Panel Pegs Illicit Iraq Earnings at $21.3 Billion

By Judith Miller
November 16, 2004
The New York Times
http://www.nytimes.com/2004/11/16/politics/16food.html?ei=5088&en=0b7c9912a627fdff&ex=1258347600&adxnnl=1&partner=rssnyt&adxnnlx=1126223007-iZ9ra23NH15JlzsRmjUn2w

WASHINGTON, Nov. 15 - A Senate committee investigating the United Nations
oil-for-food program for Iraq estimates that during 13 years of
international sanctions, Saddam Hussein's government made at least $21.3
billion illicitly - more than double previous government estimates.

Senator Norm Coleman, the Minnesota Republican who is chairman of the
Senate's Permanent Subcommittee on Investigations, said at a subcommittee
hearing on Monday that he doubted that fraud and abuse on this scale could
have gone undetected by senior United Nations officials or their American
counterparts. Because it was unknown where the illicit money ended up, he
said, he was worried that it may be helping to finance the insurgency in
Iraq.

The United Nations aid program for Iraq ran from 1996 to 2003, easing some
of the effects of the sanctions by allowing the country to make monitored
sales of oil and use the money to purchase aid like food and medicine. Since
then, there has been growing evidence that Mr. Hussein's government
exploited the program with a campaign of illicit oil sales, illegal
surcharges and kickbacks, as well as bribes aimed at lifting sanctions.

Senator Coleman said the huge scale of fraud and theft while United Nations
penalties were in effect had created a dark stain over the world
organization that raised questions about whether it could put in place and
monitor any sanctions.

Questions about how much money was siphoned away from the oil-for-food
program, and the money's ultimate use, were particularly troubling, he
added, because of allegations that Benon V. Sevan, who was in charge of the
United Nations program, had benefited from special allocations of oil from
Mr. Hussein.

Mr. Sevan has repeatedly denied any wrongdoing.

However, Charles A. Duelfer, the top American weapons investigator in Iraq,
who was the Senate panel's first witness, told the committee on Monday that
based on Iraqi documents and what Iraqi officials had told him, he believed
that Mr. Sevan had been given 13 million barrels of oil in special oil
allocations.

The subcommittee's new higher estimates of Iraq's illicit gains are based on
evaluations of earlier studies by the Government Accountability Office, the
Pentagon, the Congressional Budget Office and Mr. Duelfer's Iraq Survey
Group, along with new information and a million pages of documents secured
by the Senate panel over its seven-month investigation.

Specifically, the panel estimated that Iraq made $3.9 billion from oil
smuggling before the oil-for-food program was created in 1996; $4.4 billion
in kickbacks on aid contracts; $241 million in illegal surcharges on the
sale of Iraqi oil; $2.1 billion from the sales of substandard goods under
the program; $9.7 billion from oil smuggling under the program; $405 million
from abuses in aid contracts in the northern, mostly Kurdish, part of Iraq
that Mr. Hussein did not directly control; and $403 million from the
investment of its illicit income overseas.

The documents, some of which were released Monday, also show how Iraqi
officials, foreign companies, politicians and journalists benefited from Mr.
Hussein's efforts to undermine support for sanctions and secretly gain money
to build palaces and buy weapons.

Senator Carl Levin, Democrat of Michigan, the panel's ranking minority
member, said three-quarters of Iraq's illicit income came from trade
protocols with Jordan and Turkey that the Clinton and Bush administrations
had known about and winked at because support from those countries was
vital.

But Mr. Duelfer, in testimony before the Senate panel, insisted that
although the protocols provided Iraq with illicit income, Mr. Hussein was
successfully using illegal proceeds specifically from the oil-for-food
program to undermine support for the sanctions that the United Nations
imposed after Iraq's 1990 invasion of Kuwait.

Mark L. Greenblatt, a counsel for the Senate panel, said that beginning in
1998, Mr. Hussein had tried to manipulate the typical oil allocation
process in order to gain influence throughout the world. Rather than let
traditional oil companies buy oil, he said, Mr. Hussein gave oil
allocations to officials, journalists and even terrorists, who then sold
their allocations to the traditional oil companies in return for a sizable
commission.

A document released Monday showed such payments to a Syrian journalist,
Hamidah Nana, who said in an interview in 2003 that she was working hard to
get sanctions against Iraq lifted. When Ms. Nana made the statement, Mr.
Greenblatt said, she had already received oil allocations totaling 10
million to 12 million barrels of oil, and had made a profit, according to
Iraq's Oil Ministry, of $1.4 million from transfer of the vouchers to a
Panama-based company.

Steven Groves, another of the subcommittee's counsels, said documents showed
that Mr. Hussein had demanded kickbacks from companies who were supplying
Iraq with food and medical aid. His presentation focused on payments by
French and United Arab Emirates-based subsidiaries of the Weir Group, of
Glasgow, which produces industrial valves for the oil industry.