Volcker to Head U.N. Iraq Probe
By Colum Lynch
Washington Post Staff Writer
Saturday, April 17, 2004; Page A21
UNITED NATIONS, April 17 -- <font size=4>Facing mounting criticism of the United Nations' management of an oil-for-food humanitarian program in prewar Iraq, U.N. Secretary General Kofi Annan today appointed former U.S. Federal Reserve Bank chairman Paul Volcker to head a panel that will probe allegations of corruption at the U.N. agency.
The move is part of a broader effort by U.N. officials to contain the political crisis, and to demonstrate that some blame rests with nations on the U.N. Security Council that failed to close loopholes allowing Saddam Hussein's government and scores of foreign companies to exploit the system. Volcker's appointment comes less than a week before the first of two hearings in the U.S. House into allegations that Iraq was able to illegally siphon billions of dollars from the U.N. program when it was supposed to exchange oil only for civilian goods.
U.S. lawmakers have warned that a credible investigation into corruption in the program is essential to restoring the United Nations' reputation at a time when it is being called upon to help Iraq through its political transition this year and elections early next year.
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"Assuming there is wrongdoing found by some U.N. officials, it is important to have an independent and credible investigation into these allegations to put to rest any lingering concerns," said Nancy Soderberg, a former U.S. representative of political affairs to the United Nations. "I think Secretary General Annan has made it clear he will do what it takes."
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The U.N. came under scrutiny after the head of its oil-for-food program, Benon Sevan of Cyprus, was included on a list of those who allegedly received vouchers to purchase or trade large quantities of Iraqi crude at a discount rate.<font size=3> Sevan has denied the allegations. Annan, asked if he has confidence in Sevan, said, "We are going to investigate these allegations very seriously and with a very thorough independent investigation."
Volcker's panel will probe those charges as well as broader allegations that Hussein skimmed billions of dollars from the 1996 oil-for-food program, which permitted Iraq to sell oil and use that money only for purchases of food, medicine and other civilian goods.
The regime, however, was able to pocket $4.4 billion in cash under the program, in part by secretly demanding extra payments from companies that wanted to purchase Iraqi oil, and by charging illicit commissions to businesses that were sending the permitted humanitarian goods to Iraq, according to the General Accounting Office. It also generated another $5.1 billion in illegal earnings from smuggled oil outside the U.N. program, according to the GAO.
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The Bush administration has defended Annan, charging that
Russia, France, China and other commercial partners of the
former Iraqi regime bore greater responsibility for
misconduct by routinely frustrating efforts to rein in
abuses in the program. "We have had resistance" from those
countries "with respect to correcting improprieties and
inadequacies" in the program, John D. Negroponte, the U.S.
ambassador to the United Nations, told the Senate Foreign
Relations Committee last week.
The United States says it supports an appeal by Annan and Volcker for passage of a legally binding Security Council resolution that would "compel member states and entities to comply with the secretary general's intention to thoroughly investigate the charges," according to Richard Grenell, spokesman for the U.S. mission to the United Nations.
But Russia opposes the adoption of such a resolution.<font size=3> A senior Russian diplomat suggested that the oil-for-food "scandal" is an invention of conservative activists in the United States who also promoted the theory that Iraq had weapons of mass destruction. "Are they doing these hearings alongside with the WMD inquiries?" Russia's acting U.N. ambassador, Gennady Gatilov, said in an interview. "I personally have very big doubts about any possible corruption on the part of the United Nations."
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U.S. and U.N. officials say they have been aware of abuses in the program since late 2000. But they said they could find little hard proof until the collapse of Hussein's regime. That's when Iraqi civil servants told U.S. officials the regime charged a cash commission of at least 10 percent on every contract since 2001. "It was the ministry officials themselves who came to us and said, 'Here's what's been going on. Here is the system; here are the percentages,' " Robin L. Raphael, the State Department's Iraq reconstruction coordinator, told the Senate.
U.N. officials have also provided closed-door briefings to
U.S. auditors, and House and Senate staffers, in their
effort to demonstrate that key council members including
Russia, France and China routinely stalled efforts to
address abuses in the program.
They have also charged that the United States showed little interest. The United States challenged that assertion, but Negroponte acknowledged that corruption was never a main focus of the U.S. mission to the United Nations, which devoted most of its energy to preventing Iraqi importation of banned weapons.
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