Oil for Food really was Oil for Fraud:

Richard J. Goldstone .  The San Diego Union-Tribune . San Diego, Calif.: Oct 30, 2005.  pg. G.1

Copyright SAN DIEGO UNION TRIBUNE PUBLISHING COMPANY Oct 30, 2005

On Thursday, the Independent Inquiry Committee submitted its final report to Secretary-General Kofi Annan, documenting the massive manipulation of the Oil for Food Program by Saddam Hussein, diverting $1.8 billion in illicit surcharges and kickbacks from the humanitarian purposes of the Program into the coffers of his regime. This Report on Program Manipulation is the eighth document in a series of committee reports and briefing papers issued since August 2004 on the United Nations Oil for Food Program. It also was presented by the committee to an informal meeting of the General Assembly.

As our Sept. 7 report made clear, these illicit payments were dwarfed beside the illicit amounts filling Saddam Hussein's bank accounts from sources and activities outside the Oil for Food Program. The latter, in fact, were roughly five times (i.e. $10.99 billion) the $1.8 billion we describe in this last report.

The central issues addressed by the committee in all of its reports were:

1. Whether there was mismanagement and maladministration in the execution of the program by the United Nations, its personnel and its agents;

2. Whether any United Nations officials, personnel, or agents engaged in any illicit or corrupt activities in connection with the program;

3. Whether contractors of the United Nations, purchasers of oil, or providers of humanitarian aid engaged in any illicit or corrupt activities in connection with the program; and

4. Whether the accounts of the program were in order.

In conducting its investigation, the committee was conscious of the line it must tread between openness and the need to maintain the integrity of an investigation into very sensitive matters; issues that could put at physical risk witnesses who have come forward and spoken to committee investigators. Other than areas where confidentiality agreements with governments and individuals are in place or the investigative process dictated otherwise, we sought to respond to requests for information from legislators, law enforcement authorities, the public, and the media. After interviews of over 1,100 individuals in more than 20 countries, and after scanning and reviewing some 12 million pages of documentation, the committee believes that it has compiled a comprehensive and objective account of the program.

As far as the United Nations was concerned, the inquiry was highly intrusive. On the instructions of the secretary-general, we had full access to U.N. records and personnel. In many cases, including that of the secretary-general himself, we also had access to private records including those of a financial nature. We received excellent cooperation from a number of countries and their regulatory and law enforcement agencies, including France, Italy and Switzerland. Lebanon and Jordan also have been helpful. We have, as well, had cooperative working arrangements with the office of the Manhattan District Attorney.

In organizing its work, the committee gave priority to the serious allegations of corruption leveled at United Nations officials, contractors and agents. The investigation, therefore, initially concentrated on the procurement practices of the United Nations in awarding major contracts to companies that would be the backbone of the program's infrastructure. This included those engaged to inspect humanitarian goods entering Iraq and oil being exported from Iraq, as well as the financial institution to hold in escrow the oil sale proceeds that funded the humanitarian imports. The committee found that in each of the original contract awards in 1996 for the inspection companies and the escrow bank, procurement rules were disregarded and/or undue political considerations skewed the bidding processes.

This phase of the investigation probed the allegations of corruption surrounding Benon Sevan, the senior United Nations official in overall charge of the program. The committee found that he was guilty of a grievous conflict of interest in soliciting oil allocations from the government of Iraq and that he benefited financially in so doing.

One such contract award had raised questions as to the involvement of the secretary-general as it had been revealed that his son was, at one time, an employee of the company. The committee found no evidence that the secretary-general acted improperly in any way to influence that contract award to Cotecna Inspection SA in 1998. However, it did find his response wanting once he became aware of his son's continuing links with that company.

Having reported on those specific issues through the early part of 2005, the inquiry then focused on the basic issue of the United Nations' performance in administering the program generally. This included the roles of the senior management of the United Nations, especially that of the secretary-general and that of deputy secretary-general, Louise Frechette.

On these topics, the committee found that there was a lack of adequate oversight and supervision of the program and of those administering it. It also found the United Nations structures, especially in the area of financial controls, inadequate for monitoring a program of such size and complexity. Importantly, the committee also found significant shortcomings in the performance of many of the U.N.-related agencies that implemented the program in the three northern governorates of Iraq. Moreover, it found that that there was inadequate coordination among these agencies and significant overcharging to the program of agency costs. On this last point, the committee recommended that the agencies reimburse Iraq up to $50 million in overcharges for administrative and operating costs. In response to action by the United Nations, over $37 million already has been returned for eventual deposit to the Development Fund for Iraq.

The committee investigated allegations of Saddam Hussein's policy of using oil allocations to influence senior officials in a number of countries. Jean-Bernard Merrimee, the former French ambassador to the U.N. and subsequently special adviser to the secretary-general accepted such allocations. In the case of the former secretary-general, Boutros Boutros-Ghali no evidence was found that those charged with implementing the policy ever communicated it to him.

Most importantly, from its investigation, the committee has made a series of recommendations for United Nations reform. They address problems within the secretariat, among member states of the United Nations, and among members of the United Nations family of institutions. Many of the committee's detailed recommendations address administrative weaknesses, especially in the areas of management, auditing, and internal oversight that can be corrected by administrative action within the secretariat. The responsibility for the failures must be shared broadly, starting with member states and the Security Council itself. The program left too much initiative with Saddam Hussein. That basic difficulty was compounded by a failure to clearly define the complex administrative responsibilities, shared between the 661 Committee of the Security Council and the secretariat, and by persistent political differences. The result was that no one seemed clearly in command. Delays in, or evasion of, decision-making were chronic.

There was, as well, a pervasive absence of effective auditing and administrative controls. Weak planning, sorely inadequate funding, and too few professional staff were all characteristic of the process. The absence of truly independent status for the auditing and control functions was a critical deficiency. To address these shortcomings, the committee has made a number of recommendations. Some, particularly in the area of financial controls, arise from the detailed investigation of this aspect of the program and are therefore, perhaps, unique. However, in other significant recommendations, the committee joins with those who have put forward similar thoughts in most recent commentaries and reports on United Nations reform.

The committee believes that strong and effective leadership and management are vital to the success of the United Nations. The United Nations needs strengthening in both, and the committee has made specific suggestions in these areas, as it has with respect to badly needed strengthening of the United Nations conflict-of-interest and financial disclosure regimes.

In conclusion, it is my strong belief that any United Nations program must carry with it a strong sense of international legitimacy. No single nation, or group of nations, can match that potential quality. But if legitimacy is essential to success, that legitimacy, in the end, is dependent upon credibility and confidence.

I would suggest that reforms of U.N. management and financial controls are urgent. Some calls in the past have met with little response from member states and from the secretariat. If the failures that dominated the implementation of the Oil for Food Program do not result in such reforms, then nothing will.