The United Nations has sent a letter to FOX News in response to the special Breaking Point investigation, "United Nations Blood Money," a special report about the Oil-for-Food scandal that appeared Sept. 19 on FOX News Channel and on FOXNews.com.

Shashi Tharoor, U.N. under-secretary-general for communications and public information, requested that a document, addressing what the U.N. says are "some fundamental points that the show either failed to make or made erroneously," be printed on FOXNews.com.

The U.N. document follows. To read FOX News' response, click here.

THE FACTS ABOUT OIL FOR FOOD

A response from the United Nations to allegations made on Fox Breaking Point (19 September 2004)

The program that aired Fox Breaking Point on 19 September concerning the Oil for Food programme contained a number of inaccuracies. As the United Nations Secretariat's offer to discuss the content of the documentary in a live studio interview immediately after its broadcast was not acceptable to Fox, we have chosen to put our observations in writing and have asked Fox to place it on its Oil for Food website. The program also raises allegations of impropriety about United Nations' administration of the Iraq Oil for Food program. The Secretary-General and senior UN officials take all allegations of impropriety very seriously. In order to determine whether there is any truth to these allegations, Secretary-General Annan asked the former Chairman of the US Federal Reserve Bank, Paul Volcker, to lead an independent inquiry into the programme. In order to preserve the independence and integrity of that inquiry, the Secretary-General will not comment on these allegations.

Oil for Food — what did it achieve? Eric Shawn says the easing of sanctions which accompanied the creation of the Oil-for-Food Program was "a recipe ... for humanitarian calamity." The facts contradict this statement. The Oil-for-Food program achieved its core mission of providing relief to 27 million Iraqis. Caloric intake rose by 83 percent, while malnutrition rates in much of the country were cut by half, and some 76,500 mines were cleared. On the health front, the capacity to undertake major surgeries increased by 40 per cent in the centre and south of Iraq. Enough medicines and vaccines were imported to eradicate polio and drastically reduce other often deadly communicable diseases, including cholera, malaria, measles, mumps, meningitis and tuberculosis. These facts also contradict the unchallenged statement by Khudair Abbas that "mortality increased."

Oil for Food finances — what did the programme receive and what did it spend? Fox News alleges that the "Iraqi people ... received, by the U.N.'s estimate, $15 billion in aid from a total of $67 billion in oil sales." This wildly incorrect figure implies that the remaining $52 billion was somehow lost or stolen. The breakdown is as follows:

• $42.7 billion was allocated directly to the relief effort.

• The Security Council allocated the rest of the money to other activities, including $18.6 billion in war reparations to pay damage awards to claimants who suffered as a result of Iraq's invasion of Kuwait. Of that figure, over $633 million was awarded to 95 US corporations.

• Some $500 million was spent on the UN weapons inspection program. (Although funded initially through contributions and frozen Iraqi revenues, this UN effort supervised the destruction of Saddam's arsenal. Since the inception of the Oil-for-Food program, the UN Monitoring, Verification and Inspection Commission (UNMOVIC) destroyed dozens of Iraqi Al Samoud 2 missiles and warheads, as well as launchers, shells filled with chemical weapons precursors and other arms.)

• The rest of the money was used to refund countries which advanced funds for relief pending the start of oil sales and to pay oil transportation costs.

• There was also interest earned of $2.9 billion and a $2.3 billion gain on currency exchange.

• More than $8 billion left over at the end of the program was transferred to the coalition-run Development Fund for Iraq.

The UN and terrorism: While it is impossible to categorically refute the nebulous and unproven — even by your own account — charge that "Oil for Food money ended up in the hands of those terrorists looking to strike here, particularly al Qaeda," it is critical to point out that the United Nations was moved to act against Osama bin Laden, Al-Qaeda and the Taliban long before September 11, 2001. They were all declared international outlaws by the UN after the 1998 terrorist bombings of United States embassies in Nairobi, Kenya, and Dar-es-Salaam, Tanzania. Immediately after September 11th, the UN set up a Counter-Terrorism Committee as part of its ongoing efforts to combat the scourge.

