Lid Off Oil-for-Food Scam

It is no accident that the United Nations Oil-for-Food program turned out to be the biggest scam in the history of humanitarian relief. Oil-for-Food, which ran from 1996-2003, was designed by the U.N. and managed by Secretary-General Kofi Annan along lines so perverse, so secretive, so inviting to corruption, that it could hardly have turned out otherwise.

But when I first began reporting on Oil-for-Food, back in 2002, I was not looking for a scandal. I had written for years about aid programs in various parts of the world, and was simply trying to understand what looked like a complicated U.N. relief effort in Saddam’s Iraq. I found someone familiar with the program, asked some standard questions, and was floored by the answers. In theory, the U.N. was busy containing U.N.-sanctioned tyrant Saddam Hussein while helping the people of Iraq. But in practice, Oil-for-Food was less an aid effort than an invitation to fraud, influence-peddling and continued tyranny in Iraq. It doubled as a terrific employment program —not for Saddam’s victims in Iraq, but Saddam’s Baath Party and the United Nations.

One of the first things that got my attention was Oil-for-Food’s goal of supervising almost the entire economy of Iraq. The world had only recently emerged from a century that pitted the devastating and dictatorial system of Soviet-style central planning against laissez-faire capitalism. Markets had won — but not, it seemed, in Iraq, where Oil-for-Food actually helped consolidate Saddam’s control and strengthen his grip.

The next shock was learning that under the U.N. setup it was not even the U.N. but  Saddam himself who got first rights to draw up the shopping lists for what the people of Iraq were presumed to need. That was disturbing given that it was Saddam who was responsible for the wars, oppression and deprivation of Iraqis in the first place.

Then I learned that the U.N. let Saddam pick his own oil buyers and relief suppliers and negotiate his own deals, subject to U.N. approval — which, as it turned out, he routinely got on thousands of contracts blatantly laced with graft. When I asked who those contractors were, the Oil-for-Food staff said the U.N. preferred to keep the identities of Saddam’s dealers confidential. The U.N. also kept secret the dollar amounts of individual deals, and just about all other details that would have allowed any third party to judge the integrity of a business. Oil-for-Food was run as a secret, privileged bargain between the UN and Saddam. To this day, the U.N. has not released such basic information. It is only through leaked documents that the most incriminating details of Oil-for-Food can begin to be gleaned.

Ah, but then came the showstopper. I learned that to cover the costs of administering this program Kofi Annan’s Secretariat collected a 2.2% commission on Saddam’s oil sales, totaling $1.4 billion over the course of the program, plus another .8%, or $520 million, for weapons inspections (though for four of the program’s seven years, Saddam did not allow any weapons inspections). In other words, the U.N. Secretariat was being paid richly by Saddam to supervise Saddam; the U.N. had, in effect, become Saddam’s business partner, playing Arthur Andersen to Saddam’s Enron. The incentives were for the U.N. Secretariat to hush up Saddam’s graft, and keep expanding the program. And that’s what happened.
Following Saddam’s overthrow, the U.N. finally shut down Oil-for-Food last November. But the U.N.-condoned mess it created it still with us. Billions in funds grafted out of the program by Saddam have yet to be accounted for. Oil-for-Food tainted the Security Council debates over Iraq, in which the U.N. never disclosed that fat deals under Oil-for-Food had gone to such pivotal U.N. Security Council members as France, China and Russia. To whatever extent Oil-for-Food corrupted politicians and businesses who dealt with Saddam — and that was evidently part of the problem — some of the figures involved may now be ripe targets for blackmail by anyone with inside information on Saddam’s U.N.-condoned secret deals. And tucked away in those confidential records are enough overlaps between Saddam’s network of dirty finance and Al Qaeda to warrant worries that money he filched from Oil-for-Food may be funding terrorists today.

This is the legacy of a U.N. that over the years has become accustomed to treating some of the world’s worst despots as privileged clients. In the end, the most alarming aspect of Oil-for-Food is not that it became the biggest financial scandal ever to bubble through the U.N., but that it was the natural product of a U.N. steeped for decades in its own culture of privilege, immunities and secrecy, accustomed to guarding the interests of despots at the expense of subjugated peoples, and — as Oil-for-Food so richly exemplified — more absorbed in its own venal interests, payrolls and power than in such matters as the world peace, freedom and prosperity it was founded to promote.

Claudia Rosett is a consultant to FOX News and Journalist-in-Residence at the Foundation for the Defense of Democracies.