Oil for Food Convictions: The U.N. prosecutions are just a drop in the ocean of dirty cash

November 30, 2007  
Wall Street Journal
Source: http://online.wsj.com/public/article/SB119637236006908436.html

The United Nations Oil for Food prosecutions are starting to yield convictions -- in the U.S., that is. Would that other countries, far more deeply enmeshed in the world's largest-ever public fraud, followed America's lead.

On Tuesday, Texas oil tycoon Oscar Wyatt was sentenced to a year and a day in prison and fined $11 million for paying kickbacks to Saddam Hussein's regime. Last week Swiss oil company Vitol pleaded guilty to the same, and agreed to pay restitution to the tune of $17.4 million. Earlier this month, Chevron paid a settlement of $30 million for buying oil from companies that its executives knew were funneling kickbacks to Saddam.

That brings the total U.S. payouts to more than $97 million so far. That number includes the Chevron and Wyatt cases, plus settlements against El Paso, Ingersoll-Rand, Textron, Vitol and Swiss commodities firm Trafigura. Two executives at Bayoil, a Houston-based company, are due for sentencing next month.

But it's all still just a drop in the ocean of dirty cash that went straight to Saddam. The Oil for Food program involved more than 2,000 companies that cycled $1.8 billion in kickbacks and surcharges back to Iraq under the watchful eye of the United Nations between 1996 and 2003. Former Federal Reserve Chairman Paul Volcker, who headed an independent investigation of Oil for Food, said that the Secretariat, the Security Council and U.N. contractors failed most grievously in their responsibilities to monitor the integrity of the program.

Two years after the report was made public (www.iic-offp.org), most of the companies and individuals implicated remain free. The primary culprits reside in Russia, where energy companies received about a third of Iraq's oil exports during the Oil for Food era. Russia was loathe to cooperate with the Volcker report and has completely ignored its findings. Likewise China, Cyprus, Yemen, Egypt, Vietnam, Malaysia and the United Arab Emirates.

Among countries that have responded to the report, many have been doing so half-heartedly. Switzerland announced last week that although it had 15 Oil for Food cases under investigation, it did not expect any prosecutions in those cases. Given that the alpine country was home to 40 implicated companies that together imported $3.5 billion in Iraqi oil, that's a disappointing follow-through. France, too, has been sluggish in pursuing an investigation of oil giant Total.

Earlier this year Italy seized more than $100 million in assets of five individuals connected with an Oil for Food probe, but no heads have rolled. Last week refiner Saras announced it is cooperating with Italian investigators on Oil for Food.

Aside from the U.S., only Australia has followed up vigorously on the Volcker report's recommendations. Canberra's Cole Commission uncovered fraud at the country's wheat export board and then promptly restructured the company, removing its monopoly rights.

This month's convictions in Manhattan bring some justice to the victims of Saddam's brutal regime. But it's far from complete. Don't expect the U.N. to press for more cases to be filed -- that would only further expose the extent of its culpability.