Oil for Food Scandal

Am I the only one who doesn't get this whole Oil for Food scandal at the UN? It's not that I can't figure it out, it's just that I don't want to expend the energy. Fortunately the recently redesigned CFR site has a Q & A breaking it down for us morons. Here are some excerpts.

What is the controversy over the U.N. Oil-for-Food Program?

The UN Security Council started the Oil-for-Food program in 1996 to allow Iraq to sell enough oil to pay for food and other necessities for its population, which was suffering under strict UN sanctions imposed after the first Gulf War. But Saddam Hussein exploited the program, earning some $1.7 billion through kickbacks and surcharges, and $10.9 billion through illegal oil smuggling, according to a 2004 Central Intelligence Agency investigation.Wide-scale mismanagement and unethical conduct on the part of some UN employees also plagued the program, according to the UN Independent Inquiry Committee.

What are the latest revelations?

The committee’s September 7 report faults UN Secretary-General Kofi Annan, his deputy, and the UN Security Council for allowing Saddam Hussein to graft over $10 billion from the humanitarian operation. “The inescapable conclusion from the committee’s work is that the United Nations organization needs thorough reform—and it needs it urgently,” says the report. In response to the report’s findings, Annan in his September 7 General Assembly address said the report’s findings “are deeply embarrassing to us all” and accepted responsibility for mismanagement of the program.

What does the committee’s final report recommend?

The report says its proposed changes should be enacted within a year, but experts say that is unlikely to happen. UN member states are already grappling with similar reform proposals ahead of September’s General Assembly meetings. Among the report’s recommendations:

• The UN Security Council should be clearer about UN operations’ purposes and criteria.
• A Chief Operating Officer should be nominated by the Security Council to provide needed focus for the Secretariat’s administrative responsibilities.
• An Independent Auditing Board should be established to fully review UN programs and hiring.
• Tasks should be coordinated more effectively between UN agencies.

How did the oil voucher scam work?

Under the Oil-for-Food program, the United Nations was supposed to monitor and approve all of Iraq ’s oil sales. All profits went into special escrow accounts that the United Nations controlled. Because the purpose of the program was to help feed and provide for the basic needs of the Iraqi people, Iraq was not permitted to buy military equipment or so-called dual-use items—items that could potentially be used in banned weapons programs—with its oil proceeds. But Iraq was given wide latitude to determine to whom it sold its oil, and was also permitted to select the vendors from which the United Nations would purchase goods with Iraqi oil profits. Saddam Hussein skimmed billions from the program by controlling these decisions.

Who received the vouchers?

The Duelfer report contains a list of more than 1,300 oil vouchers that Saddam Hussein gave to more than a hundred corporations, foreign officials, individuals, and political parties around the world. This information came from lists found at Iraq ’s state oil company and interviews with captured regime officials.

• Thirty percent of the oil vouchers were issued to beneficiaries in Russia, including individual officials in the president’s office, the RussianForeign Ministry, the Russian Communist Party, members of the Russianparliament, and the oil firms Lukoil, Gazprom, Zarubezhneft, Sibneft, Rosneft, and Tatneft.
• Fifteen percent of the beneficiaries were French, including a former interior minister, the Iraqi-French Friendship Society, and the oil company Total.
• Entities in China received 10 percent of the vouchers.
• Entities in Switzerland , Malaysia , and Syriaeach received 6 percent.
• U.S.companies and individuals received between 2 percent and 3 percent of the total vouchers—some 111 million barrels out of a total of 4.1 billion. These companies were not named in the report, because of U.S.privacy laws, but were later leaked to the press.

Which individuals were named in the report as voucher recipients?

Among them:

• Vladimir Zhirinovsky, the Russian Liberal Democratic Party leader, and companies associated with his party were allocated 53 million barrels.
• Alexander Voloshin, chief of staff under former Russian President Boris Yeltsin, was allocated 3.9 million barrels of oil from May to December 2002.
• Oscar S. Wyatt Jr., a prominent Texasenergy investor with a long history of dealings in Iraq, received vouchers for 29.7 million barrels, according to press reports.
• Benon Sevan, the UN chief of the Oil-for-Food Program, received an allocation of 13 million barrels.
• Charles Pasqua, a businessman and former French interior minister, received an allocation of 11 million barrels.
• Megawati Sukarnoputri, the former Indonesian president, was allocated 6 million barrels.

Was it illegal to take vouchers?

Yes. If individuals and companies knowingly received profits from oil sales not approved by the Oil-for-Food program, they broke the rules of that program and violated the terms of UN Security Resolutions that established the program and the sanctions against Iraq, say investigators from the House International Relations Committee. In the case of UN employees, accepting bribes would also violate the rules of that body, experts say.

Whether individuals on the list will be prosecuted, however, would, in most cases, be the decision of their own governments and subject to the domestic laws of each nation. In the United States, as in some other nations, the sanctions became part of domestic law. Another key question in the American context would be whether these vouchers truly served as bribes that caused individuals to work on Saddam Hussein’s behalf to modify U.S. policy. A series of laws, including the 1977 Foreign Corrupt Practices Act, regulates the overseas business practices of American citizens. In addition, U.S. firms could be prosecuted if they failed to receive the required approval from the U.S. Department of Treasury to purchase Iraqi oil.

What are the details of the allegations against U.N. Oil-for-Food chief Sevan?

The Duelfer report states that as Sevan was administering the U.N.’s program, he accepted Iraqi oil vouchers through various companies that he recommended to the Iraqi government. An investigation by the now-defunct Iraqi Governing Council uncovered a letter linking Sevan to a Panamanian-registered company called the African Middle East Petroleum Company, which set up an oil deal on his behalf, the report states. Some 7.3 million barrels were allegedly sold by Sevan before 2003, which could have netted him between $730,000 to $2 million, depending on market conditions.