Inside the Oil-for-Food Scandal w/ Eric Shawn

Eric Shawn How did this scandal come about?

Eric Shawn: Oil-for-Food was started in 1996 to let the Iraqi people get humanitarian relief without the money going into Saddam’s pockets which he would use to go off and buy weapons. Even though the program generally worked, there are all these allegations that Saddam was able to use the Oil-for-Food program to basically amass about $10 billion worth of illegal money through bribes and kickbacks. That’s how the regime was able to build all the palaces and keep itself going. They provided contracts to sell oil to politicians around the world. So the obvious question is, were all these people around the world payed off to keep it going? Including three top U.N. officials? No one expected people to find out?

Shawn: Who would expect Saddam would be toppled? It was going so well for a number of years. The head of the Oil-for-Food program, Benon Sevan, has denied he did anything wrong, but now it has come out that there were papers found in the Oil Ministry in Baghdad with his name on them indicating he may have gotten $3.5 million worth of oil to sell. Two other unnamed public officials at the U.N. were allegedly bribed with millions of dollars. Is there evidence to back that up?

Shawn: Yes. The Security Council decided to unanimously adopt this new investigation and they appointed Paul Volker who is the former head of the Federal Reserve, a very trusted, honest, financial big shot, to run the investigation. The problem is, Volker doesn’t have subpoena power. That means he’ll have a report and say, "this is what we found," and the people who are in the report can write their own report rebutting it, and there’s nothing they can do about it. If they go to Benon Sevan to get his bank records, he could say "no."

It is a legitimate investigation that may not achieve anything. The big question that I have is who could prosecute this? Will it be U.S. authorities? Perhaps it will be the new Iraqi government after the handover. Who investigates the U.N.? Is this unprecedented?

Shawn: Kofi Annan said he wants to get to the truth. But you have to wonder in a sense if they’d really be able to uncover anything since the U.N.’s paying for it, it’s in U.N. offices, and with U.N. staff. We’ll have to see. The GAO (General Accounting Office) did their own investigation and they estimated at least $10 billion was stolen. Has there ever been an investigation of this type before?

Shawn: No. The U.N. has already said in terms of this program, that they did 200 audits, and everything was “clean as a whistle.” But what did they do? It wasn’t, "who owns the company? Are bribes going out to people?" I look at it as a huge RICO (Racketeer Influenced Corrupt Organizations) case. It’s a fraud case that could be the biggest financial white-collar crime in the history of mankind. Volker ran the Holocaust settlement with the Swiss banks which was $1.3 billion. Here we’re talking at least $10 billion. We’re talking ten times the Holocaust settlements. So this is so huge, involves so much, and it really affects the credibility of the U.N. How was the extent of the scandal revealed?

Shawn: Journalists have really been driving the story, because the U.N. certainly didn’t. An Iraqi newspaper in January published a list of 270 names of people around the world who had contracts.  We asked the State department to give them to us, but the mission in New York said it was not public information. Now they’re having Senate hearings and House hearings. Our ambassador was yelled at by Senator Biden, who said "what do you mean it's private? It’s our money – why is it private?" So the U.S. as well as other countries have refused to give over the list. But a newspaper in Baghdad got it from the paperwork there. What about Kofi Annan’s son?

Shawn: Annan's son, Kojo worked for a consulting company that worked for the Oil-for-Food program. His office says there’s no wrongdoing – that he had nothing to do with the program. But others have said it’s a complete conflict of interest because the contract was apparently given to that company after Kojo got a job there and it was then taken away from another company. There’s a question that they will probably have to investigate. What is the most surprising thing to you about this story?

Shawn: I’ve covered the mafia and this is bigger than the mob.  If these charges are true, that’s what the U.N. turned into for businessmen around the world, for corrupt politicians, for Saddam, and for U.N. officials themselves. I think it could be the biggest financial crime in the history of humankind. I’ve covered criminal stories, Wall Street scams — this is beyond anything anybody could ever imagine. You've been covering the U.N. intensely since 9/11. What do you love about this beat?

Shawn: I used to go to the U.N. for 20 years, and I never understood it. And now I realize it's very basic. It’s just like the city council. The U.N. story is fantastic because it's right up my ally in terms of criminal justice, law enforcement investigations, and foreign relations. I’m learning that you can apply everything you learned in high school to the U.N. It’s all the same personalities and the same conflicts. It's all egos and politics. Any advice to FOX Fans following this story?

Shawn: I have two rules of news for FOX Fans. One, there are no coincidences, and two, small details make the grand story. That is, if you take a look at one small detail in a story, you can predict where the story is going to go. Just take any criminal investigation story that you can think of, and apply it to the U.N. and that’s where it’s headed. So stay tuned!

Eric Shawn is a senior New York-based correspondent for FOX News Channel.