Report: U.N. oil-for-food fraud widespread

Once a sprawling operation
The oil-for-food program was one of the world’s largest humanitarian aid operations, running from 1996-2003.

It allowed Iraq to sell limited and then unlimited quantities of oil provided most of the money went to buy humanitarian goods. It was launched to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam’s 1990 invasion of Kuwait.

But Saddam, who could choose the buyers of Iraqi oil and the sellers of humanitarian goods, corrupted the program by awarding contracts to — and getting kickbacks from — favored buyers, mostly parties who supported his regime or opposed the sanctions.

Tracing the politicization of oil contracts, the report said Iraqi leaders in the late 1990s decided to deny American, British and Japanese companies allocations to purchase oil because of their countries’ opposition to lifting sanctions.

At the same time, it said, Iraq gave preferential treatment to France, Russia and China, which were perceived to be more favorable to lifting sanctions and were also permanent members of the Security Council.

Volcker’s previous report, released in September, said lax U.N. oversight allowed Saddam’s regime to pocket $1.8 billion in kickbacks and surcharges in the awarding of contracts during the program’s operation from 1997-2003.

According to the new findings, Iraq’s largest source of illicit income from the oil-for-food program was the more than $1.5 billion from kickbacks on humanitarian contracts.

Volcker’s Independent Inquiry Committee calculated that more than 2,200 companies worldwide paid kickbacks to Iraq in the form of “fees” for transporting goods to the interior of the country or “after-sales-service” fees, or both.

Kickbacks in detail
Tables accompanying the report give a detailed look at the value of each company’s contracts and the amount of money it paid in kickbacks.

According to the findings, the Banque Nationale de Paris S.A., known as BNP, which held the U.N. oil-for-food escrow account, had a dual role and did not disclose fully to the United Nations the firsthand knowledge it acquired about the financial relationships that fostered the payment of illegal surcharges.

The report chronicles Saddam’s manipulation of the program and examines in detail 23 companies that paid kickbacks on humanitarian contracts including Iraqi front companies, major food providers, major trading companies, and major industrial and manufacturing companies.

According to the findings, the program was just under 3 years old when the Iraqi regime began openly demanding illicit payments from its customers. The report said that while U.N. officials and the Security Council were informed, little action was taken.

The report is the fifth by Volcker and concludes a year-long, $34 million investigation that has faulted Annan, his deputy, Canada’s Louise Frechette, and the Security Council for tolerating corruption and doing little to stop Saddam’s manipulations.

The smuggling of Iraqi oil outside the program in violation of U.N. sanctions poured much more money — $11 billion — into Saddam’s coffers in the same period, according to the report.

MORE FROM MIDEAST & N. AFRICA

Mideast & N. Africa Section Front

Bombs target Iraqi Christians, Shiites Reports: Iran protesters ‘savagely attacked’ Report: Hasan asked about killing GIs in '08 Destination of N. Korean arms cache is murky Captain of famed Exodus refugee ship dies at 86   Ex-President Carter offers apology to Jews   Gates proposes $2 billion for unstable countries Mediator in prisoner swap meets with Hamas in Gaza Ahmadinejad dismisses nuclear deal deadline General: No trials of pregnant soldiers in Iraq Mideast & N. Africa Section Front   Add Mideast & N. Africa headlines to your news reader: