"UNscam" Revisited

Oil-for-Food is undoubtedly a scandal. But there may be more to the story than FOX lets on.

| Thu Nov. 18, 2004 3:00 AM EST

As the United Nations rebuked the U.S. military over its incursion into Fallujah, politicians in Washington continued to lash back at the UN for its role in the Oil-for-Food Scandal. The accusations, watched closely by conservative media outlets such as FOX News and the Wall Street Journal, have unfolded so rapidly that it's been difficult to keep up with every twist and turn. On Wednesday, the House Committee on International Relations revealed that former Iraqi president Saddam Hussein had used some of the money he diverted from the program to compensate families of Palestinian suicide bombers. Henry Hyde, chairman of the House Committee, then suggested that a French bank "may have facilitated" the Saddam's manipulations. A Senate Committee, meanwhile, demanded that the UN hand over findings from its own investigation of the matter—a demand that was promptly refused.

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What, exactly, is going on? And more importantly: Can we really believe a scandal that seems to live on only on the pages of FOX, the Journal op-ed pages, and various right-wing blogs?

Start from the beginning. The Oil-for-Food program was created in 1996 to help alleviate the humanitarian cost of sanctions against Iraq. Under Oil-for-Food, Iraq could sell its oil in exchange for food, medicine, and other supplies. It was to be run by the UN Secretariat and supervised by members of the UN Security Council. As an aid program, its success was considerable: the UN created over 55,000 distribution centers in Iraq and delivered over $30 billion worth of goods. Malnutrition rates in the parts of Iraq controlled by Hussein dropped drastically during the program's six years of existence, according to UNICEF, and by 2002 over half the country depended on the program for basic food needs.

Not all was rosy, though. As early as 2000, rumors began to pop up that Saddam Hussein had extorted kickbacks from his oil trading partners. One of the loopholes in the program—a loophole that the UN repeatedly refused to close—was that the Iraqi president was allowed to determine which companies would buy the oil. Michael Soussan, a former program coordinator for the program, wrote in the New Republic about prewar allegations that Iraq asked had trading partners to inflate their asking prices artificially, and then deposit the difference in Saddam's bank accounts.

But the rumors remained rumors until after the American invasion of Iraq. In January of 2004, al-Mada, an independent newspaper, published a list of 270 beneficiaries—a list including multi-national corporations, UN officials, and top French and Russian politicians—who had received oil contracts from Saddam in exchange for either supporting the Iraqi regime, helping Saddam import illegal materials, or simply ignoring the ongoing corruption. These beneficiaries could then turn around and sell the contracts to legitimate oil traders, making a tidy profit.

Now here's where the tale gets complicated. According to AFP, Al-Mada "refused to disclose how [it] procured the documents." The documents had allegedly come from the Iraqi Oil Ministry, which at the time was run by a group of Iraqi exiles, including Fadhil Chalabi—a cousin of Ahmed Chalabi, the con man whose phony intelligence helped lead the Pentagon to war. This same Oil Ministry, note, had already issued other documents in May of 2003 alleging that British MP George Galloway—a prominent critic of the Iraq war—had received bribed from Saddam's regime through oil-for-food. Those documents, in fact, turned out to be forgeries. The Chalabi track record was not exactly airtight.

After the names were published, two Iraq-based investigations began looking into the matter. One was set up by Paul Bremer, then-proconsul of Iraq, along with Ihsan Karim, the head of Iraq's Board of Supreme Audit, aided by Ernst and Young, an auditing firm. The other was conducted by Claude Hankes Drielsma, a close associate of Ahmed Chalabi, directed by Chalabi himself, and aided by the British firm KPMG.

It wasn't long before Bremer and Chalabi started clashing over their investigations, with each side trying to lead the charge. The most stunning allegations—of international figures implicated in the scandal—all came from Chalabi's office, though no one else was allowed to verify his documents. In a May raid of Chalabi's offices, Bremer reportedly seized files related to the oil-for-food program, thus complicating the ability of KPMG to complete its audit. (KPMG eventually withdrew from the investigation, citing Chalabi's refusal to pay for its services.) But Bremer couldn't find all of Chalabi's files—as the Daily Telegraph reported, on the day of the raid, Chalabi and Hankes-Drielsma announced that their computer files on the scandal had been "destroyed by hackers," and the backup disks mysteriously "wiped out." It was too bad, Hankes Drielsma said: Had it not been for the bad breaks, "[t]his report would have been even more damning than anticipated."

Meanwhile, Ihsan Karim signed an agreement in June to turn over his board's findings to an independent investigative team led by former Reserve Chairman Paul Volcker. In July, however, Karim was killed by a car bomb. U.S. officials told FOX News that they believed Oil-for-Food was the motive. A Chalabi spokeman, Zaab Sethna, rather ominously told reporters: "The assassination of Mr Karim is very worrying, Bremer appointed the audit board and left them on their own." Conspiracy, anyone?

Chalabi's team still reportedly has in its possession several key lists of names related to Oil-for-Food. The investigation led by Paul Volcker has made use of those lists to make its allegations, and the names were included in the recent Duelfer report on Iraq. But, Volcker's team has not yet been able to independently verify the names on the list. "We name those individuals and entities here in the interest of candor, clarity and thoroughness," the Duelfer report said, adding that it did not "investigate or judge those non-Iraqi individuals." Volcker, meanwhile, will not make his investigation's findings public until 2005.

It's a matter of considerable importance, then, to figure out how many names originate from Ahmed Chalabi—given the INC leader's propensity for lying and fraud—and whether these names can be independently verified. The stakes are quite high: Chalabi's associate, Hankes-Drielsma recently implicated UN Secretary-General Kofi Annan in the scandal, saying that problems with the program "were repeatedly drawn to his attention, yet he did nothing." The Duelfer report, meanwhile, accuses Benon Sevan, who ran the program, of receiving kickbacks from Saddam. These are not light charges; and certainly need to be verified.

No one, of course, is claiming that the Oil-for-Food scandal never existed. Both the Government Accountability Office as well as the Congressional investigations underway found grave discrepancies in the program's audits, and evidence that corruption and bribery took place is overwhelming. As well, news reports have indicated that the United Nations have been guilty of stonewalling the investigation. But it is still unclear exactly who was responsible, and their may be more to the most high-profile allegations than meets the eye.

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