Oil Is Not Well
Kofi Annan can run, but he can't Hyde.

By Pete Du Pont
April 20, 2004
Wall Street Journal
http://www.opinionjournal.com/columnists/pdupont/?id=110004968

The U.N.'s mechanisms for controlling Oil-for-Food contracts were inadequate, transparency went by the wayside, and effective internal review of the program did not occur. . . . If the United Nations cannot be trusted to run a humanitarian program, its other activities, including peacekeeping, arms inspection regimes or development projects may be called into question. 
--Sen. Richard Lugar, April 7     
More than called into question. The United Nations' administration of the Oil-for-Food program was so ineffective, inadequate and corrupt that, in the words of OpinionJournal columnist Claudia Rosett, the U.N. is an institution that should never be trusted to carry out missions requiring integrity or responsibility. 
So should the U.N. be given control over Iraq's transition to a free and democratic nation, as John Kerry has demanded and President Bush is being politically pressured to do? 
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The U.N. began the Oil-for-Food program after the first Gulf War to provide humanitarian relief for the people of Iraq. Saddam Hussein was to sell Iraqi oil, two-thirds of the proceeds of which would be used to buy food and medicine, generate electricity, build houses and help the country recover. The U.N. would get a 2.2% fee on each barrel of oil sold. 
But with Saddam running the program and the U.N. only pretending to pay attention, corruption quickly dominated the process. Saddam added a 20-cent kickback fee to every barrel sold, which soon became 30, then 50 and finally 70 cents a barrel. Add to that the profit from Iraqi oil smuggled to Syria, Turkey and Jordan, and kickbacks on the humanitarian materials shipped into Iraq, and Saddam was raking in as much as $2.5 billion each year in illicit revenue to build up his military, his palaces and his power. The U.S. General Accounting Office estimates Saddam's total illegal revenues from the Oil-for-Food program to have totaled more than $10 billion. 
Why would the U.N. delegate total, unsupervised authority to run the program to Saddam? Perhaps because Iraq and the other nations whose companies were participating in the scam didn't want appropriate procedures and controls applied to their ventures. Teresa Raphael, the editorial page editor of The Wall Street Journal Europe, has seen a spreadsheet listing the companies Saddam had approved for oil purchases. It included 11 French middleman concerns, (150 million barrels sold to them), 14 companies in Syria (120 million) and dozens of Russian firms (more than a billion barrels), the president of Indonesia, the Palestine Liberation Organization, the director of the Russian president's office and former French foreign minister Charles Pasqua. 
Most stunning is Benon Sevan, the U.N.'s assistant secretary-general, whom his boss, Kofi Annan, designated to run the Oil-for-Food program. Mr. Sevan was allocated 14 million barrels of oil and disposed of 7 million of them. 
As all this information became public over the past year or so, U.N. lawyers refused to allow identification of the kickback firms; it was, they said, privileged information which could not be made public. Mr. Annan then suggested an independent high-level inquiry to clean up the U.N.'s sordid image. Absolutely not, said France's U.N. ambassador, Jean-Marc de la Sabiliere, for the U.N. Iraqi accounts were managed by a French company, BNP Paribas. The Russians didn't much like the idea of an investigation either. Last Friday they blocked a Security Council resolution giving an investigating commission headed by Paul Volcker authority to conduct a complete investigation. All of which may explain why France and Russia so vigorously opposed the liberation of Iraq a year ago: They didn't want their very lucrative and very illegal kickback scheme to come to an end. 
The Oil-for-Food program involves U.N. oversight of about $15 billion a year, by far the largest program it administers and more than five times the U.N.'s annual core budget. So the $10 billion at issue is not small time-graft, but big-time corruption. 
Why, after Saddam Hussein invaded Kuwait and had been repulsed by U.S. and allied forces, would the U.N. have given him the power to manage the oil sale program, choose the agents, prevent the U.N. from viewing the agents' contracts, and set the price of oil? Perhaps because the French and Russians insisted upon it? 
And why would the U.N. forbid Mr. Sevan to discuss the program he was responsible for running? He says there was no need for an investigation because nothing was wrong, and--incredibly--that it was not his responsibility to hold the Iraqi regime responsible for running an honest program because we take our marching orders from the Security Council. 
So why would any American think the U.N. should now run Iraq? Most Democrats and some Republicans are for it, the establishment media is for it, and Mr. Kerry wants a U.N. resolution to turn the authority over to them. 
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But if Kofi Annan and the U.N are responsible for the corruption and the mismanagement of the Oil-for-Food program and the coverup of its illegalities, how can they be trusted to manage the government of Iraq? Won't Mr. Annan allow France and Russia (and others) to expand their less-than-honest behavior once the U.N. is fully in charge? 
The House International Relations Committee is scheduled to hold hearings on all these matters. Chairman Henry Hyde feels much more strongly about U.N. corruption than his Senate colleagues do: he believes the Oil-for-Food program represents a scandal without precedent in U.N. history, and so Mr. Annan's response must be equally unprecedented. 
Since the House appropriates the money that the U.S. contributes to the U.N.--about a quarter of its annual $1.5 billion base budget--Mr. Hyde might place the next quarterly U.N. check on his desk, to be exchanged for a full and accurate report on Oil-for-Food from Kofi Annan. 
And then, depending on what we learn about the integrity of U.N. operations, we can decide what might be an appropriate role for the United Nations in Iraq and how we might be sure the international body fulfills it honestly. 
Mr. du Pont, a former governor of Delaware, is policy chairman of the Dallas-based National Center for Policy Analysis. His column appears once a month. 
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