November 19, 2004
by Claudia Rosett
With estimates soaring of graft and fraud under the United Nations Oil for Food program in Iraq, we are hearing a lot about the need to "get to the bottom" of this scandal, the biggest ever to hit the U.N. To get to that bottom will need a much harder look at the top -- where Secretary-General Kofi Annan himself resides.
That violates all sorts of taboos. But so, one might suppose, does a United Nations that allowed Saddam Hussein to embezzle at least $21.3 billion in oil money during 12 years, with the great bulk of that sum -- a staggering $17.3 billion -- pilfered between 1997-2003, on Mr. Annan's watch.
These are the record-breaking new estimates released Monday by the Senate's Permanent Subcommittee on Investigations, whose staffers, despite Mr. Annan's refusal to cooperate, have spent the past seven months voyaging deep into the muck of Oil for Food. At a hearing Monday, these investigators surfaced to tell us the theft and fraud under Oil for Food was at least twice as bad as earlier reports had suggested, and that all this is just a preview of yet more appalling disclosures they expect to release early next year. Sen. Norm Coleman, the subcommittee's chairman, underscored the urgency of such investigations, noting not only that the size of the fraud "is staggering," but that some of Saddam's vast illicit stash might right now be funding terrorists and costing American lives.
Mr. Annan, by contrast, seems to inhabit a different universe -- one in which the chief problem lies not in the U.N.'s complicity, including his own, in the biggest fraud in the history of humanitarian relief, but rather in the attempts to shine any light on all that sleaze. In Annan Land, there was earlier this year no need for any probe into Oil for Food; and even now there is no need for any investigating beyond the U.N.'s own "independent inquiry" into itself, led by former Fed chairman Paul Volcker, required to funnel its findings first through Mr. Annan, funded to the tune of $30 million out of one of the old Oil for Food accounts it is supposed to be investigating, and not planning to clock in with any specific results until sometime next summer.
In the spirit of shooting the messenger, Mr. Annan has complained often in recent months about criticism of Oil for Food, denouncing it as a "campaign" that has "hurt the U.N." Monday's Oil for Food hearing evoked from Mr. Annan's spokesman, Fred Eckhard, the comment that Mr. Annan feels he has been "misjudged by certain media" and that Mr. Annan is "not being obstructionist" in his refusal to cooperate with congressional investigators. We are given to understand that Mr. Annan would help if he could, but his job entails so many over-riding responsibilities.
OK, except that when it comes to Oil for Food, Mr. Annan has labored hard in recent months to disavow his own large role and responsibilities. From both Mr. Annan and the entourage of U.N. speechwriters and spokesman who report to him have come a long series of disclaimers and protests, eye-catching less for what they tell us than for what they leave out.
Just last week, we had Mr. Annan's director of communications, Edward Mortimer, asserting in a letter to The Wall Street Journal that Mr. Annan was "not involved" in designing Oil for Food. Technically, it may be correct that Mr. Annan did not actually seal the original deal. But Mr. Annan's own official U.N. biography states that before becoming secretary-general, he "led the first United Nations team negotiating with Iraq on the sale of oil to fund purchases of humanitarian aid"--and that implies a certain familiarity with the origins of Oil for Food.
Once Mr. Annan became secretary-general, he lost little time in getting deeply involved with Oil for Food. In October 1997, just 10 months into the job, he transformed what had begun as an ad hoc, temporary relief measure into the Office of the Iraq Program, an entrenched U.N. department, which reported to him directly--and was eliminated only after the U.S.-led coalition, against Mr. Annan's wishes, deposed Saddam. To run Oil for Food, Mr. Annan picked Benon Sevan (now alleged to have received oil money from Saddam, which he denies) and kept him there until the program ended about six years later.
Mr. Annan's reorganization of Oil for Food meant a nontrivial change in the trajectory of the program. All the signs are that Saddam immediately took the cue that he could now start gaming the program with impunity--and Mr. Annan did not prove him wrong. Within the month, Saddam had created the first crisis over the U.N. weapons inspectors, who were supposed to be part of the sanctions and Oil for Food package. Mr. Annan's response was not to throttle back on Oil for Food but to go before the Security Council a few months later and urge that Baghdad be allowed to import oil equipment along with the food and medicine to which the program had been initially limited. This set the stage for the ensuing burst in Saddam's oil production, kickbacks, surcharges and smuggling.
Mr. Annan then flew to Baghdad for a private powwow with Saddam and returned to declare that this was a man he could do business with. The weapons inspectors returned to Iraq for a short spell, but by the end of 1998, Saddam had evicted them for the next four years. Mr. Annan, however, went right on doing business. And big business it was, however humanitarian in name. Under the Oil for Food deal, Mr. Annan's Secretariat pulled in a 2.2% commission on Saddam's oil sales, totaling a whopping $1.4 billion over the life of the program, to cover the costs of supervising Saddam. Yet somehow the Secretariat never found the funding to fully meter oil shipments, ensure full inspections of all goods entering Iraq, or catch the pricing scams that by the new estimates of Senate investigators let Saddam rake in $4.4 billion in kickbacks on relief contracts.
Mr. Annan and his aides would also have us believe that Oil for Food had nothing to do with Saddam's smuggling of oil -- which generated the lion's share of his illicit income. But it was only after Oil for Food geared up that Saddam's oil smuggling really took off, totaling $13.6 billion during his entire 12 years between wars, but with more than two-thirds of that -- an estimated $9.7 billion -- earned during the era of Oil for Food. Those were precisely the years in which Mr. Annan repeatedly went to bat to enable Saddam, under Oil for Food, to import the equipment to rebuild Iraq's oil infrastructure, whence came all that smuggled oil.
Transparency from the start might have flagged the world and stopped the scams as things turned deeply rotten under Oil for Food. But Mr. Annan's policy to this day has been secrecy. On Monday, Sen. Coleman summed up his subcommittee's efforts to get at the truth, as having required so far, eight subpoenas, 13 chairman's letters, "numerous interviews with key participants, and receipt of over a million pages of evidence" to begin to understand "the behind-the-scenes machinations of the participants in the Oil for Food program."
"Participants" are generally understood to have been Saddam's chosen contractors. But we need to recognize that one of the biggest of those contractors was, in effect, the U.N. itself. As Oil for Food was not only designed but expanded, embellished upon and run for more than six years under Mr. Annan's stewardship, it became not so much a supervisory operation, but a business deal with Saddam, in which the U.N. in effect provided money laundering services, the Secretariat collected a percentage fee from Saddam -- and somewhere in there, between the kickbacks, surcharges, importation of oil equipment and smuggling out of oil, they jointly ran a storefront relief operation.
Who at the U.N. took illicit money from Saddam -- if, indeed, anyone did -- is an important question, and worth pursuing. But so is the matter of who covered up for Saddam; who pushed to continue and expand a program so derelict that it failed to nab more than $17 billion in illicit deals, and so secretive that investigators have spent much of the past year trying simply to get their hands on information the U.N. should have made public at the time. It is worth asking whose welfare was enhanced, whose domain was expanded, whose coffers filled with $1.4 billion delivered as a percentage cut of Saddam's oil revenues -- and who has failed to this day to take on board the thumping lessons about the need for transparency at the U.N.
That would be Mr. Annan. He is not protecting the U.N. At great cost to whatever noble aspirations the U.N. once had, and to all societies that value integrity over Potemkin institutions, he is protecting himself.
This article appeared November 17, 2004 in The Wall Street Journal Europe.
Claudia Rosett was formerly an adjunct fellow with the Hudson Institute.
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