Saddam's U.N. Payroll Oil for Food bribery means sanctions against Iraq were doomed to fail. October 28, 2004 Wall Street Journal http://www.opinionjournal.com/editorial/feature.html?id=110005818 Out on the campaign trail, John Kerry continues to diminish our allies in Iraq and decry President Bush for rushing to war without U.N. Security Council approval. But we hope his would-be Secretaries of State, Biden and Holbrooke, are paying attention in private to revelations about the crumbling sanctions regime they would have had us continue and the related corruption in the U.N.'s Oil for Food program. These folks are in for a rude awakening if they really think Old Europe will be rushing to help a President Kerry in Iraq, or that the United Nations is competent and trustworthy enough to manage their foreign policy projects. http://www.opinionjournal.com/images/storyend_dingbat.gif \* MERGEFORMATINET The latest pieces of news are last week's data dump from Paul Volcker's U.N.-blessed investigation of Oil for Food, and U.S. weapons inspector Charles Duelfer's report to Congress earlier this month. Everybody is still digesting these massive documents. But the most important conclusion is already clear: Saddam Hussein exploited the program to run the largest bribery scheme in the history of the world. Yes, we mean that literally. Total turnover between 1996 and 2003 was about $97 billion, or $64.2 billion in oil sales and $32.9 billion worth of food and other humanitarian goods. Crucially, Saddam was able to manipulate the program largely because U.N. Secretary-General Kofi Annan--who was given more or less complete discretion to design Oil for Food by the Security Council resolution that created it--allowed him to pick and choose the buyers of his oil and the sellers of the humanitarian goods. This meant the Iraq dictator could reward his friends and political allies with oil at below market prices and goods contracts at inflated ones. In the middle of the program, he also started demanding kickbacks on the contracts to add to the stream of unmonitored revenue he was already getting from oil smuggling. It can't be stressed enough that both the Duelfer and Volcker investigations confirm that this global web of corruption is no mere allegation trumped up by Ahmed Chalabi and neoconservatives, as U.N. officials tried to pretend in January when Iraq's al Mada newspaper published a list of the oil voucher recipients. Mr. Duelfer's list of recipients--which more or less confirms al Mada's--was compiled based on information from current and former Iraqi officials and lists maintained by former Iraqi Vice President Taha Yasin Ramadan (now in U.S. custody) and the former Iraqi Oil Minister. Mr. Volcker's lists--which include the 248 companies that bought Iraqi oil under the program and the 3,545 companies supplying humanitarian goods--are compiled from the U.N.'s own records and cross-checked against Iraqi and other sources, including the French bank BNP Paribas that administered program revenues. High-level officials of Saddam's regime have told investigators that oil and goods contracts were always awarded with an eye to helping Saddam politically, particularly to promote the lifting of the sanctions. The Volcker data bears this out. Iraq's top customer was Russia, whose firms bought $19.2 billion worth of Iraq oil and exported $3.3 billion in humanitarian goods. Fellow Security Council member France was a distant but significant second, at $4.4 billion and $2.9 billion respectively. China is also high on the list. Oil voucher recipients are alleged to include the Russian presidential office, former French Interior Minister Charles Pasqua, and even former Oil for Food program director Benon Sevan of the U.N. Just this week our news side colleagues reported that French authorities have placed under formal investigation a top official of French oil giant Total, for possible misuse of funds including payment of the Iraqi kickbacks. Before the war Total was also openly courting Baghdad for the rights to develop two large Iraqi oil fields. http://www.opinionjournal.com/images/storyend_dingbat.gif \* MERGEFORMATINET Against this backdrop, it is impossible to take Secretary-General Annan seriously when he calls it inconceivable that this could have affected the Security Council's handling of Iraq. I don't think the Russian or the French or the Chinese government would allow [themselves] to be bought, he said recently. But even in the unlikely event that they weren't too worried about the possible financial losses, they surely never wanted this information to see the light of day. Mr. Annan would be on stronger ground pointing out that Saddam was seeking agents of influence within the U.S. as well. The very first oil voucher recipient under Oil for Food appears to have been Texas tycoon Oscar Wyatt, who had tried to save Saddam from U.S. force before the first Gulf War. The records allege that Mr. Wyatt and his company took 71.8 million barrels of oil under Oil for Food for a profit of $22.8 million. According to a weekend story in the Los Angeles Times, since 1991 he and his wife have given more than $700,000 to federal candidates and PACs (about 75% to Democrats) and Saddam may have regarded him as a way to get to the Clinton Administration. Another name appearing on the Duelfer and Volcker lists is a politically connected Detroit-area businessman named Shakir al-Khafaji. Our Robert L. Pollock reported on Mr. al-Khafaji's oil vouchers back in March, based on the al Mada list and information from an Iraqi intelligence source. Mr. al-Khafaji later conceded taking such vouchers, so his appearance on the Duelfer list is not surprising. More interesting is the appearance of his South African-based Falcon Trading Group on the Volcker list of humanitarian goods suppliers. At about $50 million, he did a serious amount of business. What's more, a source on Representative Henry Hyde's House International Relations Committee tells us Falcon was on the so-called exempt list, which was meant for highly valued individuals and companies that were allowed to circumvent normal Iraqi contract procedures. Why might Mr. al-Khafaji have been highly valued? Could it be because he financed an anti-sanctions documentary by former U.N. weapons inspector Scott Ritter to the tune of $400,000? Or brought Mr. Ritter to Baghdad to address Saddam's rubberstamp parliament? Or brought a U.S. Congressional delegation including former House Minority Whip David Bonior, and Democratic Representatives Jim McDermott and Mike Thompson to Baghdad in late 2002 to denounce President Bush's Iraq policy? Or because he did the same with South African politicians, possibly influencing that country's pro-Saddam stance? Mr. al-Khafaji did not return a call this week seeking comment. Trading with Iraq under Oil for Food wasn't necessarily illegal (at least if you weren't paying the kickbacks). And we're not suggesting Mr. Ritter and the Congressmen were anything other than useful idiots. But it is surely a matter of concern that Saddam may have been able to use the Oil for Food scheme to advance his interests even within the United States. We hope federal authorities have been looking into this activity, as well as the other Iraqi-American (Samir Vincent) on these lists. http://www.opinionjournal.com/images/storyend_dingbat.gif \* MERGEFORMATINET Now, let's step back and put this all in context--the context offered by Mr. Duelfer's report. The news there isn't that there appear to have been no large stockpiles of WMD in Iraq at the time of the March 2003 invasion. That's been clear for more than a year. Rather, the news is that we now know straight from Saddam himself, his scientists, and his fellow high-level detainees that Saddam intended to restart his weapons program the second U.N. sanctions were lifted. And we now know that he would never have unambiguously come clean on his WMD programs because he wanted his enemies (especially the U.S. and Iran) to believe he had them. In other words, had the weapons inspections been allowed to continue, as Mr. Kerry says he wanted, a U.S. President would have eventually faced the same uncertainties and the same agonizing choice that Mr. Bush did when he decided to commit the U.S. to war. Remember, too, that the final round of inspections was won only with a build-up of U.S. troops in the Gulf, and that a decision to accept as satisfactory the desultory cooperation that Saddam gave these inspectors would have meant overwhelming international pressure for immediate lifting of all sanctions. There were reasonable arguments against having gone into Iraq. But in light of this latest evidence, the arguments Mr. Kerry and his team have been making--that more inspections might have yielded something, and that the real coalition of the bribed at the Security Council might ever have supported force--don't pass the laugh test, never mind the global one. Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved.