Oil for Food Facts
The interim Volcker report is no whitewash.

February 12, 2005
Wall Street Journal
http://www.opinionjournal.com/editorial/feature.html?id=110006283

So much for the worry that Paul Volcker's probe into the U.N. Oil for Food scandal would be a whitewash. After taking the time to read the 246-page interim report the former Fed chairman issued late last week, we think his revelations have if anything been underplayed. To wit: 
• Oil for Food program director Benon Sevan behaved unethically and then lied about it, and he hasn't adequately explained $160,000 he received. 
• There is convincing and uncontested evidence that the selection of the program's three prime contractors did not conform to U.N. rules or to general standards of fair play and competitive bidding. 
• While more than 50 audits were done of the program, nobody bothered to audit those aspects--the banking process, and the actual oil and goods contracts--that would have most likely shed light on the kind of graft everyone knew was a risk when Oil for Food was created. 
And that's just for starters. The Volcker team has yet to report on such explosive subjects as what role if any Secretary-General Kofi Annan's son Kojo had in winning one of those inspections contracts for his employer Cotecna. Hundreds of interviews have been conducted around the world, and there is every indication that Mr. Volcker is taking all issues seriously. 
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In the case of Mr. Sevan, the Volcker commission has come up with everything but the smoking gun. It has been proved conclusively that Mr. Sevan made repeated requests to the Iraqis to route allocations of oil to a company called African Middle East Petroleum (which was owned by one Fakhry Abdelnour, a relative of former Secretary-General Boutros Boutros-Ghali). 
Whether the resulting profits had anything to do with an unexplained $160,000 in payments to Mr. Sevan is not known. But it's certainly clear where the Iraqis thought the money was going, as records show they often listed Sevan as the oil recipient in place of AMEP. Mr. Sevan lied repeatedly to investigators about his relationship with Mr. Abdelnour. 
As the report notes, Mr. Sevan's great power and authority concerning Iraq under sanctions meant that any solicitations on behalf of AMEP . . . presented a grave and continuing conflict of interest, were ethically improper and seriously undermined the integrity of the United Nations. For the record, Mr. Sevan continues to deny any wrongdoing. 
An even larger issue for Mr. Volcker to address is just who conceived of this sanctions regime in which the sanctioned country was given so much scope for mischief. As the commission notes, Saddam Hussein personally reviewed who would receive oil and Iraq had complete discretion over the humanitarian contracts as well. 
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Which brings up a critical point about the size and scope of this scandal. We keep reading that this was a $64 billion program and that the scandal is somehow equal to the amount of unmonitored revenue Saddam was able to amass, either through surcharges, kickbacks or smuggling. 
But the larger scandal is that Saddam was able to use every legitimate dollar of the program to reward friends and allies and undermine support for sanctions. The total value of contracts under Oil for Food was more than $100 billion--or $64.2 billion in oil sales and $38.7 billion in humanitarian purchases. Subtract a few billion dollars the U.N. spent in Kurdish-controlled northern Iraq, and you have some $100 billion worth of business that Saddam was able to steer wherever he wanted. 
We doubt it's a coincidence, comrade, that Saddam directed so much of that money to Security Council members, including $22.5 billion to Russia and $7.3 billion to France. The links between this money and the two countries' positions on sanctions need to be explored. And we hope U.N. Undersecretary General Shashi Tharoor, who has sent us an ill-informed defense of the $64 billion program, will take note. 
In short, the Volcker commission has already concluded that the U.N. was tested by Oil for Food and found wanting in various ways. There's still a debate to be had about how much of the blame rests with the Secretariat in New York and how much with individual member states on the Security Council. But the experience of Oil for Food and the Iraq sanctions generally offer no reason to believe that the United Nations is capable of delivering on its core missions of humanitarian relief or collective security. 
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