Fast Facts: Oil-for-Food Program 
Tuesday, February 15, 2005
http://www.foxnews.com/images/foxnews_story.gif \* MERGEFORMATINET
The U.N. Oil-for-Food program is being investigated for lack of oversight and severe mismanagement, among other claims. Here is a quick look at what the program is and various elements of the ongoing investigation.
1.What was the Oil-for-Food program?
After Iraq invaded Kuwait in 1990, the U.N. Security Council imposed sanctions on Iraq to isolate former Iraqi dictator Saddam Hussein's regime in Baghdad. The Oil-for-Food program was established on April 14, 1995, to allow Iraq to sell its oil to legitimate oil traders and use the major portion of the revenues to buy food and other humanitarian aid in an effort to soften the blow that sanctions were having on Iraqi civilians.
According to the U.S. General Accounting Office, from 1997 to 2002 Iraq sold more than $67 billion in oil through the program and issued $38 billion in letters of credit to purchase commodities for the Iraqi people. As of May 28, 2003, some $28 billion worth of humanitarian supplies and equipment had been delivered to Iraq under the Oil-for-Food Program, including $1.6 billion worth of oil industry spare parts and equipment. The program ended in November 2003.
Nine different U.N. agencies, programs and funds developed and managed humanitarian operations in Iraq across 24 economic and social sectors.
2. What kind of humanitarian goods were purchased through the program?
The program delivered enough food rations to feed all 27 million Iraqi residents, resulting in a drop in the malnutrition rate among Iraqi children by 50 percent, according to the United Nations.
Money also went toward national vaccination campaigns that helped reduce child mortality and eradicated polio in Iraq for the last three years of the program, while it also helped provide more dependable access to electricity and clean water. Foodstuffs worth more than $13 billion and medical supplies totaling $2 billion entered Iraq, as well. More than 2,500 Iraqis were given some sort of responsibility to help carry out these projects.
3. Who controlled the oil that was sold through Oil-for-Food?
The Iraqi government controlled the oil that was sold through the program and was able to choose the companies with which it dealt, as well as from whom or from what companies it would import humanitarian supplies.
4. With how many companies did Oil-for-Food do business, and where did these companies come from?
Members of the independent Oil-for-Food investigation, being conducted by former Federal Reserve Chairman Paul Volcker's Independent Inquiry Committee, said records show 3,545 companies exported goods to south and central Iraq, receiving payment totaling $32.9 billion. Meanwhile, 941 firms provided exports to northern Iraq through U.N.-related agencies and 248 companies paid for and received Iraqi oil under contracts totaling $64.2 billion.
5. Who was in charge of managing the program?
The U.N.'s Office of the Iraq Program, formerly headed by Benon Sevan, managed the program. Sevan has been cited by Volcker's committee as being mainly responsible for severe mismanagement of the program.
6. What role did the U.N. Security Council play?
The Security Council Iraq sanctions committee had full responsibility for monitoring implementation of the program. The committee, whose members are the same as those of the Security Council, also approved contracts and dealt with any irregularities in their implementation.
7. What committees in the U.S. government are investigating the program?
The Justice Department is investigating various aspects of the program. Meanwhile, at least five congressional committees also are probing the program: Senate Permanent Subcommittee on Investigations; House Appropriations Subcommittee on Commerce-Justice-State; House International Relations Committee; House Government Reform Subcommittee on National Security, Emerging Threats and International Relations; and House Energy and Commerce Committee. Volcker's U.N.-commissioned Independent Inquiry Committee and The Iraqi Board of Supreme Audit also are investigating the matter.
8. What is the Volcker Commission?
The Volcker Commission, formally known as the Independent Inquiry Committee, or IIC, was commissioned by U.N. Secretary-General Kofi Annan to investigate the Oil-for-Food program. It is named after Volcker, who heads the group. The panel released a series of audits earlier this year and its first interim report last month, which showed that there was severe mismanagement and lack of oversight of the multibillion-dollar program. Its next report is due later this year.
9. Has anyone been charged with a crime?
Yes, one person.
Samir Vincent of Annandale, Va., pleaded guilty in January 2005 to making false statements on income-tax returns, acting as an unregistered agent of a foreign government between the first and second Gulf wars and violating the International Emergency Economic Powers Act. He could be sentenced to 28 years in prison.
The Justice Department says Vincent reaped millions of dollars in profits by selling Iraqi oil vouchers to an oil company. The DOJ claims that from 1992 to 2003 Vincent consulted with Hussein's government about loosening or ending the U.N. sanctions imposed on Iraq after the 1991 Gulf War. He was also involved in the drafting of the Oil-for-Food program, including agreements guaranteeing him and others millions of dollars in compensation, according to the government.
At least two other high-profile figures are being accused of various actions.
Sevan, who was in charge of the multibillion-dollar humanitarian program, was accused of misconduct in early February by the IIC, which accused Sevan of a grave conflict of interest, saying his conduct in soliciting oil deals from Iraq was ethically improper and seriously undermined the integrity of the United Nations.
The IIC report said he helped a company owned by a friend obtain valuable contracts to sell Iraqi oil and accused Sevan of failing to act in the sole interest of the United Nations, engaging in an activity that was incompatible with his duties, and actively associating with a business where it was possible for him to benefit ... by reason of his official position with the United Nations, thus creating a conflict of interest. Sevan ran the Oil-for-Food program from 1996 until it ended in November 2003.
Joseph Stephanides, head of the U.N. Security Council Affairs Division, also was accused of misconduct by the IIC. Volcker's report said Stephanides tainted the competitive bidding process for a company to inspect humanitarian goods entering Iraq under the program. His contacts with an unnamed U.N. mission led to Lloyd's Register Inspection Limited's winning the contract even though there was a lower bidder.
Volcker said Stephanides violated U.N. rules by actively participating in a process that prejudiced and pre-empted competitive bidding. Stephanides is scheduled to retire later this year.
The Justice Department also is investigating U.N. Secretary-General Kofi Annan's son, Kojo Annan, who used to work for Cotecna, the company that had to contract to oversee all humanitarian goods flowing into Iraq as part of the Oil-for-Food program.