Heritage Foundation Leadership for America

WASHINGTON, APRIL 21, 2004 – The United Nations should allow a full and impartial investigation of its Oil-for-Food program, one of the largest financial scandals of modern times, according to a paper from The Heritage Foundation.

The U.N. Security Council established Oil-for-Food in 1995 to serve a critical humanitarian need – feeding millions of Iraqis who were being harmed by economic sanctions against their government. But the program quickly became a cash cow for the corrupt Iraqi regime and for hundreds of shady middlemen, including some French and Russian companies, say Heritage foreign policy experts Nile Gardiner and James Phillips.

“With little U.N. oversight, the Iraqi dictatorship was able to circumvent and exploit the program,” they write. That allowed Saddam Hussein to extract billions of dollars in kickbacks from companies doing business with Iraq. Most of that money was then laundered through a network of foreign banks.

Overall, between 1997 and 2002, the Oil-for-Food program generated more than $67 billion in revenues for Iraq. The U.S. General Accounting Office estimates some $10.1 billion of that was illegally skimmed by Saddam’s regime, including $5.7 billion from oil smuggling and $4.4 billion in “illicit surcharges on oil sales and after-sales charges on suppliers.”

And Saddam isn’t the only one who benefited. According to the Times of London, between 1996 and 2003, Russian companies received $7.3 billion of business from Oil-for-Food, and French companies pocketed $3.7 billion. For that reason, the analysts write, France and Russia should play no part in any criminal investigation.

“The abuse of the Oil-for-Food program was the result of a staggering management failure by the United Nations and has raised troubling questions about the U.N.’s credibility and competence,” Gardiner and Phillips write.

To regain some credibility, they urge the Security Council to allow a complete investigation. “A leading international accounting firm with no previous ties to the United Nations should be hired to help conduct the investigation, alongside top criminal investigators,” they write.

There also must be real consequences for anyone convicted of wrongdoing. “Since the Iraqi people were the victims of the Oil-for-Food scam,” they write, “it is appropriate that the Iraqi legal system try to sentence those responsible. If convicted, their U.N. employment should be terminated.”

In addition, the United States should reconsider its level of U.N. funding and link it directly to the pace of U.N. reform, Gardiner and Phillips write. And, to make sure this sort of scandal isn’t repeated, “the United Nations never should again administer an international sanctions regime,” they write.

The paper is available online.