April 14, 2005
Annan: US, UK Also Bear Blame in Oil, Food Scandal
By REUTERS 


Filed at 3:43 p.m. ET
UNITED NATIONS (Reuters) - U.N. Secretary-General Kofi Annan said on Thursday the United States and Britain bore part of the blame in the Iraq oil-for-food debacle by allowing unsupervised oil exports that Saddam Hussein exploited.
Annan, addressing a seminar on the United Nations and the media, said most of the money Saddam earned was by oil sold to Jordan and Turkey outside of the $67 billion U.N. program.
Only countries like the United States and Britain had interdiction forces that could have stopped it. But he said they ``decided to close their eyes to Turkey and Jordan because they are allies.''
Annan said the reason for it was understandable: no one had the money to compensate neighbors of Iraq for their losses under U.N. sanctions, imposed in mid-1990 after Iraq invaded Kuwait.
Under the oil-for-food program, which began in December 1996 and ended in 2003, Saddam Hussein was allowed to sell oil to buy civilian goods to ease the impact of 1990 sanctions on ordinary Iraqis.
CIA weapons inspector Charles Duelfer found that corruption within the U.N. oil-for-food program, such as inflated prices for goods shipped to Iraq, amounted to $1.7 billion. But he said Iraq made most of his money, another $8 billion through kickbacks on oil exports outside of the program.
``The bulk of the money Saddam made came after smuggling outside the oil for food program,'' Annan said. ``It was on the American and British watch.''
KICKBACKS
As Annan was speaking, U.S. federal prosecutors in New York charged several people, including a Texas businessman, with paying kickbacks in exchange for oil allocations.
Saddam had charged oil companies, both under the U.N. program and around it, a surcharge in exchange for getting a contract. In mid-2001, about nine months after media reports on the scheme, the United States and Britain changed the U.N. oil pricing system to subvert the kickback scheme, despite objections from other Security Council members. 
Annan told the seminar some in the U.S. media reported only the U.N. lapses and not those in the Security Council that was supervising the program.
``I sometimes bridle at press criticism that seems politically biased and ideologically inspired,'' Annan said.
For example, he said the United Nations was criticized for wanting to let Iraq have spare parts for its oil industry. Yet after the war, U.S. and other officials were the first to acknowledge the dilapidated equipment.
He also noted the United Nations had turned over $8-9 billion in oil-for-food money to the U.S.-led occupation coalition after the 2003 war in Iraq. And these funds had still not been properly accounted for, he said.
Brian Urquhart, a former U.N. undersecretary-general and author, said criticism of the world body was not new since its inception although it had now reached a fever pitch.
``There was always a faction in U.S. politics which regarded the United Nations as a curse on humanity which had to be eliminated,'' Urquhart said.
Since the end of the 2003 war, Iraq has released lists of kickbacks from the Saddam Hussein government. The lists are a veritable who's who of political groups and individuals from whom the former Iraqi government wanted to buy influence.
Paul Volcker, the former U.S. Federal Reserve chairman assigned by Annan to investigate the program, has accused Benon Sevan, the head of the U.N. program, of steering oil contracts to friends in Egypt.
He also faulted Annan for failing to investigate the potential conflict-of-interest in a U.N. contract awarded to a Swiss firm that employed his son.