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UN: 2,000 firms gave Iraq illicit funds
(AP)
Updated: 2005-10-27 14:56
More than 2,000 companies paid about $1.8 billion in illicit kickbacks and
surcharges to Saddam Hussein's government through extensive manipulation of the
U.N. oil-for-food program in Iraq, according to key findings of a U.N.-backed
investigation obtained by The Associated Press.
The report — to be released in full Thursday by the committee probing claims
of wrongdoing in the $64 billion program — indicates that about half the 4,500
companies doing business with Iraq paid illegal surcharges on oil purchases or
kickbacks on contracts to supply humanitarian goods.
The investigators reported that companies and individuals from 66 countries
paid illegal kickbacks through a variety of devices while those paying illegal
oil surcharges came from, or were registered in, 40 countries. The names will be
included in Thursday's report but were not in the key findings obtained
Wednesday by the AP.
Thursday's final report of the investigation led by former U.S. Federal
Reserve chairman Paul Volcker strongly criticizes the U.N. Secretariat and
Security Council for failing to monitor the program and allowing the emergence
of front companies and international trading concerns prepared to make illegal
payments.
According to the findings, the Banque Nationale de Paris S.A., known as BNP,
which held the U.N. oil-for-food escrow account, had a dual role and did not
disclose fully to the United Nations the firsthand knowledge it acquired about
the financial relationships that fostered the payment of illegal surcharges.
The report presented by Paul Volcker, Chairman
of the Independent Inquiry Committee, to the Security Council.
[Reuters/file] | The oil-for-food program was one of the world's largest humanitarian aid
operations, running from 1996-2003.
Under the program, Iraq was allowed to sell limited and then unlimited
quantities of oil provided most of the money went to buy humanitarian goods. It
was launched to help ordinary Iraqis cope with U.N. sanctions imposed after
Saddam's 1990 invasion of Kuwait and became a lifeline for 90 percent of the
country's population of 26 million.
But Saddam, who could choose the buyers of Iraqi oil and the sellers of
humanitarian goods, corrupted the program by awarding contracts to — and getting
kickbacks from — favored buyers, mostly parties who supported his regime or
opposed the sanctions. He allegedly gave former government officials,
journalists and U.N. officials vouchers for Iraqi oil that could then be resold
at a profit.
Tracing the politicization of oil contracts, the new report said Iraqi
leaders in the late 1990s decided to deny American, British and Japanese
companies allocations to purchase oil because of their countries' opposition to
lifting sanctions on Iraq. At the same time, it said, Iraq gave preferential
treatment to France, Russia and China which were perceived to be more favorable
to lifting sanctions and were also permanent members of the Security Council.
Volcker's previous report, released in September, said lax U.N. oversight
allowed Saddam's regime to pocket $1.8 billion in kickbacks and surcharges in
the awarding of contracts during the program's operation from 1997-2003.
According to the new findings, Iraq's largest source of illicit income from
the oil-for-food program was the more than $1.5 billion from kickbacks on
humanitarian contracts.
The smuggling of Iraqi oil outside the program in violation of U.N. sanctions
poured much more money — $11 billion — into Saddam's coffers during the same
period, according to a finding in the new report.
Volcker's Independent Inquiry Committee calculated that more than 2,200
companies worldwide paid kickbacks to Iraq in the form of "fees" for
transporting goods to the interior of the country or "after-sales-service" fees,
or both.
The report to be released Thursday chronicles Saddam's manipulation of the
program and examines in detail 23 companies that paid kickbacks on humanitarian
contracts including Iraqi front companies, major food providers, major trading
companies, and major industrial and manufacturing companies.
According to the findings, the program was just under three years old when
the Iraqi regime began openly demanding illicit payments from its customers. The
report said that while U.N. officials and the Security Council were informed,
little action was taken.
The report is the fifth by Volcker and wraps up a year-long, $34 million
investigation that has faulted Secretary-General Kofi Annan, his deputy,
Canada's Louise Frechette, and the Security Council for tolerating corruption
and doing little to stop Saddam's manipulations. The investigation also accused
Benon Sevan, the former head of the U.N. oil-for-food program, of taking
$147,000 in illegal kickbacks.
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