Oil-for-food probe awkward for U.N.

Secretary-General Kofi Annan and many of the leading U.N. powers face some embarrassing moments as a House panel today begins an expansive probe into the scandal-plagued oil-for-food program in Iraq.

The U.N. Security Council, meanwhile, is about to pass a resolution calling on U.N. officials and member states to offer “full cooperation” to an independent panel investigating accusations that Saddam Hussein and his associates skimmed billions of dollars from the U.N.-run humanitarian program.

Both probes will look into accusations that:

• At least one key U.N. official accepted bribes from the Iraqi Oil Ministry.

• A key inspection contract was awarded to a company with ties to Mr. Annan’s son.

• Corporations routinely built in false fees and provided kickbacks to the regime as the price of doing business in Iraq.

• Oil companies paid surcharges in cash on every barrel of oil purchased.

• Saddam’s associates openly smuggled billions of dollars worth of oil overland through Turkey and Syria.

Rep. Christopher Shays, Connecticut Republican and chairman of the House Government Reform subcommittee on national security, emerging threats and international relations, said the House hearing was needed in part to restore the integrity of the United Nations in dealing with future failed states.

“An institution as important to the United States and the world as the United Nations should do everything possible to remove the stain this program may leave on its reputation,” Mr. Shays said in calling the hearing.

The accusations are so complex that a number of competing investigations have been spawned to understand them.

In Baghdad, the Iraqi Governing Council has an inquiry under way, based in part on documents discovered after the regime fell. The council has hired accounting firm KPMG and law firm Freshfields Bruckhaus Deringer to assist in the investigation.

In New York, Mr. Annan will today appoint an independent panel to examine the oil-for-food program, which has been deemed too explosive to be handled by the in-house inspector general’s office.

Former Federal Reserve Chairman Paul Volcker will take the helm, assisted by Swiss money-laundering expert Mark Pieth and South African jurist Richard Goldstone.

In Washington, the General Accounting Office estimated last month that Saddam netted about $10 billion from the program, including $5.5 billion in illegal but widely tolerated oil shipments. That report is the cornerstone of two congressional probes.

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