Corruption in Plain View
What the latest Oil for Food indictments say about the U.N.

Saturday, April 16, 2005 12:01 a.m.

U.N. officials and their allies have been telling the world that the investigation into the Oil for Food scandal is all over, now that Paul Volcker has filed his second interim report. Well, on Thursday a pair of new indictments revealed that we're only getting started. 
The indictments announced by U.S. Attorney David Kelley support what the critics have long been saying: Oil for Food was designed from the beginning, and virtually in plain sight, in a way that allowed skimming and kickback operations to help Saddam Hussein circumvent U.N. sanctions. 
One indictment named Texas oil trader David Chalmers, the second American indicted so far, along with Bulgarian and British business associates. The three are alleged to have paid millions of dollars in kickbacks on deliberately underpriced oil, giving Saddam access to unmonitored revenues and thereby depriving Oil for Food of humanitarian funds. (Mr. Chalmers says he's innocent.) 
In another complaint, Korean Tongsun Park was charged with acting as an unregistered agent of influence for the Iraqi government in connection with mid-1990s meetings to help design Oil for Food. Mr. Park is alleged to have received millions in payment from the Saddam regime, and the complaint suggests that he funneled that money to U.N. officials. Park told a cooperating witness that Park needed money from the Government of Iraq to 'take care' of his expenses and his people, which the cooperating witness understood to mean U.N. Official #1, says the complaint. It cites a second U.N official, whose name we also look forward to learning. 
The Chalmers indictment offers a bracingly simple explanation of how the scam worked: From at least in or about 2000, up to and including in or about March 2003, officials of the Iraqi Government conditioned the distribution of allocations of oil under the Oil-for-Food program on the recipients' willingness to pay a secret surcharge to the Government of Iraq. . . . Iraq directed that these surcharges--representing a percentage of the total amount of each oil contract and totaling at least several hundred million dollars--be paid to front companies and/or bank accounts under the control of the Iraqi Government in various countries. 
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One point to keep in mind is that much of this was known by 2001 if not before, yet the U.N. did nothing to stop it. Every man and his dog is buying Iraqi oil, said one oil trader quoted by the Times of London in early 2001. The same story described total anarchy and flagrant disregard of U.N. Security Council resolutions in Oil for Food. A myriad of shady middlemen had moved in after the world's major oil companies shunned Iraq in response to Saddam's widely publicized demand the previous year for illegal kickbacks on oil contracts. 
This open and flagrant corruption--the Times story was one of many--is the best evidence of Kofi Annan's unfitness to continue to lead the U.N. It's not merely that it all happened on his watch, but that it was allowed to happen in plain view. A year ago (Saddam's U.N. Financiers, April 7, 2004), we offered a partial timeline gathered from contemporaneous news reports of the scheme. 
Highlights included the introduction of the Saddam surcharge in late 2000. In March 2001, the U.S. and Britain asked the U.N. sanctions committee to cut down the list of more than 600 operators approved to purchase Iraqi oil in order to eliminate companies paying the kickbacks. France and Russia objected. In November 2001, the U.S. and Britain made another attempt to stop the kickbacks--this time by forcing the sanctions committee to retroactively price Iraqi oil, thus making it harder for Iraq and its buyers to calculate the margin for the surcharge. In February 2002, Mr. Annan's Oil for Food director, Benon Sevan, criticized the retroactive pricing policy, blaming it for a financial crisis. And so it went. 
Had Messrs. Annan and Sevan spent even a tenth of the political capital on getting Saddam to run an honest relief program that they spent criticizing U.S.-British sanctions policy, much of the trouble might have been avoided. 
Mr. Kelley said Thursday that he is conducting a broad and large investigation. . . . We're going to wring the towel dry. By the time he finishes, we suspect the need for a thoroughgoing U.N. reform, not to mention a new Secretary General, will be demonstrated beyond a shadow of a doubt. 
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