Feb. 4, 2005

UN oil-for-food program was 'tainted,' probe finds

By URIEL HEILMAN
NEW YORK

In a reportedly scathing assessment, the investigative panel charged with reviewing the UN's corrupt oil-for-food program delivered its highly anticipated report Thursday to UN Secretary-General Kofi Annan.

The report, which was to be released publicly Thursday afternoon, found that the UN failed to follow its own accounting procedures in administering the roughly $65 billion venture, through which former Iraqi dictator Saddam Hussein and others were able to bilk the program of billions of dollars.

Even before the 200-plus-page report was released, Annan pledged to adopt reforms suggested by the probe, headed by former U.S. Federal Reserve Chairman Paul Volcker.

"We ourselves are taking measures to strengthen some of our management practices and we will be making some announcements and taking some concrete action very soon," Annan said Wednesday.

Those reforms include greater accountability and transparency within the UN's expansive bureaucracy.

Annan has faced heavy criticism in recent months over the growing scandal. The oil-for-food program was designed to provide the Iraqi people with food and medical needs, despite international sanctions against Iraq, in exchange for Iraqi oil. But Saddam was able to divert a substantial portion of the oil payments to his own coffers due to poor oversight at the UN, siphoning off billions of dollars.

Furthermore, last fall it was discovered that Kojo Annan, the secretary-general's son, apparently had received payments until early 2004 from a firm that had a contract in the oil-for-food program. The secretary general said he had not known of the payments to his son.

The independent probe focused on the initial 1996 procurements of three UN contractors responsible for the inspection of Iraqi oil exports, Iraqi imports of humanitarian goods, and the escrow and management of program funds; internal program audits; and spending of oil-for-food funds for administrative purposes, according to an Op-Ed piece Volcker wrote in Thursday's Wall Street Journal.

"The findings do not make for pleasant reading," Volcker wrote. "We have found in each case that the procurement process was tainted, failing to follow the established rules of the organization designed to assure fairness and accountability. Perhaps not surprisingly, political considerations intruded, but in a manner that was neither transparent nor accountable."

Volcker singled out the director of the program, Benon Sevan, a longtime UN official, for violating UN rules and putting himself in a position where he had a clear conflict of interest. As for Kojo Annan, Volcker said those findings would be released in a later report.

Some critics of the UN have argued that the scandal epitomizes the problems at the world body, which they say has proven ineffective confronting the sort of violence it was created to curb. And pro-Israel critics long have maintained that the UN is hopelessly biased against the Jewish state, employs terrorists in its Palestinian refugee organization, the United Nations Relief and Works Agency (UNRWA), and routinely ignores the human rights abuses of Arab countries.

These critics have used the oil-for-food scandal to push for reforms and management changes in the UN.

Annan has announced several major staff changes in recent weeks, including the replacement of UNRWA Commissioner-General Peter Hansen, UNICEF Executive Director Carol Bellamy, UN Controller Jean-Pierre Halbwachs and Annan's own chief of staff, Iqbal Raza. The secretary-general has two years left in office.

On Wednesday, Annan told reporters that there would not be a wholesale purging of the ranks after the release of the Volcker report.

"I know most of you are interested in shakeup of senior staff," Annan said. "There's not going to be any blood on the floor. There will be changes, but it will be done in a civilized way."

He also resisted calls for a complete overhaul of the organization.

"I think we need to separate oil for food from other issues," Annan said. "Some people may want to link it and may think it can be used to put pressure on me, but my conscience and the mandates of the Security Council will guide me in implementing the decisions of the Council, whether it is Iraq or Sudan, and I'm not going to bend because of some investigation."