August 10, 2005
Many Oil-for-Food Companies Said to Have Made Illegal Payments
By THE ASSOCIATED PRESS
UNITED NATIONS, Aug. 9 (AP) - Half of the 4,500 companies involved in the United Nations oil-for-food aid program in Iraq paid kickbacks or illegal surcharges and are being given a chance to respond to the accusations, two top investigators say. 
After releasing a report on Monday that for the first time accused two United Nations officials involved in the program, Benon V. Sevan and Aleksandr V. Yakovlev, of outright corruption, an investigative committee commissioned by the United Nations is expected to release a major report in early September on the $64 billion aid operation. That will be followed by a final report in October on the companies involved in the purchase of Iraqi oil or sale of relief goods under the program, the investigators said.
The oil-for-food program was started in December 1996 to help Iraqis cope with United Nations sanctions imposed after Saddam Hussein's invasion of Kuwait in 1990. Under the program, Mr. Hussein's government could sell oil, provided that the proceeds went primarily to buy goods or pay war reparations. Mr. Hussein supposedly sought to curry favor with former government officials, activists, journalists and others by giving them vouchers for Iraqi oil that could then be resold at a profit.
The chairman of the committee, Paul A. Volcker, a former Federal Reserve chairman, said at a news conference on Monday that his investigation would give the definitive list of more than 4,500 private contractors involved in the program. For the first time, he said, it will also include findings on entities that established front companies involved in the program. 
It will provide information of known or alleged beneficiaries of oil allocations or purchase contracts, and it will report the apparent payment of illicit surcharges on oil contracts and kickbacks on humanitarian contracts, he said. 
Richard Goldstone, a former prosecutor for Yugoslav war crimes trials and a member of Mr. Volcker's investigation, said afterward that many contracts had been accompanied by side letters containing evidence of kickbacks.
Before making allegations of illegal actions against companies, Mr. Goldstone said, we are going through the painstaking process of giving them prior notice, and giving them the opportunity of saying why this would be unfair and incorrect.
Mr. Goldstone said about half the 4,500 companies would receive notices.