Tuesday, August 09, 2005 5:48 p.m. ET
By EDITH M. LEDERER Associated Press Writer
UNITED NATIONS (AP)
-- Half the 4,500 companies that took part in the U.N. oil-for-food program in Iraq paid kickbacks or illegal surcharges and are being given a chance to respond to the accusations, two top investigators told The Associated Press.
The U.N.-backed probe is expected to release a major report in early September on the $64 billion operation and a final report in October on the companies involved in the purchase of Iraqi oil or sale of humanitarian goods under the program, the investigators said.
"We will report on the management and the corruption," former U.S. Federal Reserve chairman Paul Volcker, who heads the investigation, said in an interview Monday. "We will talk about the benefits and the shortfall."
The oil-for-food program, launched in December 1996 to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait, was one of the largest humanitarian programs in history. By most accounts, it achieved what it set out to do, becoming a lifeline for 90 percent of the country's population of 26 million.
Under the program, Saddam's regime could sell oil, provided the proceeds went primarily to buy humanitarian goods or pay war reparations. Saddam allegedly sought to curry favor with former government officials, activists, journalists and others by giving them vouchers for Iraqi oil that could then be resold at a profit.
Volcker said "the definitive list" of more than 4,500 private contractors involved in the program will include for the first time the entities behind so-called front companies.
"It will provide information of known or alleged beneficiaries of oil allocations or purchase contracts, and it will report the apparent payment of illicit surcharges on oil contracts and kickbacks on humanitarian contracts," Volcker told a news conference Monday.
Richard Goldstone, a former Yugoslav war crimes prosecutor and a member of Volcker's Independent Inquiry Committee, said afterward that many contracts were accompanied by side letters containing "evidence of kickbacks."
Before making allegations of illegal actions against companies, Goldstone said, "we are going through the painstaking process of giving them prior notice, and giving them the opportunity of saying why this would be unfair and incorrect."
Goldstone said about half the 4,500 companies would receive notices.
He said a substantial amount of evidence of kickbacks came from Iraqi files, and "a lot from U.N. documents," adding that some evidence also came from the committee's investigations.
In the October report, Goldstone said, "we will be selecting some companies for in-depth treatment to show how the Saddam regime used the oil program to solicit favors from government."
Volcker said he regrets that the investigation's final report on Secretary-General Kofi Annan's role in oil-for-food and recommendations for U.N. reform will be issued just weeks before a summit of world leaders in mid-September to overhaul the world body.
"I wish this report was out two months ago," he said in an interview. "It comes late, and it complicates it."
The third report by Volcker's committee released Monday said new e-mails suggesting Annan knew more than he said about a company which employed his son, Kojo, and won an oil-for-food contract "clearly raises further questions."
Volcker's eagerly awaited final assessment on Annan's involvement could affect the U.N. summit and the secretary-general's completion of his second five-year term, which ends on Dec. 31, 2006.
Mark Malloch Brown, the secretary-general's chief of staff, told reporters Monday that Annan expects "vindication" in the September report.
The timing may even be a good thing, though in an ideal world nobody would want a report of that magnitude "raining on your parade just a couple of weeks before a global summit," he said.
He said Volcker's accusation that oil-for-food chief Benon Sevan took $147,184 in illegal kickbacks and Monday's guilty plea by U.N. procurement official Alexander Yakovlev for soliciting an oil-for-food bribe and pocketing hundreds of millions of dollars in bribes on other contracts demonstrate the need for deep-rooted management reform of the United Nations.
"Maybe Mr. Volcker can give us what's needed to lift this issue above politics and say, `this U.N. that we all believe in badly needs a strengthening of its management systems,'" he said.
Volcker and Goldstone promised that management reforms will be a focus of their recommendations in the September report.
By EDITH M. LEDERER Associated Press Writer
UNITED NATIONS (AP)
-- Half the 4,500 companies that took part in the U.N. oil-for-food program in Iraq paid kickbacks or illegal surcharges and are being given a chance to respond to the accusations, two top investigators told The Associated Press.
The U.N.-backed probe is expected to release a major report in early September on the $64 billion operation and a final report in October on the companies involved in the purchase of Iraqi oil or sale of humanitarian goods under the program, the investigators said.
"We will report on the management and the corruption," former U.S. Federal Reserve chairman Paul Volcker, who heads the investigation, said in an interview Monday. "We will talk about the benefits and the shortfall."
The oil-for-food program, launched in December 1996 to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait, was one of the largest humanitarian programs in history. By most accounts, it achieved what it set out to do, becoming a lifeline for 90 percent of the country's population of 26 million.
Under the program, Saddam's regime could sell oil, provided the proceeds went primarily to buy humanitarian goods or pay war reparations. Saddam allegedly sought to curry favor with former government officials, activists, journalists and others by giving them vouchers for Iraqi oil that could then be resold at a profit.
Volcker said "the definitive list" of more than 4,500 private contractors involved in the program will include for the first time the entities behind so-called front companies.
"It will provide information of known or alleged beneficiaries of oil allocations or purchase contracts, and it will report the apparent payment of illicit surcharges on oil contracts and kickbacks on humanitarian contracts," Volcker told a news conference Monday.
Richard Goldstone, a former Yugoslav war crimes prosecutor and a member of Volcker's Independent Inquiry Committee, said afterward that many contracts were accompanied by side letters containing "evidence of kickbacks."
Before making allegations of illegal actions against companies, Goldstone said, "we are going through the painstaking process of giving them prior notice, and giving them the opportunity of saying why this would be unfair and incorrect."
Goldstone said about half the 4,500 companies would receive notices.
He said a substantial amount of evidence of kickbacks came from Iraqi files, and "a lot from U.N. documents," adding that some evidence also came from the committee's investigations.
In the October report, Goldstone said, "we will be selecting some companies for in-depth treatment to show how the Saddam regime used the oil program to solicit favors from government."
Volcker said he regrets that the investigation's final report on Secretary-General Kofi Annan's role in oil-for-food and recommendations for U.N. reform will be issued just weeks before a summit of world leaders in mid-September to overhaul the world body.
"I wish this report was out two months ago," he said in an interview. "It comes late, and it complicates it."
The third report by Volcker's committee released Monday said new e-mails suggesting Annan knew more than he said about a company which employed his son, Kojo, and won an oil-for-food contract "clearly raises further questions."
Volcker's eagerly awaited final assessment on Annan's involvement could affect the U.N. summit and the secretary-general's completion of his second five-year term, which ends on Dec. 31, 2006.
Mark Malloch Brown, the secretary-general's chief of staff, told reporters Monday that Annan expects "vindication" in the September report.
The timing may even be a good thing, though in an ideal world nobody would want a report of that magnitude "raining on your parade just a couple of weeks before a global summit," he said.
He said Volcker's accusation that oil-for-food chief Benon Sevan took $147,184 in illegal kickbacks and Monday's guilty plea by U.N. procurement official Alexander Yakovlev for soliciting an oil-for-food bribe and pocketing hundreds of millions of dollars in bribes on other contracts demonstrate the need for deep-rooted management reform of the United Nations.
"Maybe Mr. Volcker can give us what's needed to lift this issue above politics and say, `this U.N. that we all believe in badly needs a strengthening of its management systems,'" he said.
Volcker and Goldstone promised that management reforms will be a focus of their recommendations in the September report.
