Conservatives’ persistent complaints about the United Nations’ alleged lack of transparency are belied by the Interim Report of Paul Volcker’s Independent Inquiry Committee into the Oil for Food program. His investigators scoured the hard drives, e-mails and telephone records of UN staff–including those of Secretary General Kofi Annan–and of the private individuals involved. They even went through a cigar box full of business cards belonging to the former head of the program.
In the interests of reciprocal transparency, similar investigative exercises at the Pentagon, the White House, Coalition Provisional Authority offices and Halliburton would be welcome. For there were actually two reports about Iraqi oil money in the same week–Volcker’s and that of Stuart Bowen Jr., US Special Inspector General for Iraq Reconstruction, on the fate of the Development Fund for Iraq (DFI). The inspector told Congress that the US occupation administration of Iraq provided “less than adequate controls for approximately $8.8 billion of DFI funds provided to Iraqi ministries through the national budget process” and that there was no way to confirm that the money had been spent in accordance with UN Resolution 1483, which set up the fund.
The inspector’s report was released the day of the Iraqi elections and was overlooked by most of the US media. It concluded that the “CPA management of Iraq’s national budget process and oversight of Iraqi funds was burdened by severe inefficiencies and poor management.” One of the relatively few news stories about the inspector’s investigation explained that the DFI was made up of “proceeds from Iraqi oil sales, frozen assets from foreign governments and surplus from the UN Oil-for-Food Program.” In fact, more than $8 billion came from the unspent balances from the Oil for Food program. Some of that money went to Halliburton, the company formerly headed by the US Vice President. We have heard no calls in Congress for the investigation of Dick Cheney.
Meanwhile, in New York on February 3, Volcker released his report at an overflowing press conference. The story dominated the headlines for the weekend. Henry Hyde, chair of the House International Relations Committee, responded to Volcker’s report, claiming, “I am reluctant to conclude that the UN is damaged beyond repair, but these revelations certainly point in this direction.” For the record, it should be noted that Hyde held that opinion before the Oil for Food program was set up, let alone the inquiry. But what are the Volcker revelations? In fact, any objective reading of the report rebuts the fevered right-wing slanders that triggered the inquiry. After all, this was supposed to be what one typically hyperbolic conservative columnist has called the greatest financial scandal in the history of the universe.
Volcker’s report finds that because of political pressure, the UN gave inspection contracts for the Oil for Food program to British and Dutch firms. The Iraqis wanted either a Swiss or a French bank to handle the fund’s escrow account, and after Secretary of State Madeleine Albright opposed choosing a Swiss bank, then- Secretary General Boutros Boutros Ghali chose a French one.
More damaging, the report produces a lot of evidence suggesting that Benon Sevan, the head of the Oil for Food fund, used his influence to introduce an oil company to the Iraqis. Sevan denies that and also denies the implication of the report that the company paid him $160,000 over four years in commissions on the sales, which were in themselves perfectly legal. He had recorded these amounts at the time as gifts from his now-dead aunt in Cyprus, and he still maintains that is what they are. However, as the report points out, if these payments were from the oil company, they did indeed represent a serious breach of trust and ethics but are not necessarily illegal–as in fact Volcker himself has said. Annan has suspended Sevan and another official. However, even if proven, $160,000 of alleged corruption is hardly on the scale of the DFI’s $8.8 billion, which the Coalition Provisional Authority used as walking-around money during the first year of the occupation.
Other conservative commentators have alleged that the UN was profiting from the suffering of the Iraqi people by taking “commissions” on the oil sales. The report concludes that 2.2 percent of oil revenues the Security Council set aside to cover the costs of the program were indeed used to administer the fund, and that, in fact, “$372 million, or twenty-seven percent of the total oil proceeds…was transferred…to be used directly for the benefit of the Iraqi people.” He doesn’t mention that the $372 million ended up in the DFI to be mismanaged by the CPA.
The Volcker report reiterates that Saddam Hussein may have skimmed $228 million from the Oil for Food program. But he also raked in more than $13 billion from sales mostly to Turkey and Jordan, which were separate from the program and conducted with the full knowledge and tacit blessing of the Security Council, the State Department and Congress. As Richard Lugar, GOP chair of the Senate Foreign Relations Committee, said, council members, including the United States, “must also answer questions as to why they, too, did not pay greater scrutiny to this program.”
But of course they won’t, and the unequal attention given to the two reports demonstrates why not. Volcker’s inquiry will go on, all the way up to Kofi Annan and his son Kojo, and it may possibly detail lots of the inefficiencies in the UN’s handling of the funds. But the International Advisory and Monitoring Board, set up by Resolution 1483 to scrutinize the DFI, is unlikely to succeed in its probe, since the Bush Administration’s satraps in Baghdad refused to cooperate with it, and they are unlikely to get a look into Paul Bremer’s computer, let alone those of Halliburton and the Pentagon.