Early Warning Not Heeded on Oil-for-Food

For years after the first Gulf War, the United Nations battled to keep everything except humanitarian aid from reaching Iraq. But U.S. lawmakers and experts believe the world body failed.

The United Nations (search) first tried a series of sanctions to make Saddam Hussein (search) bend to its will following the successful 1991 war to oust him from Kuwait. But then it attempted to find a way for Iraqi citizens to get needed medicine and other supplies through the sale of Iraqi oil – an approach that failed.

[Editor's Note: This is one in a series of articles about the U.N. Oil-for-Food program. Check back tomorrow for the next installment. For background information, click here.]

The scheme ultimately allowed billions of dollars to change hands and investigators now are examining how much ended up in Saddam's pockets or in the coffers of other organizations. One U.N. whistle-blower who said he tried to identify what he saw as an emerging scandal became a casualty.

"I tried to do my best and that's one of the reasons why I was fired," said Paul Conlon (search), who was fired in 1995 as a staffer on the U.N. Iraq sanctions committee. The panel carried out the Security Council's mandate to squeeze Saddam after the 1991 war.

Conlon said he repeatedly warned his bosses that Saddam had undermined the sanctions effort with the help of questionable companies that sprang up to provide "humanitarian" assistance.

"Most of these trading partners that began to turn up on our doorstep with their applications for export permits were very obscure, unknown little companies in very obscure locations," Conlon told FOX News.

He added that U.N. officials often didn't ask who wanted to do business with them and he estimated the number of suspect cases could be in the thousands.

One of the people who wanted a slice of the pie was Marc Rich (search), the fugitive financier pardoned by former President Bill Clinton during his last hours in office in 2001.

Conlon remembered Rich another way.

"He was an experienced, a very experienced, sanctions buster," Conlon said, explaining that because Rich had helped South Africa evade U.N. sanctions during apartheid. Rich later became infamous when he was charged with illegally doing business with Iran.

"If Mark Rich can get on your list of approved companies, there are no standards, then anyone can," Conlon said. "When I told my director about this, he nearly collapsed."

Conlon said he was so concerned, he fired off memos telling the U.N. secretariat that it was "crooks who now make up an important part of our ultimate clientele."

Those "crooks" turned humanitarian aid into a "Trojan horse" for Saddam's regime, Conlon said. It was a case of the old bait-and-switch.

"For example, we gave them an awful lot of permits for water purification chemicals. Any kind of chemical whatsoever could have been in those drums that they were importing," Conlon said.

It was all so easy, Conlon said, because of the United Nation's obsessive secrecy. Despite claims that the Security Council (search) monitored everything that was going on, Conlon said few knew who was doing business with Saddam or what business they were actually doing.

At one point, Pakistan wanted to ship 40 million pencil sharpeners.

"That was so crass that it actually got discussed in the committee. And the hard-liners asked very pointedly what are they going to do with all the pencil sharpeners?" Conlon said. "It was decided that Iraq could have some pencil sharpeners but not 40 million."

Conlon said the pencil sharpener request was made so that other goods could be transported, such as expensive Scotch, which Saddam claimed he needed for strategic reasons.

"The Republican Guards had to be kept in a good mood and they were so sophisticated in this regard that he couldn't supply them with cheap whiskey from the Far East," Conlon said. "He actually had to buy Johnny Walker and export it via ... a supplier of various things to his son Uday."

The United Nations did not know that Scotch was going into Iraq, Conlon said. "This would have been a case where he needed to ... get it out of Jordan disguised as something else."

Sen. Norm Coleman (search), R-Minn., said when Saddam beat the sanctions, the United States paid the price because officials had hoped that sanctions would ultimately lead to regime change and the bloodless end of rule for Saddam.

"We sacrificed American lives now for regime change. It was supposed to be through sanctions," said Coleman, chairman of the Senate permanent subcommittee on investigations.

But Denis Halliday (search), a former U.N. assistant secretary general, said the more the Iraqi people suffered, the less support there was for sanctions. Halliday became one of the most vocal critics of the sanctions and U.S. policy toward Iraq.

"Sanctions killed perhaps over a million Iraqi civilians. That's a huge crime, that's a war crime," said Halliday, who quit his job in protest for what he saw happening with sanctions.

Conlon was out of a job too. He said he was fired by the U.N. Secretariat when he kept pushing the United Nations to get tougher on Saddam by, for starters, making all the transactions public.

After Conlon left, the sanctions were greatly eased with the 1997 creation of the Oil-for-Food program – a plan intended to allow Iraq to sell oil so it could get humanitarian aid but which led to billions of dollars being skimmed off for Saddam and others.

For more information — including government documents, U.N. audits and past stories — click here.