UN 'did nothing' while Saddam smuggled oil

The man leading an independent investigation into alleged corruption in the United Nations’ oil-for-food programme said most of the money illegally obtained by Saddam Hussein came from smuggling, much of which the UN Security Council knew about but did not stop.

In an interview to be broadcast today on Alhurra, the US government-backed television station tailored for Arab audiences, Paul Volcker questioned the reliability of reports that Saddam diverted amounts ranging from €1.3bn to €16.5bn from the €46.9bn oil-for-food programme.

The former US Federal Reserve chairman said there was a lot of confusion made between money Saddam earned from smuggling and money obtained illegally under the oil-for-food programme.

He refused to give any estimates, saying his investigation was still under way.

“The big figures that you see in the press, which are sometimes labelled oil-for-food – the big figures are smuggling, which took place before the oil-for-food programme started and it continued while the oil-for-food programme was in place,” he said, according to a transcript obtained by The Associated Press.

The security council authorised the oil-for-food programme to help Iraqis cope with UN sanctions imposed after Saddam’s 1990 invasion of Kuwait. Launched in December 1996, it allowed the former Iraqi regime to sell oil provided the money went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War.

Saddam’s government decided on the goods it wanted, who should provide them, and who could buy Iraqi oil – but the security council committee overseeing sanctions monitored the contracts.

In a report in October, top US weapons investigator Charles Duelfer said Saddam was able to “subvert” the programme to generate an estimated €1.3bn in revenue outside UN control from 1997 to 2003.

In addition, Iraq brought in more than €6.3bn in illicit oil deals with Jordan, Syria, Turkey and Egypt through smuggling or illegal pumping from 1991 to 2003 when sanctions were in place, he said.

US congressional investigators reported in November that Saddam made more than €16.8bn in illegal revenue – more than €10.2bn from smuggling and about €5.4bn by subverting the oil-for-food programme.

“Without question, (there were) problems in the oil-for-food area,” Volcker said. “But when you look at those 10 billion-dollar figures, or 20 billion figures, most of those numbers are so-called smuggling, much of which was known and taken note of by the security council, but not stopped.”

Volcker refused to speculate on why the council did not stop the smuggling, but indicated the issue would probably be addressed in his reports. An initial report was expected in January and a final report in the summer, he said.

Volcker stressed that his inquiry was focused on “what went wrong or right inside the UN” in managing the oil-for-food programme.

The investigation was not just focusing on whether UN officials might be guilty of corruption, he said, but on other issues – did UN officials follow proper procedures?

Was there “bad administration rather than corrupt administration”? What were the directions from the security council, and what was its responsibility?

But Volcker said the investigation could not avoid the question of smuggling, including why the security council did not take action to stop it and the responsibility of the five permanent veto-wielding members – the United States, Britain, France, Russia and China.

Volcker said his investigators had interviewed Saddam’s associates, and plan to interview more – but they had not asked to interview Saddam, although “maybe we should”.

With serious allegations against the United Nations as an institution, and US Congressional calls for Secretary-General Kofi Annan’s resignation over the oil-for-food allegations, Volcker said an investigation was needed “to clear the air”.

“If there were mistakes made, that ought to be revealed. If there was corruption, malfeasance, that ought to be revealed, and my hope is that that will strengthen in the end confidence in the institution because it will have to reform,” he said.