The $34 million U.N.-appointed Independent Inquiry Committee (IIC) issued its fifth and final report on October 27. The 18-month investigation, chaired by Paul Volcker, has documented a huge amount of evidence regarding manipulation of the $60 billion Oil-for-Food Program by the Saddam Hussein regime with the complicity of more than 2,200 companies in 66 countries as well as a number of prominent international politicians.
The 500-page report paints an ugly tableau of bribery, kickbacks, corruption, and fraud on a global scale-without a doubt the biggest financial scandal in modern history. It amply demonstrates how the Iraqi dictator generously rewarded those who supported the lifting of U.N. sanctions on Iraq and who paid lip-service to his barbaric regime. Oil-for-Food became a shameless political charade through which Saddam Hussein attempted to manipulate decision-making at the U.N. Security Council by buying the support of influential figures in Russia and France.
The IIC evidence confirms many of the findings of the groundbreaking Senate Permanent Subcommittee on Investigations (PSI) inquiry, which initially exposed the close ties between senior French and Russian politicians and the Iraqi regime. The IIC's findings also broadly support the evidence presented by the PSI in its recent report on the activities of British MP George Galloway.
The IIC's Key Findings
The latest IIC report "illustrates the manner in which Iraq manipulated the Programme to dispense contracts on the basis of political preference and to derive illicit payments from companies that obtained oil and humanitarian goods."
- "Oil surcharges were paid in connection with the contracts of 139 companies and humanitarian kickbacks were paid in connection with the contracts of 2,253 companies." Companies accused of paying kickbacks to the Iraqi regime include major global corporations such as Daimler-Chrysler AG, Siemens AG, and Volvo.
- The Saddam Hussein regime received illicit income of $1.8 billion under the Oil-for-Food Program. $228.8 million was derived from the payment of surcharges in connection with oil contracts. $1.55 billion came through kickbacks on humanitarian goods.
- In allocating its crude oil, "Iraq instituted a preference policy in favor of companies and individuals from countries that, as Tariq Aziz described, were perceived as 'friendly' to Iraq, particularly those that were members of the Security Council."
- Russian companies purchased 30 percent of oil sold under the Oil-for-Food Program, worth approximately $19.3 billion. French companies were the second largest purchasers of Iraqi crude oil under the Program overall, contracting for approximately $4.4 billion of oil from Iraq. "Total International Limited and SOCAP International Limited contracts accounted for approximately 74 percent of the oil purchased by French companies under the Programme."
- "Iraq awarded 'special allocations' not only to companies, but also to individuals and their representatives. These individuals were influential in their respective countries, espoused pro-Iraq views, or organized anti-sanctions activities. They included present and former government officials, politicians and persons closely associated with these figures, businessmen and activists involved in anti-sanctions activities."
- A "Command Council" was established by the Iraqi regime "to determine the distribution of oil contracts to companies and individuals of interest." It was headed by Vice President Taha Yassin Ramadan, and included Deputy Prime Minister Tariq Aziz and Minister of Finance Hikmat Al-Azzawi.
- Several Russian political parties and politicians received allocations of Iraqi oil, including:
The Communist Party of the Russian Federation (125.1 million barrels)
Vladimir Zhirinovsky and the Liberal Democratic Party of Russia (73 million barrels)
Party of Peace and Unity (55.5 million barrels)
Alexander Voloshin, Chief of Staff to Russian President Vladimir Putin (4.3 million barrels)
- The Iraqi government, in addition to giving preference to French-based companies, "granted oil allocations to individuals based in France who espoused pro-Iraq views." These included:
Jean-Bernard Merimee, Special Adviser to the United Nations, with the rank of Under-Secretary General (6 million barrels)
Charles Pasqua, former Minister of the Interior (11 million barrels)
Claude Kaspereit, businessman and son of French MP Gabriel Kaspereit (over 9.5 million barrels)
Serge Boidevaix, former Director of the Department for North Africa and the Middle East, French Ministry of Foreign Affairs (over 32 million barrels)
Gilles Munier, Secretary-General of the French-Iraqi Friendship Association (11.8 million barrels)
- British Member of Parliament George Galloway was allocated "a total of over 18 million barrels of oil" either directly "or in the name of one of his associates, Fawaz Abdullah Zureikat." Nearly two-thirds of the oil was lifted, or loaded by tanker at a port.
"Mr. Zureikat received commissions for handling the sale of approximately 11 million barrels that were allocated in Mr. Galloway's name."
"According to Iraqi officials, oil allocations were granted to fund Mr. Galloway's anti-sanctions activities. Iraqi officials identified Mr. Zureikat as acting on Mr. Galloway's behalf to conduct the oil transactions in Baghdad."
