Questions for Paul Volcker

New information about the business dealings of Paul Volcker, head of the independent inquiry into the U.N. Oil for Food Program, threatens to overshadow the findings in the panel’s interim report, which is scheduled to be released early this month.

Mr. Volcker, a former Federal Reserve chairman, is an honorable man. But recently, Heritage Foundation scholar Nile Gardiner and Fox News Channel correspondent Jonathan Hunt have reported new information suggesting the Volcker probe could be sidetracked by questions about his personal and business relationships with potential targets of the investigation.

On Friday, Mr. Hunt reported that Mr. Volcker is a close friend and paid adviser to billionaire Paul Desmarais Sr., who owns the Power Corp. of Canada. Power Corp. shares control of a holding company that is the largest single shareholder of the multinational energy firm Total, which received $1.75 billion worth of oil from Iraq. Total was in discussions with Saddam Hussein to develop oil fields in Iraq if sanctions were lifted (which would have made them worth billions of dollars more). Mr. Demarais’ son is currently a director of Total.

Mr. Gardiner observes that when Mr. Volcker was appointed to head the Oil for Food investigation, it was not well known that he was a director of the U.N. Association of the United States of America. But Mr. Volcker did not mention this affiliation in his biography which appears on the Independent Inquiry’s Web site — even though he noted his affiliation with other institutions such as the Trilateral Commission.

It would be difficult to imagine a more challenging task than the job of the UNA-USA: portraying the United Nations in a favorable light to the American public in spite of the Oil for Food scandal and other myriad problems at the United Nations. But that’s precisely what the UNA-USA does. The group has denounced what it terms “politically motivated attacks” over the Oil for Food scandal, and claims that calls for the resignation of U.N. Secretary-General Kofi Annan “constitute an effort to undermine the U.N., which is the real objective for many of those who are distorting the facts on this complex issue.” Mr. Annan, whose leadership has been questionable, has been effusive in his praise for the UNA-USA’s work in defending the world body: “There are United Nations Associations in many other countries, but this one is unique — both in the challenges it faces and in the energy and resources it devotes to tackling them. From our perspective, it is hard to think of any work more valuable than what you do to improve the understanding of United Nations issues in our host country.”

One of the chief underwriters of the UNA-USA’s partner organization, the Business Council for the United Nations, was BNP Paribas — the French bank holding the escrow account for the Oil for Food Program. Congressional investigators have said that BNP failed to properly monitor business transactions related to Saddam’s oil sales. In 2002 and 2003, BNP donated more than $100,000 to UNA-USA and the business council.

Mr. Volcker needs to come forward to clarify his side of the story in detail, in order to answer the questions being raised by the public and by members of Congress about his relationships with potential targets of the investigation. Until Mr. Volcker offers details, the debate will overshadow his own efforts to get a full accounting of the Oil for Food scandal.