The Great Cash Cow

William Safire
June 23, 2004 
The New York Times
http://www.defenddemocracy.org/research_topics/research_topics_show.htm?doc_id=229580&attrib_id=9059

This was the biggest cash cow in the history of the world, says one of the insiders familiar with the $10 billion U.N. oil-for-food scandal. ''Everybody -- traders, contractors, banks, inspectors -- was milking it. It was supposed to buy food with the money from oil that the U.N. allowed Saddam to sell, but less than half went for that. Perfume, limos, a shipment of 1,500 Ping-Pong tables, for God's sake.'' 
Another whistle-blower, often on the ''graveyard shift'' of round-the-clock operations at the U.N.'s New York Office of the Iraq Program, explains the workings of the historic rip-off: 
Well-connected international traders -- called ''the usual suspects'' by low-level U.N. staff, who knew they often fronted for sellers of luxury products -- would make their deals, including kickbacks, in Baghdad. Letters of credit, as many as 150 a day, would be issued in New York by the U.N.'s favorite bank, BNP Paribas. 
But before the sellers, called ''beneficiaries,'' could be paid (at Saddam's request, in euros, harder to trace than dollars) the bank required a C.O.A., ''Confirmation of Arrival,'' from the U.N.'s contracted inspector, Cotecna of Switzerland.
''The key was Cotecna,'' says my graveyard source. ''Ships were lined up at the port of Umm Qasr, stacks of containers already onshore waiting for inspection. You won't believe the grease being paid. The usual suspects got preferential treatment when the U.N. bosses in New York called the BNP bank to get Cotecna to issue a C.O.A. to release the money.''
Last week, Secretary General Kofi Annan claimed that my reporting of what he told me at a luncheon was ''a private conversation'' (no such ground rule was set) and that ''some are jumping to conclusions without facts, without evidence. It is a bit like a lynching, actually.'' 
However, my call for a Congressional subpoena to overcome his attempt to limit investigation to his internal Volcker committee has flushed out a fact not hitherto disclosed. Annan's press aide complained to The Times that a subpoena had already been served secretly on BNP Paribas (the initials once stood for Banque Nationale de Paris) by the U.S. Senate Permanent Subcommittee on Investigations.
Although the U.N. had warned its bank, as well as Cotecna, the oil monitor Saybolt and all its other oil-for-food contractors, not to cooperate with anybody but Paul Volcker -- and had blown off the House International Relations Committee's requests -- Annan's advisers knew it would be unseemly and foolhardy to insist that its bank fight the Senate in court.
With his subpoena and investigation thus publicly revealed by the U.N., Chairman Norm Coleman of Minnesota, a Brooklyn-born Republican, felt free to take my call. ''This is a major priority for us,'' he says. ''There's a lot of stuff to cover, a big universe of documents, and we're being aggressive about it. Yes, Cotecna, Saybolt, all of them.'' 
He sent out four ''chairman's letters,'' countersigned by the ranking Democrat, Carl Levin, in early June. One was to the U.S. State Department for the minutes of the ''661 committee'' meetings at the U.N., which reviewed oil-for-food contracts (though not yet for copies of the contracts themselves). Another to the Government Accounting Office, which had first estimated the skimming at $10 billion. Another to Paul Bremer in Baghdad for copies of documents being turned over to the interim government -- and the Senate still awaits a response; apparently the White House doesn't want to offend the U.N. Finally, a friendly letter to Annan about the subpoena that would require his bank to open its letter-of-credit files.
Now let's review the investigative bidding. The Senate seems serious; though Coleman is a freshman, the subcommittee staff is experienced and nonpartisan. The House is doing what it can. The U.N. allocated $4 million to Volcker, but he hasn't yet submitted a budget or announced a staff. The New York Fed defers to its old boss, and the New York State Banking Department is overdrawn.
But since this involves possible fraud, bribery and larceny on a grand scale, where is law enforcement? Interesting: the U.S. attorney for the Southern District of New York, David Kelley, served subpoenas last week on Exxon Mobil, ChevronTexaco and Valero about Iraqi oil purchases. That deals with the income side of the scandal, the money for Iraq (less kickbacks) supposedly to buy food. 
I suspect Kelley was moved to empanel a grand jury by probable competition from the Manhattan district attorney, Robert Morganthau, on the scandal's payoff side. These two offices compete, and Morganthau's office has expertise on global banking.
Without imputing wrongdoing to any individual, I suggest investigators supplement their document search by talking to people who should be in the know. At the U.N., these include Benon Sevan's deputy, Teklay Afeworki, and at the bank, Pierre Veyres and Eva Millas-Russo.
But defenders of U.N. malfeasance can take heart. In a counterattack, our global servants hired an accountant to warn of ''fraudulent acts'' by the U.S. after it took over the U.N.'s mismanaged Iraqi oil account. Now, that will get media coverage.