- Roberto Formigioni, the President of the Lombardy Region of Italy was "granted a total of over 27 million barrels of oil" by the Government of Iraq. Over 24.1 million barrels of this oil were lifted.
Recommendations for Further Action
In light of the latest findings by the IIC, as well as the evidence presented by the Senate Permanent Subcommittee on Investigations, the United States should press strongly for U.N. member states to investigate, and where appropriate prosecute, individuals and companies that gained illicit earnings through the Oil-for-Food Program. In particular, the United States should call on the Russian, Italian, and British governments to act against politicians alleged to have received oil allocations in return for support for the Saddam Hussein regime. Prosecutors in Paris have already charged several French officials with corruption and bribery relating to the scandal. In the United States, several indictments have been issued in the past few months by the Department of Justice and the Manhattan District Attorney's Office.
The report should also prompt widespread soul-searching within the United Nations, whose administrators turned a blind eye to massive wrongdoing in a humanitarian program designed to help the weakest and most vulnerable in Iraq. The fact that the Baathist regime was able to get away with such a vast scandal under the noses of U.N. bureaucrats, and in some cases with their complicity, represents both spectacular incompetence as well as extremely poor leadership at the top of the world body.
U.N. Secretary-General Kofi Annan and Deputy Secretary-General Louise Frechette should take responsibility for a scandal that has irreparably damaged the U.N.'s reputation. Both should resign for presiding over the biggest management failure in the history of the United Nations.
The IIC's latest findings should increase the pressure for wholesale reform of the United Nations, and reinforce the need for the United States to push for greater accountability and transparency at Turtle Bay. Congress and the Bush Administration must press for significant management reform at the U.N. as well as for a far greater degree of external oversight for its operations.
The United States should threaten to withhold a portion of its assessed contribution for the United Nations unless a series of reform measures are implemented. The U.S. must also demand the prosecution of all U.N. officials accused of criminal activity, including Benon Sevan, the former director of the Oil-for-Food Program, who is currently in hiding in Cyprus.
The Bush Administration should strongly back the efforts of Congressman Henry Hyde and the House International Relations Committee in advancing a powerful U.S. agenda for fundamentally reforming the United Nations and making it accountable to the American taxpayer.
Verdict on the Volcker Investigation
The final report of the Independent Inquiry Committee is by far the strongest of the five it has issued over the past eight months. The evidence presented is comprehensive, damning, and a wake-up call to those who naively believed that the Saddam Hussein regime could be trusted to comply with U.N. sanctions. Saddam's multi-billion dollar fraud, carried out with the complicity of prominent political figures across Europe as well as thousands of international companies, was halted only by the liberation of Iraq by the United States and Great Britain, in the face of determined opposition by France and Russia. It is not difficult to see why powerful political interests in Paris and Moscow were so fundamentally opposed to a war that would open the archives of Baghdad to close scrutiny and subsequently cause huge political embarrassment.
The overall IIC investigation should not, though, be viewed as the final say on the Oil-for-Food scandal. It should be seen as an important but at times flawed and incomplete inquiry that leaves many questions unanswered in relation to the role of senior U.N. officials, including Kofi Annan and his chief aide Iqbal Riza.
Paul Volcker's leadership of the Oil-for-Food inquiry was lackluster and uninspiring, as well as confrontational and condescending toward congressional investigations. His unwillingness to share U.N. documents with Congress was a major source of tension between the IIC and Capitol Hill. The monopoly wielded by the Volcker Committee over United Nations Oil-for-Food papers was, and continues to be, unacceptable. Volcker's stubborn refusal to fully cooperate with Congress has impeded the efforts of House and Senate committees in their own inquiries.
It is imperative now that Mr. Volcker immediately release all U.N. documents in his possession, as well as transcripts of interviews conducted with U.N. officials and other individuals linked to the Oil-for-Food scandal. The Volcker Committee especially owes it to the people of Iraq, who footed the huge bill for their inquiry, to give them full access to all U.N. records pertaining to the Oil-for-Food Program.
The Volcker inquiry was less than forthright in its analysis of possible wrongdoing and incompetence at the very top of the U.N. Secretariat, a point sharply highlighted by the resignation in April of former FBI agent Robert Parton, the IIC's lead investigator on the Kofi Annan/ Kojo Annan issue. Parton resigned on a matter of principle, in protest at the Volcker Committee's unwillingness to take a harder line regarding the actions of the Secretary-General. Parton subsequently handed over thousands of pages of documents relating to the Annan investigation to the House International Relations Committee.
A huge cloud remains over the U.N. Secretary-General with regard to his meetings with senior officials from the Swiss Oil-for-Food contractor Cotecna, which employed his son Kojo from 1995 to 1997 and continued to pay him through 2004. Congressional investigators are examining evidence that questions Annan's central claim that he was unaware of Cotecna's bid for a lucrative U.N. Oil-for-Food contract in 1998.
