Posted on 04/21/2004 9:24:28 PM PDT by Valin
UNITED NATIONS (Reuters) - Paul Volcker, the former chairman of the U.S. Federal Reserve, has begun a high-level investigation into allegations of kickbacks and bribes in the U.N.-run oil-for-food programme for Iraq.
Volcker assumed his post as head of a three-man team after he was assured that all 15 members of the U.N. Security Council adopted a resolution to back the investigation, which will include a probe of contracts with Iraq around the world.
"We will be following the money as well as we can," Volcker Volcker told a news conference.
"I wanted a resolution to make sure that member governments and member states knew what they were getting into," he said.
The council's resolution called "on member states, including their national regulatory authorities, to cooperate fully by all appropriate means with the inquiry."
Under the now-defunct programme, Iraq was permitted to sell oil in order to buy civilian goods. Its purpose was to ease the impact on ordinary Iraqis of sanctions imposed after the 1991 Gulf War.
But Volcker acknowledged his group would not have subpoena power and was relying on voluntary cooperation from foreign governments, whose officials and firms may have made deals with Saddam Hussein.
He predicted he would get more cooperation from U.N. staff, where he was assured that diplomatic immunity would be waived.
The panel intends to hire investigators, accountants and legal specialists in an effort to analyse contracts, he said. The programme allowed Saddam's government to choose buyers of its oil and suppliers of goods.
U.N. Secretary-General Kofi Annan said he took the allegations seriously, which include accusations that a senior U.N. official took a bribe from Saddam's government.
"Obviously, these are serious allegations which we take seriously. And this is why we've put together a very serious group to investigate it," Annan said. "I want to get to the truth, and I want to get to the bottom of this."
The General Accounting Office, the investigative arm of the U.S. Congress, says Iraqi elites pocketed $4.4 billion (2.4 billion pounds) by imposing illegal surcharges on oil sales.
Iraq is estimated to have smuggled another $5.7 billion in oil outside the U.N. programme, which amounted to some $67 billion from December 1996 until last year, a few months after the U.S.-led invasion of Iraq.
Russia, whose firms were favoured by Saddam, initially argued a resolution was unnecessary. But Moscow agreed after Annan spoke to Foreign Minister Sergei Lavrov.
Volcker, 76, has been a major architect of U.S. financial and economic policy, serving five presidents from John F. Kennedy to Ronald Reagan. U.S. diplomats had wanted Annan to appoint an American whose reputation was beyond approach.
Other members of the board are Judge Richard Goldstone, who served as the first prosecutor on the U.N. Balkan war crimes tribunal, and Swiss lawyer Mark Pieth, an expert on international bribery and money laundering.
Volcker said he would have his first report within three months but predicted the investigation would take much longer.
"I didn't agree to do this lightly," Volcker said.
"But there are some important accusations made about the U.N., accusations about the administration of the programme, accusations about activities outside the U.N. that need to be resolved."
The most important task, Volcker added, was to find out if there was substance to the allegations. "If there is substance, get it out there, get it out in a hurry and cauterise the wound."
Riiight like that's gonna happen.
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