UN scandal tests investigators

Former Federal Reserve Chairman Paul Volcker leads just one of nine separate investigations into a United Nations humanitarian program that may have enriched Saddam Hussein and UN officials.

But Mr. Volcker's inquiry is arguably the most significant, as he heads the UN's internal probe into what some critics describe as "the biggest financial scandal in history." An estimated $10 billion was siphoned from the $65 billion Oil for Food program.

Volcker recently finished assembling his investigative team and vowed to produce a "truly definitive report" in six to eight months. "The chips will fall where they may," he wrote in The Wall Street Journal earlier this month.

Yet some critics question the UN's ability to investigate itself and how effectively Volcker will be able to examine the 270 companies and individuals from 46 countries - including the UN official who ran the program - implicated in scheming with Mr. Hussein. Critics suggest the findings will reveal that some of the countries most opposed to sanctions and military action - like Russia and France - were some of the greatest beneficiaries of the sweetheart deals and essentially did Hussein's bidding.

"If Russian companies were recipients of billions of dollars worth of contracts, then what distortion, if any, did it have on Russian policymaking at the UN?" asks a congressional aide to the US House of Representatives Committee on International Relations, which is also investigating the program. "That's a steep charge, but as we go further, it's something we'll have to consider."

It is unclear how much access Volcker and his team will have to internal UN audits from the program. And some critics suggest that the US might try to stall any investigation to avoid embarrassing the UN and fellow member states in order to garner more support for Iraq.

In 1991, he UN Security Council slapped sanctions on Iraq for invading Kuwait and to force Iraq's full disarmament of its unconventional weapons. But the sanctions appeared to hurt ordinary Iraqis and not Hussein. So the Oil for Food program was hatched in 1996, which allowed Iraq to sell oil and use the proceeds to purchase food and humanitarian supplies. Over the next seven years the UN says the program fed 27 million Iraqis, saved a least a half a million children from malnutrition, helped fight diseases, and cleared 135 million square feet of land of mines.

But Hussein was allowed to choose his own business partners for the program. This allegedly enabled him to game the system. He is said to have hauled in $5.7 billion from illicit oil sales and $4.4 billion more in kickbacks, while his partners skimmed a portion as well, the US General Accounting Office reported in March. Analysts say he used some of the money to buy weapons.

The assorted investigations will try to determine who's to blame and who took what. In addition to the Volcker inquiry, there are three congressional investigations, one by both the Treasury Department and US Customs, one in New York courts, and one by the Iraqi Board of Supreme Audit. In a sign that powerful interests may work to prevent the facts from coming to light, the board's chief auditor, Ehsan Karim, was killed in a car bombing in Baghdad on July 1.

Documents from several of the banks and oil companies involved have been subpoenaed - including US concerns Exxon Mobil, ChevronTexaco, and Valero Energy. Outside critics and investigators charge that UN Secretary- General Kofi Annan has been slow to release internal audits, though he has officially instructed all UN personnel to cooperate with Volcker's inquiry.

Mr. Annan and Benon Sevon, who oversaw the oil-for-food program and is accused of accepting $3.5 million worth of Iraqi oil vouchers, are in the two hottest seats. Annan's son, Kojo, was briefly employed as a consultant by Cotecna Inspections, which in December 1998 - just after he left the company - won the UN contract to check all goods coming into Iraq. Both Mr. Sevon and the secretary-general, on behalf of his son, have denied any wrongdoing.

Conservative lawmakers and commentators have been adamant in their criticism of the UN over the alleged scandal.

"Here's why I take aim at the Secretariat," says Claudia Rosett, a fellow at the Foundation for the Defense of Democracies and columnist for the Wall Street Journal. "They actually had the people on the ground in Iraq - 800 international staff plus 3,500 Iraqi staff.... They handled the paperwork, the bank accounts, and gathered the anecdotal evidence. At some point, the job of the secretary-general is to rise above the factional interests of member states and do what's right. I don't think Kofi Annan did that."

UN defenders, meanwhile, suggest that right-wing forces are once again trying to discredit the world body.

"If money was misspent or somehow ripped off, people need to know why," says James Paul, executive director of Global Policy Forum, a UN watchdog. "But this story is being framed that the UN as an institution is guilty of malfeasance, this bloated bureaucracy full of grasping people who are in it to feather their own nest. We know to be suspicious of who tell this story because we see what their interest is - to discredit the UN and keep the UN out of Iraq."

UN spokesperson Stephane Dujarric chastised critics for "jumping to conclusions without facts." However even some UN supporters expect the probes to reveal serious problems.

"This was a well-intended program that went badly wrong," says Nina Bang-Jensen, executive director of Washington's Coalition for International Justice, which first detailed the oil-for-food scandal in September 2002. "What disturbs us is that this is becoming a partisan issue, when there are serious culpability issues that need to be investigated. For a program that was supposed to aid Iraqis, whom Saddam was starving, to wind up in his hands is a travesty."