Corruption: The-Oil-for-Food Scandal
The scandal surrounding the U.N.-administered Oil-for-Food Program has also done immense damage to the world organization's already shaky credibility. The Oil-for-Food scandal is undoubtedly the biggest scandal in the history of the United Nations and probably the largest financial fraud in modern times. It has shattered the illusion that the U.N. is the arbiter of moral authority in the international sphere.
Oil for Food became the hottest investigative issue on Capitol Hill in a generation. Investigators examined huge amounts of evidence relating to corruption, fraud, and bribery on an epic scale; French and Russian treachery; and the attempts of a brutal totalitarian regime to manipulate members of the U.N. Security Council.
Set up in the mid-1990s as a means of providing humanitarian aid to the Iraqi people, the U.N.-run Oil-for-Food Program was subverted and manipulated by Saddam Hussein's regime, allegedly with the complicity of U.N. officials, to help prop up the Iraqi dictator. Saddam's dictatorship was able to siphon off billions of dollars from the program through oil smuggling and systematic thievery, by demanding illegal payments from companies buying Iraqi oil, and through kickbacks from those selling goods to Iraq—all under the noses of U.N. bureaucrats.
The 18-month, $34 million U.N.-appointed Independent Inquiry Committee (IIC) documented a huge amount of evidence regarding manipulation of the $60 billion 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 three-member committee was chaired by former U.S. Federal Reserve Chairman Paul Volcker. The other two committee members were South African Justice Richard Goldstone and Swiss professor of criminal law Mark Pieth.
According to the IIC's report, "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 DaimlerChrysler, Siemens, 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.
The 500-page report painted an ugly tableau of bribery, kickbacks, corruption, and fraud on a global scale. 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 countries such as Russia and France.
The evidence presented was 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 multibillion-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 report should 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 and extremely poor leadership at the top of the world body.
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 left many questions unanswered in relation to the role of senior U.N. officials, including Kofi Annan and his chief aide, Iqbal Riza.
According to the second interim report released by the Volcker Committee, Iqbal Riza, Kofi Annan's chief of staff, authorized the shredding of 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 approved this destruction just 10 days after he had personally written to the heads of nine U.N.-related agencies that administered the Oil-for-Food Program in Northern Iraq, requesting that they "take all necessary steps to collect, preserve and secure all files, records and documents…relating to the Oil-for-Food Programme." The destruction continued for more than seven months after the Secretary-General's June 1, 2004, order to U.N. staff members "not to destroy or remove any documents related to the Oil-for-Food programme that are in their possession or under their control, and to not instruct or allow anyone else to destroy or remove such documents."
Significantly, Kofi Annan announced the retirement of Mr. Riza on January 15, 2005—the same day that Riza notified the Volcker Committee that he had destroyed the documents. Riza was immediately replaced by Mark Malloch Brown, Administrator of the U.N. Development Programme. Riza was chief of staff from 1997 to 2004, almost the entire period of the Oil-for-Food Program's operation, and undoubtedly possessed intricate knowledge of the U.N.'s management of it. He was a long-time colleague of Kofi Annan and served as Annan's deputy in the Department of Peacekeeping Operations from 1993 to 1996.
The destruction of highly sensitive documents by Iqbal Riza was an obstruction of justice that demands congressional investigation. It gave the impression of a major cover-up at the very heart of the United Nations and cast a dark cloud over the Secretary-General's credibility. It projected an image of impunity, arrogance, and unaccountability on the part of the leadership of the United Nations.
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 the House International Relations Committee and the Senate Permanent Subcommittee on Investigations, 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.