Is the UN cooperating with investigators? Fox News quotes Rep. Representative Christopher Shays expressing concern that Paul Volcker's panel may not get "the cooperation he wants." However, the Security Council itself adopted a resolution requiring all UN member countries "including their national regulatory authorities, to cooperate fully by all appropriate means with the inquiry." For his part, Secretary-General Kofi Annan issued instructions to all staff to do the same, and publicly declared that those who fail to cooperate will be fired. Mr. Volcker has stated a number of times that he is committed to cooperating with other on-going investigations. Furthermore contractors working for the Oil for Food Programme have been urged by the UN to cooperated with subpoenas and are in fact doing so. For his part, Secretary-General Kofi Annan issued instructions to all staff to do the same, and publicly declared that those who fail to cooperate will be fired.

The Al-Mada list and the UN response: Fox News refers to the Al-Mada list which "sent a lot of people scrambling at the U.N.," implying that they feared the truth. In fact, the UN was scrambling to get copies of the documents that allegedly formed the basis for the list so as to investigate further, but repeated requests have still yielded nothing. The matter is now in the hands of the Volcker inquiry.

The Oil for Food programme and expenses: Fox News erroneously refers to the UN's "2.2 percent commission on every oil sale." The UN never collected "commissions" on Iraqi oil. The 2.2 percent figure cited was used to pay for administrative costs and staff salaries — the majority of which went directly to Iraqi employees. Had this arrangement not been in place, funding would have come from taxpayers — including Americans — in countries which support UN relief agencies.

But it also must be pointed out that when the UN brought its own expenditures in under budget, surpluses totalling $272 million were transferred to the humanitarian relief effort, and an additional $100 million in savings was later transferred to the coalition-managed Development Fund for Iraq.

Oil for Food contracts — who knew what? Fox News makes much of the UN's supposed "secrecy" when in fact all contracts had to be submitted to the UN for approval via the national authorities of each supplier. All details of every contract were known not only by the national authorities of each supplier but also by the members of the Security Council 661 Committee — including, of course, the US — who had the power to approve or hold any contract. Further, on November 23, 2003, the UN provided the Coalition Provisional Authority with its entire database. Simultaneously, thousands of copies of Oil-for-Food contracts were placed on CDs and transferred to the Iraqi authorities and the CPA (which had requested copies of all active contracts).

Eliminating oil overpricing — whose idea? Fox News credits the US with "put[ting] an end to Saddam's oil pricing scam in 2001" without conceding that it was UN oil overseers who first alerted the Security Council to Saddam's illegal surcharges on oil sales. Secretary-General Kofi Annan himself raised the issue in a public report in 2000. Based on this information, the Council instituted a "retroactive pricing" mechanism which served to curb the practice.

Stopping kickbacks — who had the power and what did they do? Concerning kickbacks, Fox News conveniently ignores the fact that the UN responded to the problem by strengthening contract review procedures when reports of the problem emerged. From 2001 onwards, hundreds of contracts were queried for pricing, some were held back indefinitely and many were specifically flagged by the UN to the Security Council. Not once did the members place any of them on hold for pricing reasons.

Smuggling and Oil for Food: Fox News also refuses to acknowledge the fact that Saddam Hussein's illegal smuggling started long before the Oil-for-Food program was put in place, and that the Security Council mandated a Multinational Interception Force (not administered by the UN) to prevent it. The UN Oil-for-Food staff had not been given the authority by the Security Council to prevent smuggling. As the GAO reported, "Under Security Council resolutions, all member states were responsible for enforcing the sanctions and the United Nations depended on states bordering Iraq to deter smuggling."

