Under the UN table

October 29, 2005 
Financial Times
Original Source: http://news.ft.com/cms/s/45bfbe7c-4819-11da-a949-00000e2511c8.html

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The lengthy inquiry led by Paul Volcker into the United Nations' oil-for-food (OFP) programme for pre-war Iraq has already revealed corruption on the part of some UN and government officials, and gross negligence of this behaviour by very many others. But this week's final report lifts the lid on an aston
ishing degree of corporate complicity in the Saddam Hussein government's manipulation of the seven-year programme to extract $1.8bn (¬ 1.4bn) in illegal surcharges and kickbacks. The report alleges more than 2,000 foreign companies were involved in illicit payments, though perhaps not knowingly. The allegations touch not only companies from countries that the Hussein regime considered favourable, such as Russia and France, but include also the likes of Volvo, Siemens, Daimler Chrysler and the UK's Weir group
.
The OFP, designed to alleviate the impact of UN sanctions on ordinary Iraqis, represented a peculiarly tempting commercial opportunity for the outside world. Iraq was selling the very valuable commodity of oil into a market full of middlemen, and generally underpricing
 it just enough to make buyers ready to pay the extra commission Baghdad was insisting be paid into secret accounts. More surprising is the Volcker report's finding that Baghdad gained far more from kickbacks, dressed up as payment for transport or after-sale services costs, on food and other imports. For UN sanctions had the perverse effect of first virtually closing Iraq to imports, and then, under OFP, artificially increasing imports beyond what a country of Iraq's development would normally buy from abroad. The reason was that the Iraqi government had virtually no legal cash to pay for local goods.