to operate under the UN aegis to continue his reign of terror and oppression," wrote Claude Hankes-Drielsma, a British businessman and former chairman of the management committee at Price Waterhouse accountants, on March 3.
A senior UN official said last night that the international body's Office of Oversight Services in New York, had started to examine the administration of the programme and any UN role in the alleged corruption. A formal announcement of the internal inquiry is expected this week.
Last month the UN denied accusations of corruption within its operations and demanded documentary evidence before it would act on the complaints.
Benon Sevan, the Assistant Secretary General - who was appointed director of Oil-for-Food in 1996 - is on holiday until the end of next month, when he will retire from the United Nations Secretariat, a UN spokesman said.
Mr Sevan's name appears on documents allegedly recovered from Baghdad's Oil Ministry that are at the heart of the investigation launched by the Iraqi Governing Council. In January, an Iraqi newspaper published a list of 270 individuals and organisations which allegedly received oil vouchers up to 1999. It is not known if the documents on which the list was based are authentic.
Mr Sevan, a career UN official, has denied any wrongdoing.Mr Hankes-Drielsma first alerted Mr Annan to the potential scandal last December and asked him to instigate an "independent commission". In a letter dated December 5, he wrote of his belief that "serious transgressions have taken place" and urged the UN to start an inquiry to "take the moral high ground and the initiative in demonstrating to the world that those guilty will be brought to account."
Mr Hankes-Drielsma launched the governing council inquiry after Mr Annan offered no response to the documents from the Oil Ministry. KPMG accountants and the Freshfields law firm have been instructed to investigate a list of irregularities including:
UN approval of oil contracts to "non-end users" - middlemen who sold their stake on for a profit. A standard 10 per cent addition to the value of oil invoices, which generated up to £2.2 billion in illegal cash funds for Saddam. A fee of two per cent, levied on all oil-for-food transactions to allow the UN to inspect all food and medical imports - which does not appear to have been effectively spent since food was rotten and medicines out of date. The role of Middle Eastern banks, their auditing and their possible suspected connection to Saddam's secret service. Mr Hankes-Drielsma last night described to The Telegraph three documents on which he said the name of the UN official appeared, and said: "Our report will clarify the details."
One is headed, "Quantity of Oil Allocated and Given to Mr Benon Sevan," and records 1.8 million barrels allocated to Mr Sevan.
Another refers to a Panamanian-registered company, Africa Middle East Petroleum Co Ltd (Amep), and says that the UN official "recommended" the company. There is nothing in the documents to suggest that any money flowed to Mr Sevan personally.
A leading member of Iraq's 25-strong governing council demanded both a UN commission of inquiry and the prosecution of anyone proven to have benefited from Saddam's Hussein's corruption of the Food for Oil scheme.
Mahmoud Otthman, a Sunni Kurd, said that he had challenged Mr Sevan at a meeting last November shortly before he left the country and Oil-for-Food was wound up.
"At the meeting in November, I asked him about the programme, about the contracts and why it was not transparent. He was embarrassed by my questions and said he did not have written information," said Mr Otthman.
"He said that he just executed his orders and that he was told by his headquarters that he was not to challenge the Iraqi government or object to its point of view."
A UN spokesman said yesterday that Mr Annan had stated "his confidence in the programme and in Mr Sevan", who was retiring only because he was older than 65. "Mr Sevan made innumerable efforts to try to ensure that Oil-for-Food was handled professionally," he said.
UN officials said that Mr Sevan and his assistants were acting on the instructions of the Sanctions Committee of the Security Council, which should take responsibility for inadequate controls.
.One prominent former employee of Cotecna is Kojo Annan, Kofi Annan's son by his first marriage. The young Mr. Annan was employed by Cotecna in the mid-1990s. He reportedly continued a consultancy relationship with Cotecna through his Nigerian-based company.
Philip Henebry, Cotecna's CFO, confirmed that Kojo Annan had been employed there, but would not confirm any dates. Asked how Cotecna was able to underbid competitors on the Iraq contract by as much as half, he replied that "We felt that the margins with competitors were very, very high. Originally the contract was for short periods and we worked on the assumption it would be renewed." ***
UN official Benon Sevan Iraq's new governing council has hired the accountants KPMG and the international law firm, Freshfields Bruckhaus Deringer, to investigate claims that large sums of money - which should have been spent on food and medicine for ordinary Iraqis - were diverted through oil "vouchers" to line pockets abroad.So who is KPMG and who owns them?
I'm not impressed.
Call in the FBI. Or the NYPD.
Then I'll believe it.
Retake that building. Put that real-estate to some good use for a change.
It's not about the money, it's about the power. The money just happens to not only be a benefit, but also a means.
How about Kofi Anan investigating himself.
Fat chances, both.
Is Hanz Blix available?
Great article. Thank you.
I think our own crooked congresspimps can relate vicariously to a lot of this.
This might be too big for them to hide:
More significant is that Sachs' article breaks the Times' silence about how Saddam's regime used oil vouchers to bribe potential goodwill ambassadors abroad.
Sachs writes of the Rashid Hotel lobby, "where the oil traders would gather whenever a journalist, actor or political figure would arrive in Iraq and openly praise Mr. Hussein.
