Thursday, October 27, 2005

So What Happened in the Oil-For-Food Scandal

As expected, Kofi Annan was criticized for his lack of oversight of the program, Saddam earned $1.8 billion from over 2,000 companies, and the neo-cons were forced to shut up as it turned out that American companies and/or their foreign affiliates made up 52% of the companies dealing with Saddam.

Saddam took $1.8 bln from UN oil-for-food pact
Thu Oct 27, 2005 10:53 AM ET

UNITED NATIONS (Reuters) - More than 2,000 firms that did business with Iraq in the now-defunct U.N. oil-for-food program were involved in bribes and kickbacks to Saddam Hussein's government, a major report on the program said on Thursday.

Saddam diverted some $1.8 billion in kickbacks and surcharges said the report from a U.N.-established Independent Inquiry Committee led by former U.S. Federal Reserve Chairman Paul Volcker.

According to the London Times:
More than 2,200 companies helped to enrich Saddam Hussein's regime by paying a total of $1.5 billion in illegal bribes as they scrambled to profit from the United Nations Oil-for-Food programme, an inquiry is expected to report today


Companies and individuals from 66 countries paid bribes, while those paying oil surcharges came from, or were registered in, 40 countries. Their names will be published later today.

The report strongly criticises the UN Secretariat and Security Council for failing to monitor the programme, according to the Associated Press, which obtained a leaked copy.

The report will say that the Banque Nationale de Paris SA, known as BNP, which administered the Oil-for-Food holding account, had a dual role and did not tell the UN all it knew about the financial relationships that fostered the payment of illegal surcharges.

Iraq was first allowed to sell limited and then unlimited quantities of oil, provided that most of the money went to buy humanitarian goods.

But it left Saddam free to choose the buyers of Iraqi oil, and the sellers of humanitarian goods. He manipulated the programme by accepting bribes from favoured buyers and awarding contracts to them.

Meaning that Saddam could punish companies from countries that opposed lifting sanctions, and prop up support among countries that wanted them lifted. Which he eventually did, except that American, British and Japanese companies had also profited mightily by that point.

Now, I emphasized "Security Council" in the above quote, because it was the US and Britain who were prime movers for sanctions and who were prime movers for the oil-for-food humanitarian program in the first place. Ergo, it is incumbent upon those nations to ensure monitoring is effective and worthwhile, something they clearly did not do.

Furthermore, this from the LA Times:
The inquiry, led by former U.S. Federal Reserve Chairman Paul Volcker, will detail how the U.N. and its member governments failed to stop the former dictator's exploitation of the $64-billion program, and will expose the participation of prominent international companies, as well as fly-by-night operations, a spokesman for Volcker's committee said Wednesday.

"There are a few marquee names that everyone will recognize," Mike Holtzman said. "Some worked with a wink and a nod with their governments. But the corruption was so widespread that literally thousands of companies were caught up in it. To play, you needed to pay."

Charges have been filed against two Texas oilmen, David B. Chalmers and Oscar S. Wyatt Jr.