March 1, 2004 | WebMemo on International Organizations

The U.N. Oil-for-Food Scam: Time for Hearings

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."[1] The seriousness of these charges warrants investigation by the U.S. Congress and an independent, Security Council-appointed commission.

 

Serious Allegations

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.[2]

 

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.[3]

 

Congressional Hearings

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 oil-for-food program.

 

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.

 

Conclusions

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 sanctions regime.
  • 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 a function.
  • 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.



[1] See Susan Sachs, " Hussein's Regime Skimmed Billions From Aid Program," The New York Times, February 29, 2004.

 

[2] 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.

 

[3] 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.

About the Author

Nile Gardiner, Ph.D. Director, Margaret Thatcher Center for Freedom
The Margaret Thatcher Center for Freedom

James Phillips Senior Research Fellow for Middle Eastern Affairs
Douglas and Sarah Allison Center for Foreign and National Security Policy

Related Issues: International Organizations