Why did Saddam pick his business partners? Claudia Rossett notes that Saddam "got to pick his own business partners" without acknowledging that the Security Council, by unanimous decision, including the veto-wielding United States, did agree to let Saddam choose who could buy Iraqi oil, and from whom Iraq would import humanitarian supplies — because otherwise he would not have allowed humanitarian goods to enter Iraq at a rate high enough make a difference to the daily lives of the Iraqi people. (see para. 3)

Dubious suppliers — who blew the whistle? Fox News also refers to the Al Wasel and Babel General Trading Company without reporting that, as the GAO testified before the House Committee on Agriculture on 16 June, UN experts in October 2001 alerted the Sanctions Committee that the prices in a proposed contract between that company and Iraq appeared high. The members of the Security Council nevertheless unanimously approved the contract. It was only in April 2004 that the US Treasury Department identified this company as a front for the regime. This example demonstrates that the UN did report suspicious cases and that while the UN was not mandated or equipped to check the backgrounds of all suppliers, even those who could, such as the US Government, did not have all of this information until after the Oil-for-Food program ceased to operate.

Did Mr. Conlon work for Oil for Food? Paul Conlon, according to Fox News, left the UN in 1995. It is worth noting that the UN didn't conclude a Memorandum of Understanding on Oil-for-Food with the intransigent Iraqi regime until 1996, so pumping didn't start until December of that year. The first humanitarian relief goods arrived in 1997.

Before 1997, those interested in exporting humanitarian goods had to obtain approval from Security Council members without input from UN secretariat experts, without using a UN escrow account and without a formal contract. Fox News's [sic] falsely implies that Johnny Walker whiskey was imported under the Oil-for-Food program when in fact no contracts for whiskey have ever been submitted or approved under it.

Assessing the quality of products entering Iraq: Fox News quotes Kamil Al-Gailani as charging that "UN inspectors let shipments of spoiled food and expired medicine get through." The World Health Organization (WHO) found only 0.4 per cent of shipments of medicines unfit for use. Further, under the Oil-for-Food program, there was a system for conducting complete checks when requested by a member of the Sanctions Committee. In such cases, each box and container for a given contract would be opened and the contents photographed. The US exercised this option on dozens of occasions. All Committee members had access to a database containing reports on such cases.

The Olympic Stadium myth: Fox News also implies that the UN somehow endorsed "the Olympic program run by Saddam's notorious son, Uday" where athletes were tortured and killed. Wrong. The Iraqi regime did indicate its desire to fund the construction of an Olympic stadium on the distribution plan — a "wish-list" of sorts — but that document in no way implied automatic approval of any listed goods, and no money for the stadium was ever approved or paid. Further, the UN expert tracking rights abuses in Iraq publicly decried Uday's atrocities (see document A/53/433) as part of his sustained campaign to shed light on the heinous practices of the regime — a campaign which bolstered the adoption by the General Assembly, year after year, of resolutions condemning Iraq's rights abuses in the strongest possible terms.

Which companies sold goods to Iraq? Fox News suggests that US and UK companies earned far less than their French or Russian counterparts without taking account of the fact that numerous US companies earned revenues through their foreign subsidiaries. This information is a matter of public record; The Washington Post (20 Feb. 2000, page A23) reported that, "Though perfectly legal, the growing U.S.-Iraqi commerce has been kept quiet by both sides because it seems to fly in the face of Washington's commitment to 'regime change' in Baghdad and Saddam Hussein's claim to be defying the world's lone superpower." The article goes on to state that "Placing bids through overseas subsidiaries and affiliates, more than a dozen U.S. firms have signed millions of dollars in contracts with Baghdad for oil-related equipment."

It is also a matter of public record that Americans were the chief consumers of Iraqi oil — at one point consuming 75 percent of all exports under Oil-for-Food — to the degree that some US lawmakers were prompted to try to introduce measures banning its import.

Why the UN would only appear on Fox News live: Fox News notes that the UN "would not do a taped interview for 'Breaking Point'" but conceals the reason why: UN officials have in the past cooperated with Fox only to see their comments grossly distorted through selective editing. Fox also fails to mention that UN officials were quite willing to appear on 'Breaking Point' live, where they could communicate directly with viewers.