Sun, Feb 06, 2005 - Page 1 News List

Iraq wants wider probe into `oil-for-food' scandal

CRONYISM Iraq wants to know why the aid program's money has not been returned to the government, and is annoyed that the probe is funded from the same source


Iraq has called for a widening of the investigation of the UN oil-for-food program and demanded the immediate return of money in the UN account that paid for administration of the humanitarian relief effort.

Iraqi ambassador to the UN Samir Sumaidaie also reiterated his government's demand that the UN stop using oil-for-food money to pay for the independent investigation into the program led by former US Federal Reserve chairman Paul Volcker.

"It is outrageous that Iraqi funds were mismanaged and then we have to pay for finding out about the mismanagement," he told reporters a day after Volcker issued an interim report saying the program was undermined by mismanagement and political cronyism and that its chief was guilty of serious conflicts of interest.

The oil-for-food program, which was launched in December 1996 to help ordinary Iraqis cope with UN sanctions imposed after former Iraqi president Saddam Hussein's 1990 invasion of Kuwait, quickly became a lifeline for 90 percent of the country's 26 million people.

Under the program, Saddam's regime could sell oil, provided the proceeds went to buy humanitarian goods or pay war reparations. Saddam's government decided on the goods it wanted, who should provide them and who could buy Iraqi oil. But the UN Security Council committee overseeing sanctions monitored the contracts.

In a bid to curry favor and end sanctions, Saddam allegedly gave former government officials, activists, journalists and UN officials vouchers for Iraqi oil that could then be resold at a profit.

"Saddam used the sales of oil as a political instrument. He awarded millions of barrels of oil to newspaper editors, to ministers of neighboring countries, to opinion-formers. People around Iraq and further afield were bought by Saddam for oil," Sumaidaie said. "Gradually the facts will appear."

He said Volcker's report raises serious questions about UN credibility and "political influence" on the UN Secretariat in the administration of the oil-for-food program.

"We found that in the early days the Secretariat bent over backwards to please the Saddam regime," Sumaidaie said.

Iraq wants Volcker to widen the scope of his investigation and determine "the extent to which the regime benefited by inflating prices on contracts, getting kickbacks and basically getting what they want," the ambassador said.

Volcker said in the report there is no doubt that Saddam's government made money illegally and sought to reward friends and cultivate political influence. The major source of illicit funds to Iraq was from smuggling, to Jordan, to Turkey, eventually to Syria, and then to Egypt, he said. But what isn't clear is how much those involved in the oil-for-food program pocketed.

UN Secretary-General Kofi Annan ordered disciplinary action on Thursday against Benon Sevan, who headed the program, after the Volcker report accused him of "undermining the integrity" of the UN by soliciting oil allocations from Saddam's regime on behalf of a trading company between 1998 and 2001. Volcker also raised concerns Sevan may have received kickbacks for the help.

Sumaidaie said Iraq also wants Volcker's team to look at the management of the oil-for-food program in the field -- not just at UN headquarters.

There are allegations that UN personnel and contractors performed "in a manner which is not consistent with the integrity with which they should behave," he said.

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