This is a partial transcript of "Special Report with Brit Hume", April 21, 2004 that has been edited for clarity.

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CLAUDIA ROSETT, WSJ COLUMNIST: The more I am worried that you should be looking at the Oil for Food (search) contracts, with an eye not necessarily to weapons of mass destruction, but where exactly was all that money going?


BRIT HUME, HOST: That question today from a veteran journalist who is now a columnist for "The Wall Street Journal's" European edition. Her reporting on this has help break open the scandal of the Iraq Oil for Food (search) scandal. Claudia Rosett joins me now.


ROSETT: Thank you.

HUME: Now, how did this work? The U.N. (search) was supervising program in which Saddam Hussein's regime, which was confined by economic sanctions, was able to sell a certain amount of oil and the money went exactly -- how did the money flow? How was it supervised? What happened?

ROSETT: The U.N. supervised it in such a way that Saddam was able to completely game the system and he paid -- it was set up so that he paid a commission to the U.N. for supervising him. In other words, they collected close to $2 billion for administering this program and for weapons inspections from Saddam.

HUME: Now that money, presumably, went into general U.N. coffers, correct?

ROSETT: That was for their administrative -- no. It was in separate accounts for this program, which was enormous. And they gave him the latitude to choose his buyers and sellers and to draw up a shopping list for the people of Iraq. So you have this tyrant who was actually outlining the program. And the U.N....

HUME: So, in other words, the U.N. did not run the program with Iraqi oil. He ran it. His government ran it.

ROSETT: The U.N. was supposed to supervise it. He got to propose and they were able to veto. And they rarely did. And what you ended up with was Saddam completely gamed the system, seems to have sent enormous amounts of business, at the least, and at this point it seems like he may have bribed people to basically buy the Security Council...

HUME: Russia (search) and France (search) got a last benefit of this?

ROSETT: They got huge business. And at this point, we know there were kickbacks, there were graft built into many of the contracts. So if you got business from Saddam, you may well have been getting a payoff. There were just corridors for money to go pretty much anywhere he wanted.

HUME: Now, the U.N. was -- this all had to be on some book somewhere.


HUME: And the U.N. had representatives in Iraq, in Baghdad who were supposed to be watching over all this, am I wrong about that?

ROSETT: They had 900 people on the ground in Iraq who were supposed to be monitoring the whole thing, yes.

HUME: And they had access to the necessary records, did they?

ROSETT: They were supposed to be watching the distribution, what came through, so they should have spotted things like outdated medicine, bad food, all the bad stuff that was coming in that we're now hearing much more about. And we were hearing...

HUME: How could these billions be paid out or end up either in Saddam's pocket or used by him to be paid out for illicit purposes without the U.N. noticing?

ROSETT: Well, they had about 100 or so people back here in New York who were supposed to be going over the contracts. The Security Council would look for weapon use items. The secretary, Kofi Annan's office had the hands-on, day-to-day business of dealing with the contracts, the bank accounts and so on.

And the way it seems to have happened is the U.N. simply -- Saddam would propose something, and where the U.N. should have said, wait a second, why are you putting a Panamanian firm on your list of oil buyers, people you want to sell oil to. The oil where everybody knew fairly early that there was graft built in? The U.N. would just say, fine, add a Panamanian firm to the list. And thus did they add many French firms; the largest numbers of contracts went to Russian firms? Thus took a...

HUME: And these would get the money from the sale of the oil and they would kick back to Saddam. Is that the idea?

ROSETT: That's the idea.

HUME: And we're talking about a total of $10 billion over all these years?

ROSETT: At least. Remember, the General Accounting Office said $10 billion or up to $40 billion.

HUME: Is it unfair to suspect that the size of the French role in this scandal might have been a motivation for France to oppose the war, which is what brought the records to light?

ROSETT: Oh, money is a huge motivator. And one other thing, once you bribe somebody, if that's what's happening, you know, these things remains to be proven and the U.N. kept the records are secret. So it's very hard to get at. That's what Paul Volcker (search) will now have to do in this investigation.

But once you bribe somebody, he has the goods on you. He can blackmail you. So -- and remember, if Saddam had actually -- anyone -- he, who accepted a bribe from him, was then in a position to be exposed by him and probably had more to lose than did Saddam. So could this have influenced the French, the Russians, the Chinese? Absolutely.

HUME: All right. So not only will Paul Volcker and his group have to deal with the records that have been discovered in Baghdad, obviously they will have access to those, but what about the other records?

ROSETT: These other records have become the great scavenger hunt. The U.N. has kept them secret for the entire duration of this program; there was no justification for that. If this had been public, it might never have become this scandal. You would have looked at the list of contractors years ago and said no.

HUME: So Volcker and his group will be in the position of simply asking the U.N. to make the records available and hoping they will.

ROSETT: And hoping they will, which they've been very hard to nail down. The U.N. gives three different versions of where they are. I will be -- one of the first things they need do is secure those documents.

HUME: All right. Claudia Rosett, thank you very much.

ROSETT: Thank you.

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