Serious questions have also emerged regarding blatant interference with the conclusions of the Volcker inquiry by the office of the U.N. Secretary-General. A recent report by the Los Angeles Times revealed an extraordinary last-minute intervention by Annan to protect his own name and head off the prospect of resignation, raising huge doubts over the independence of the U.N.-appointed inquiry. Based on an interview with the IIC Chairman, the Times concluded:
"Hours before the publication of Volcker's report in September assessing Annan's culpability, the UN chief and his lawyer asked Volcker to change language about business dealings by Kojo Annan that they thought could force his father's resignation. Volcker agreed. It was merely a part of the due process, he said."
It is strikingly clear from this revelation that the Volcker Committee was subject to U.N. intervention from the highest levels. In future years, the Secretary-General should not be permitted to hand-pick the investigative committee into a U.N. scandal and then pass it off as "independent." Such inquiries will always be open to the possibility of political interference and manipulation by those being investigated. The United States should insist that future investigations into U.N. scandals be completely independent of the Secretary-General. Chairmen of such inquiries should also be asked to disclose, upon appointment, all potential conflicts of interest, whether business or political.
The Volcker investigation may have ended, but several other major inquiries will continue to gain momentum and reveal new findings relating to the Oil-for-Food scandal. These include the leading investigations on Capitol Hill led by Henry Hyde in the House and Norm Coleman in the Senate, in addition to the Department of Justice inquiry. It will be many months, even years, before the full extent of the corruption and mismanagement within the United Nations is completely exposed.
Nile Gardiner, Ph.D., is the Bernard and Barbara Lomas Fellow at the Margaret Thatcher Center for Freedom in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation. The author is grateful to James Dean, Deputy Director of Government Relations at the Heritage Foundation, for his advice and suggestions. Heritage intern Matt Rooney assisted with research for this report.
Independent Inquiry Committee into the United Nations
Oil-for-Food Programme, Manipulation of the Oil- for- Food
Programme by the Iraqi Regime, October 27, 2005, at
http://www.iic-offp.org/story27oct05.htm Hereafter referred to as IIC Final Report.
United States Senate Permanent
Subcommittee on Investigations, Committee on Homeland Security and
Governmental Affairs, Report on Oil Allocations Granted to
Charles Pasqua and George Galloway, May 17, 2005,
/static/reportimages/CE732EEDE1F9AB4F300A37F890274021.pdf; Report on Oil Allocations Granted to the Russian Presidential Council, May 17, 2005, at /static/reportimages/71BBC57D182E64AC474AC4E8466EDF08.pdf
 United States Senate Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, Report Concerning the Testimony of George Galloway Before the Permanent Subcommittee on Investigations, October 25, 2005, at /static/reportimages/375A3589726935F1EEDAC1B686BEF307.pdf
 IIC Final Report, p.1.
 IIC Final Report, p.1.
 IIC Final Report, p.1.
 IIC Final Report, p.9.
 IIC Final Report, p.22.
 IIC Final Report, p.47.
 IIC Final Report, p.11.
 IIC Final Report, p.16.
 IIC Final Report, pp.27-42
 The report finds that "according to Iraqi officials and records, the oil allocations were carried out on Mr. Pasqua's behalf by his diplomatic adviser at the time, Bernard Guillet."
 IIC Final Report, pp. 47-61.
 IIC Final Report, pp. 79-88.
 IIC Final Report, pp.89-98.
For a summary of the Hyde proposals, see Brett D. Schaefer, "The
United Nations Reform Act of 2005: A Powerful Lever to Advance UN
Reform," Heritage Foundation WebMemo No. 759, June 10, 2005,
 Riza, Annan's chief of staff from 1997 to 2004, should face further scrutiny in relation to his extraordinary decision to shred thousands of U.N. documents between April and December 2004. Among these documents were the entire U.N. Chef de Cabinet chronological files for 1997, 1998, and 1999, many of which related to the Oil-for-Food Program. Riza's actions gave the impression of a major cover-up at the heart of the United Nations, and raised further serious concerns over interference with the work of the Volcker inquiry by U.N. officials.
For background on Kofi Annan's relationship with Cotecna, see Nile
Gardiner Ph.D., "The Cotecna Memorandum: End of the Road for Kofi
Annan?" Heritage Foundation WebMemo No. 765, June 15, 2005,
Maggie Farley, "UN Oil-for-Food Inquiry Findings Surprised
Volcker," Los Angeles Times, October 28, 2005, at http://www.latimes.com/news/nationworld/world/la-fg-volcker28oct28,1,