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The oil-for-food investigation

The breadth of the corruption in the United Nations' oil-for-food program was so sweeping that it makes you wonder how so many could have gotten away with it for so long. The question now is will anyone be held accountable? The Financial Times recently reported that some individual governments appear more interested in whitewashing the scandal than in prosecuting the wrongdoers. If that happens, such governments would be complicit in the scandal.

Thousands of companies in more than 60 countries, including the United States, were willing to pay bribes in order to win contracts from Saddam Hussein. An 18-month investigation by a group headed by former U.S. Federal Reserve Chairman Paul Volcker found that nearly $1.8-billion in illegal kickbacks had been paid to the Iraqi government during the program's seven years of operation. (Billions more found their way into Iraqi coffers by circumventing the program altogether.) The money helped Hussein rebuild his military after its devastating defeat in Kuwait and pay off his supporters at home and abroad.

What was intended to be a humanitarian program, giving Hussein the opportunity to sell oil in exchange for food, medicine and other staples of life so his people wouldn't suffer under the regime of U.N. economic sanctions, became a cover for the Iraqi leader to retain his grip on power. Almost half of the 4,500 businesses that traded with Iraq were willing to direct illicit payments into Jordanian banks that the dictator controlled.

The 623-page report, along with earlier revelations from Volcker's committee, exposed corruption and malfeasance at the United Nations, raising questions about the competence of Secretary-General Kofi Annan and the ability of the world body to operate for the public good and without member self-dealing. The most recent report focuses on the disturbing readiness of so many international businesses to resort to graft. Hussein may have been the prime villain, but he succeeded because there were plenty of "legitimate" oil companies, banks, suppliers of humanitarian good, and other seemingly above-board companies willing to do his bidding for a share of the spoils.

Some of the names mentioned include the American-run oil companies Bayoil, Taurus and Coastal Corp. Coastal's former chairman, Texas oilman Oscar Wyatt Jr., has been indicted for paying bribes to Iraq and has pleaded not guilty. Mark Rich, who was pardoned by President Clinton as one of his last acts in office, was identified as an alleged middleman. Other companies such as Germany's DaimlerChrysler, the Paris-based bank BNP-Paribas and subsidiaries of Siemens AG were singled out for alleged corrupt acts. Countries that spoke up for Iraq before the United Nations were well rewarded by Hussein, with Russia winning $19-billion in oil contracts and France being given $4.4-billion worth.

Volcker has sketched an ugly picture of current international business ethics and the way the United Nations operates. Both are in need of serious reform.

[Last modified December 9, 2005, 21:36:02]