OIL FOR PALACES
By ANDREW APOSTOLOU April 2, 2004 --
ALMOST a year after the fall of Baghdad, everybody knows that Saddam
Hussein stole billions from the Iraqi people. What is now emerging
is that the United Nations was his partner in crime - aiding and abetting
him during the eight-year Oil-for-Food program.
Initially an attempt to alleviate the hardship of U.N. sanctions
on Iraqis, Oil-for-Food raises troubling questions not only about
the United Nations' competence, but its role in propping up Saddam's
tyrannical regime.
The program was theoretically designed to take Iraq's oil revenues
out of Saddam's hands and use them for the benefit of the Iraqi people.
The United Nations was to supervise the sale of Iraqi oil and then
ensure that the oil money went for food and medicine, not tanks and
mustard gas.
But Saddam - with U.N. compliance, if not connivance - subverted
all of those aims. His grip on Iraq was tightened, not loosened, while
his monstrous sons rolled in U.N.-provided riches.
Uday, the older son, even got U.N. funds for his Iraqi National Olympic
Committee. U.N. Secretary-General Kofi Annan agreed on June 13, 2002
to hand over $20 million to build an Iraqi Olympic arena, part of
Uday's absurd bid for the 2012 Olympics. A renowned rapist, Uday used
to torture Iraqi athletes if they failed to win international competitions.
His father? Saddam built new palaces throughout the eight years of
the program. Gen. Tommy Franks got it right when he reached Baghdad
in April 2003: The Iraqi dictator's rule was an "Oil for Palace" program.
Although the United Nations supposedly kept an eye on the price at
which Saddam sold Iraqi oil, in reality the Iraqi strongman set the
prices and forced his customers to pay him kickbacks. The Iraqi regime
then used this money to bribe and buy influence abroad.
One recipient of that largesse was Shakir al-Khafaji, a Detroit
businessman who stumped up $400,000 for former U.N. arms inspector
Scott Ritter to make "In Shifting Sands," an anti-sanctions film.
Meanwhile, back in Iraq, Saddam's secret police punished hundreds
of thousands of Shi'a Iraqis by taking away their U.N. ration cards,
forcing them into the very poverty from which the U.N. program was
supposed to protect them.
Another group of Iraqis that never received their fair share of oil
revenues, thanks to U.N. collaboration, was the Kurds. The oil revenues
were supposed to be divided up in such a way as to protect Iraq's
Kurds, whose regions Saddam had devastated with a genocidal campaign
of village destruction and executions in the late '80s. Oil-for-Food
theoretically guaranteed the Kurds their fair share of Iraq's national
wealth - 13 percent of all Iraqi oil revenues - for the first time
in their history.
Difficulties arose almost from the first day because of the way that
Annan organized the program. Rejecting advice from experienced U.N.
staff, he decided against having one U.N. agency oversee the whole
scheme. Instead, Annan created an Oil-for-Food program office in New
York to oversee the work of nine U.N. agencies which in turn dealt
with the Iraqis, introducing a pointless and costly layer of bureaucracy.
Many of these U.N. agencies used their Middle East offices to implement
Oil-for-Food. Staffed mostly with Sunni Arabs, they proved sympathetic
to Saddam's Arab nationalism and uninterested in the welfare of Iraqis
- especially Iraqi Kurds.
The Iraqi government was quick to exploit this bias for its own political
ends. The Cairo office of the U.N.'s World Health Organization managed
to stall the building of a new general hospital for the Kurdish city
of Sulaimani, even though the funds were available in 1998.
Over the life of Oil-for-Food, the Kurds barely got half of the $8.4
billion allocated to them - they are still owed some $4 billion. Who
owes it to them? Well, the United Nations was supposed to pay them,
out of accounts entrusted to it. But the status of any funds remaining
in those accounts is in dispute - and the U.N. is balking at efforts
to clarify things. It won't even let anyone else examine its books.
Saddam didn't just use Oil-for-Food to give preferential treatment
to Iraqis: He rewarded foreign friends, too. He favored Russian and
French contractors, even insisting that all Iraqi oil earnings be
paid into just one bank, BNP Paribas in Paris.
One of the largest shareholders in the bank as of 2000 was Nadhmi
Auchi, an Iraqi Sunni who was involved in Saddam's 1959 assassination
attempt on Iraq's then head of state, Brig. Gen. Abdul Karim Qassem.
Auchi was the sort of business partner that Saddam liked. Auchi was
convicted in a French court in November 2003 of accepting illegal
payments in a major corruption scandal at a French state-owned oil
company. (He got a 15-month suspended prison sentence and a $2.4 million
fine.)
After Saddam and his cronies, the main beneficiary of Oil-for-Food
was the U.N. payroll. To make the program self-financing, the United
Nations took its cut off the top - 2.2 percent of Iraqi oil sales
for its administrative costs, plus 0.8 percent to pay for weapons
inspections (in four of Oil-for-Food's eight years), allowing the
United Nations to walk away with $1.9 billion of Iraqi oil money.
U.N. staff employed by the Oil-for-Food program ballooned to 3,000,
the largest single U.N. program in the world.
No wonder that when Kofi Annan met Saddam Hussein in February 1998,
he said that the Iraqi dictator was a man that "I can do business
with."
Andrew Apostolou is director of research at the Foundation for
the Defense of Democracies. He has just returned from Iraq.
* * *
PENTAGON AUDIT CONFIRMS $LICK SADDAM OIL GRAFT
By NILES LATHEM (Post Wire Services) March 26, 2004
A secret Pentagon audit of Iraq's U.N. -run oil-for-food program
showed almost half the contracts examined were exploited by Saddam
Hussein as part of a giant graft scheme.
The Defense Contract Audit Agency last year looked at 759 contracts
between Iraq and suppliers of food, medicine and humanitarian goods
- about 10 percent of the contracts in the program - and found a staggering
potential for corruption. "We identified potential overpricing in
at least 48 percent of the contracts evaluated," the report said.
"The total potential overpricing identified in our sample is $656
million."
The General Accounting Office estimated Saddam skimmed more than
$4.4 billion from the oil-for-food program and pocketed another $5.7
billion from oil smuggling. The Pentagon audit found many contracts
loaded with "items of questionable utility for the Iraqi people, i.e.,
Mercedes-Benz touring sedans," and provisions for training Iraqi personnel
at the suppliers' facilities, with travel expenses and "pocket money"
paid for by the suppliers.
In a letter to Security Council members, U.N. Secretary-General Kofi
Annan yesterday called for an independent inquiry to look into allegations
of corruption among U.N. officials and outside firms dealing with
Iraq under the now-defunct $65 billion humanitarian plan.