"Experience taught them that the visitor usually returned to the hotel with a gift voucher, courtesy of the Iraqi president or one of his aides, representing the right to buy one million barrels or more of Iraqi crude."
At last, some light on so many foreign visitors' otherwise inexplicable enthusiasm for the brutal regime.
Rather too briefly, Sachs mentions a list in the possession of the Iraqi Governing Council, originating with Saddam's State Oil Marketing Organization, of 267 companies and individuals who allegedly received allocations of oil vouchers during the oil for food program.
The list was first published in Baghdad in January (this newspaper wrote about it on Jan. 29); it names politicians from around the Arab world, a host of Russian companies and officials, former French Interior Minister Charles Pasqua - and George Galloway, the antiwar British pol who was one of the Saddam's key mouthpieces abroad.
The Times article mysteriously neglects to mention Galloway or some of the more startling names on the list - like President Sukarnoputri of Indonesia and Benon V. Sevan, the actual head of the U.N. Oil for Food program.
Then again, the Times' decision to mention the existence the Oil for Food bribe list only an entire month after it was made public in Iraq is even more mysterious.
This was a major story by anyone's reckoning. The "paper of record's" decision to keep silent on it (until the Iraqi Governing Council handed its reporter a massive dossier that could not be safely ignored) presumably had something to do with the paper's unstinting support of the United Nations as an alternative to the Coalition Provisional Authority in Iraq.
The corruption and misuse of the Oil for Food program has long been an open secret.
So, they can investigate it until the cows come home. The real score card proof will be:
a. How many give the money back
b. How many get fired
c. How many go to jail
d. How many get fined
e. none of the above
The answer will no doubt be "e".
"...were caught up" - the excusatory passive voice
"...potential scandal" - actually it is actual
"...not known if...authentic" - some contract recipients - e.g. French businessmen close to Chirca - have already confessed to getting the money, just saying it wasn't illegal.
The article reports this as though it might all blow over, as though it might all be made up, as though they are just allegations. When there are documents in Iraq and confessions on the other end *proving* it happened.
Johnson appeared on LKL and was "grilled unmercifully" by the master of all talk shows. End of story.
I became convinced by France, Russia, and Germany's vigorous campaihn against going into Iraq that they were terrified of what might be revealed by scutiny of Iraqi dosuments following the fall of Saddam. I admit that at the time, they were mostly concerned about evidence that would prove their complicity in covertly aiding Saddam's WMD programs, but financial corruption, especially in the OFF program was likely.
I remain convinced that F, R&G's stonewalling gave Saddam time to move WMD stockpiles out of the country and that their trail will eventually be found. I am also convinced that any evidence of that F, R&G's complicity in Saddams WMD programs will be kept from view with the acquiescence of the USA (too hot to handle, let bygones be bygones, new tone, etc.).
I would be both surprised and pleased if the OFF scandall story blows up on them, but it may, because the Iraqis were so abused by the program (spoinled food, outdated medicines, Saddam kickbacks, etc.) and they are really PO'd. I hope heads roll over this outrage. In my dreams, this scandall will take Kofi and teh UN down.
It sounds like damage control, a limited investigation. Everything should be traced and published...especially what banks all the Iraqi's money sit in today...and yesterday.
KPMG was formed in 1987 with the merger of Peat Marwick International (PMI) and Klynveld Main Goerdeler (KMG) and their individual member firms. Spanning three centuries, the organization's history can be traced through the names of its principal founding members - whose initials form the name "KPMG."
K stands for Klynveld. Piet Klynveld founded the accounting firm Klynveld Kraayenhof & Co. in Amsterdam in 1917.
P is for Peat. William Barclay Peat founded the accounting firm William Barclay Peat & Co. in London in 1870.
M stands for Marwick. James Marwick founded the accounting firm Marwick, Mitchell & Co. with Roger Mitchell in New York City in 1897.
G is for Goerdeler. Dr. Reinhard Goerdeler was for many years chairman of Deutsche Treuhand-Gesellschaft and later chairman of KPMG. He is credited with laying much of the groundwork for the KMG merger. In 1911, William Barclay Peat & Co. and Marwick Mitchell & Co. joined forces to form what would later be known as Peat Marwick International (PMI), a worldwide network of accounting and consulting firms.
In 1979, Klynveld joined forces with Deutsche Treuhand-Gesellschaft and the international professional services firm McLintock Main Lafrentz to form Klynveld Main Goerdeler (KMG).
In 1987, PMI and KMG and their member firms joined forces. Today, all member firms throughout the world carry the KPMG name exclusively or include it in their national firm names.
An accountant from Peat Marwick audited a bank I worked at in Boston in 1970.
I was more impressed with the auditor from the FDIC who could work the 9-key with either hand at blur speed while conversing intently with you, looking in your eye.
In point of fact President Bush and the coalition forces have done the audit of records found in the taking of Baghdad.
The report is in.
Kofi Annan, you have the right to remain silent.
If you give up that right you go directly to orange jumpsuit Disney World in beautiful Guantanamo Bay, Cuba.
The Left must verify reports on their comrades, where as reports on the Right are breaking news. In other words, the Right is guilty until proven otherwise and the Left is sacrosanct.