The company hired to monitor aid under the U.N. oil-for-food program in Iraq failed to staff key checkpoints, used unauthorized subcontractors, and could not account for “massive discrepancies” between reported and actual shipments of aid, according to an internal U.N. audit.
Switzerland-based Cotecna Inspection SA has already figured as a key player in the $10 billion scandal when it was revealed that U.N. Secretary-General Kofi Annan’s son, Kojo, worked for Cotecna and later served as a consultant to the company when it won the lucrative U.N. contract in 1998.
Records from the U.N. agency overseeing the oil-for-food program “show massive discrepancies between Cotecna reports and U.N. agency reports” for the value of the shipments into northern Iraq, according to a summary of the audit obtained by The Washington Times.
The oil-for-food program is the subject of investigations in Baghdad, Washington and within the United Nations itself.
The General Accounting Office (GAO) has estimated that the regime of Saddam Hussein, the Iraqi dictator who was ousted last year by U.S.-led forces, siphoned off more than $10 billion from the program in illegal oil sales and inflated contracts for food and humanitarian aid.
The audit, conducted by the United Nations’ Office of Internal Oversight Services, covers only a five-month period ending in October 2002, but suggests that there were long-standing problems with the six-year program. The program began in December 1996.
Details of the previously undisclosed internal audit were leaked earlier this week to Mineweb.com, an Internet-based trade publication that follows the mining industry.
In perhaps the most damning finding, the auditors found that Cotecna did no independent inspections on nearly $1 billion worth of aid shipments into northern Iraq in the first three years of its contract.
Saddam was routinely accused of inflating contract deals, reselling goods and demanding contractor kickbacks as a way to sidestep international economic sanctions.
When Cotecna began inspections in 2001, it reported a difference of $111 million in just over a year between what contractors said they were importing to Iraq and the value of the actual shipments.
The audit also found that Cotecna failed to provide the required 24-hour monitoring of key border posts and was “rubber-stamping” cargo manifests on Iraqi government purchases.
Nicolas Giannakopoulos, head of the Geneva-based Organized Crime Observatory, said Cotecna lacked the manpower to carry out the contract.
“Millions of tons of goods were imported for distribution or sale to the civilian population, but there were only 50 Cotecna staffers to check and supervise,” he said.
“How could it have been possible technically for it to monitor this influx?” he asked.
Mr. Giannakopoulos said he had looked at Cotecna’s monitoring operations in Iraq and concluded that “the door was left open for money to be made.”