Claudia Rosett is an investigative journalist with the Wall Street Journal and journalist-in-residence with the Foundation for the Defense of Democracies. She writes a column, "The Real World," on issues of tyranny and human rights. Ms. Rosett has reported from Asia, the former Soviet Union, Latin America and the Middle East during a 22-year career. She is a frequent commentator on TV and radio and her writings have appeared in the American Spectator, Commentary, New York Times and the Weekly Standard. Ms. Rosett played a major role in exposing the U.N. oil-for-food scandal, unearthing much of the story of nepotism, corruption, blocked audits and obstruction of investigations. She addressed the Middle East Forum in Philadelphia on May 3, 2005.
In 1996, with criticism mounting over the alleged humanitarian impact of U.N. sanctions on Saddam Hussein's Iraq, the oil-for-food program was instituted with the goal of providing food to impoverished Iraqis, funded by sales of Iraqi oil. In fact, the arrangement became spectacularly corrupt, with U.N. officials receiving kickbacks from the Iraqi regime and the humanitarian supplies never reaching Iraqis.
The oil-for food scandal the biggest heist in the history of humanitarian relief. It involved thousands of contractors in dozens of countries and Saddam personally obtained vast sums of money from the program. In all, the program is estimated to have involved $9-17 billion, but it may have been even more.
As a result, there are three investigations in congress, federal prosecutors have indicted suspects and named two officials and there has been an internal U.N. investigation. The organization has an important aim but a rotten core. In particular, the oil-for-food scandal demonstrates that, at the U.N., incentives matter, because there is a culture of privilege and secrecy.
There has been a proliferation of other U.N. scandals, such as the African sex scandal; auditing problems; the resignation of the U.N. High Commissioner for Refugees amid allegations of sexual harassment; and the U.N. Commission on Human Rights admitting Zimbabwe, and so on. None of these, however, have attracted the same amount of attention. This scandal has opened at window into the U.N. itself in a way other U.N. scandals have not.
Origins of oil-for-food corruption
After the U.S. drove Iraq out Kuwait in 1991, the U.N. maintained sanctions imposed by the Security Council in 1990, to be removed on condition that Saddam Hussein obey the terms of the ceasefire and comply with the various resolutions. Hussein never did these things and in particular, he did not disarm, so the sanctions were kept in place.
Because Hussein was then in trouble, he signed off on the deal with the U.N. to alleviate the impact of sanctions, the so-called ‘oil-for-food' deal. When one examines how the program was set up, it is clear that there was enormous scope for manipulation and corruption. The program was based on the idea that Iraq could sell oil and use the revenues towards humanitarian needs. The U.N. was to monitor the situation to ensure that all was above board and that the revenues were used properly to purchase and distribute humanitarian supplies for the Iraqi people.
According to the U.N., 60% of Iraqis depended on the oil-for-food program. The implicit understanding of the U.N. was the Hussein had full control of Iraq's oil reserves. Hussein had the discretion as to what the people of Iraq needed and chose the business partners of the program. The U.N. secretariat received a portion of the profits from the oil. This meant that the U.N. secretariat was paid by Saddam to monitor Saddam.
The program was intended to be a temporary measure pending Hussein's full compliance with his obligations for disarmament. The U.N. secretary-general, Kofi Annan appointed Benon Sevan to run the program and effectively set up to program as a department within the U.N. Initially the program was to be for only for food and medicine, but that changed. In 1998, Annan urged the U.N. Security Council to let Iraq produce more oil and to extend the program. Additionally, in 1999, the Iraqis debarred the weapons inspectors from returning to the country. At this time, Hussein was able to smuggle oil out of Iraq.
The program in operation
The scam worked through a process of kickbacks. Hussein would sell oil at the low market price, which naturally attracted many investors who wanted to re-sell the oil at higher price. Hussein chose those with whom he would do business and those people in turn would give Hussein a slice of the profits. Accordingly, the money earmarked for the humanitarian needs of Iraqis went instead to whatever Hussein wanted. Hussein used some of this money to buy political influence in the Security Council and secretariat. Some of Hussein's biggest business partners were from China, France and Russia.
On the humanitarian side, Hussein would overpay for goods and the supplier would then kick back some of that money to Hussein. Consequently, the corruption involved in the program led Iraqis to receive only a fraction of the humanitarian supplies intended for them.
By 2002, the US and UK put contracts on hold as a result of concerns over covert Iraqi weapons programs and corruption over oil-for-food. However, the U.S. and U.K. did little about the corruption. Annan retained complete control of processing humanitarian goods and he approved all of the humanitarian contracts, many of which were over-priced. This program might have continued indefinitely if not for the toppling of Saddam Hussein's regime in 2003. It is likely that oil-for-food corruption led to three Security Council permanent members voting against deposing of Hussein.
One of best reasons to remove Hussein was to eliminate this gigantic fraud. The Security Council officially ended the program in November 2003. As a result, billions of dollars intended for the program were handed over to the Coalition Provisional Authority (CPA) that was established after the war. Documents then began to surface that incriminated Mr. Sevan and 270 people and organizations. Since the U.N. kept the program so secret, it is hard to prove that the people and organizations on the list were in fact involved in the corruption.
Initially Savan and the U.N. denied any wrongdoing. Evidence has come to light that Kojo Annan, Kofi Annan's son, was also involved in the scandal. Kofi Annan has denied allegations against him. We still do not know where a lot of the money from the program ended up. The financial backing of the current terrorist insurgency could be derived from the oil-for-food program, but it is hard to ascertain because the UN continues to keep a lot of information regarding the scandal secret. Congress demanded internal audits from the U.N. and the U.N. initially refused to release them. When they did, the audits were damning.
The U.N. has used diplomatic immunity to avoid prosecutions. There is such a tradition of secrecy in the U.N. that it is hard to achieve reform. The former U.S. ambassador to the U.N., John Negroponte, was not assertive enough in the U.N. We also need a Secretary-General who will be tackle corruption. Unfortunately, Annan has not done so.
While the U.N. is set up to look like a democratic institution, it is not. Tyrants have the most motivation to exert influence in the U.N. In order to reform the U.N., its budget should be cut. There is a conflict between people who believe we should try to appease other countries and those who believe we should confront other countries. Appeasement leads to events like September 11. Therefore, going to war in Afghanistan and Iraq was the correct decision.