UNITED NATIONS, Oct 27: Nearly half of the 4,500 companies involved in the UN oil-for-food programme paid some $1.8 billion in illegal surcharges and kickbacks to Saddam Hussein’s government, according to a report released by the Independent Inquiry Commission (IIC) on Thursday.
The IIC headed by former US Federal Reserve Chairman Paul Volcker investigating the $64 billion Iraqi relief programme, said that about 2,200 companies participated in extensive manipulation of the programme.
The investigators reported that companies and individuals from 66 countries paid illegal kickbacks through varieties of devices while those paying illegal oil surcharges came from, or were registered in, 40 countries.
The final report strongly criticises the UN Secretariat and Security Council for failing to monitor the programme 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 UN oil-for-food escrow account, had a dual role and did not disclose fully to the United Nations the first-hand knowledge it acquired about the financial relationships that fostered the payment of illegal surcharges.
The oil-for-food programme was one of the world’s largest humanitarian aid operations, running from 1996-2003.
Under the programme, 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 UN sanctions imposed after Saddam’s 1990 invasion of Kuwait and became a lifeline for 90 per cent of the country’s population of 26 million.
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 favourable to lifting sanctions and were also permanent Security Council members.
The IIC ‘s previous report, released in September, said lax UN oversight allowed Saddam’s regime to pocket $1.8 billion in kickbacks and surcharges in the awarding of contracts during the programme’s operation from 1997-2003.
According to the new findings, Iraq’s largest source of illicit income from the oil-for-food programme was the more than $1.5 billion from kickbacks on humanitarian contracts.
The smuggling of Iraqi oil outside the programme in violation of UN sanctions poured much more money - $11 billion - into Saddam’s coffers during the same period, according to a finding in the new report.
The fifth and final report by the Volcker commission ended its year-long investigation spending some $34 million from the same programme it was investigating. The IIC faulted UN Secretary-General Kofi Annan, his deputy, Canada’s Louise Frechette, and the Security Council for tolerating corruption.
