U.N. Report

Idealism runs amok

One morning last week, Security Council members sought a role for business in preventing conflict and helping countries recover from it. The diplomats achieved a broad consensus by defining their topic narrowly, but still managed to expand the council’s purview.

The 15 council members think that multinational corporations have a responsibility to the world beyond their shareholders and that transnationals should create jobs for the undereducated, the unskilled and recently demobilized soldiers, said German Ambassador Gunter Pleuger, who is chairman of the council this month. The council’s views should surprise no one.

They should build markets where none exist and, as a rule, should resist the temptation to cash in when those risks pay off, several diplomats said.

Furthermore, manufacturers and middlemen dealing with small arms and light weapons have a responsibility to see that their wares don’t wind up in the wrong hands. And businesses have an ethical responsibility not to traffic in exotic timbers, “blood diamonds” or other natural resources known to finance conflict and civil war.

“The role of business, in particular, can be crucial, for good and for ill,” U.N. Secretary-General Kofi Annan said at the Thursday session. “Their bottom lines can no longer be separated from some of the key goals of the United Nations: peace, development and equity.”

Well, OK. It’s hard to argue with corporate responsibility.

But is this really the time for the U.N. staff or the Security Council to weigh in on corporate ethics? With a multibillion-dollar scandal spreading, it seems that the organization most responsible for creating and policing Iraq’s oil-for-food program would want to stick to its usual verbal knitting.

Just last week, a spokeswoman for Mr. Annan confirmed that a panel of three experts had agreed to undertake an as-yet undefined investigation into the oil-for-food program, in which about $70 billion worth of oil was exported by Saddam Hussein’s regime and nearly $36 billion worth of merchandise was imported. The difference went to a Kuwait compensation fund, weapons inspections and other worthy causes.

The panel will be led by former Federal Reserve Chairman Paul Volker, assisted by Swiss money-laundering analyst Mark Pieth and South African jurist Richard Goldstone. But the three men have indicated that they can’t do their job until they get public assurances from Security Council members — preferably in the form of a resolution — that they will cooperate.

The enthusiastic participation of the council will be necessary because every contract over the life of the eight-year oil-for-food program had been vetted by representatives of the council and approved by a special office at U.N. headquarters.

If — as asserted by former participants and outside investigators — U.N. officials were taking bribes and foreign companies were paying off Baghdad — then there was a lot of bad business behavior going on indeed. As much as $10 billion in kickbacks may have been diverted to key members of the old regime, such as Oil Ministry officials and members of Saddam’s elite.

How? Sales contracts were written calling for expensive and often unnecessary after-service contracts, excessive spare parts or lucrative training programs, and the extra money was shared with the regime. In the final two years of the oil-for-food effort, Iraq openly demanded a 10 percent cash surcharge, or “lifting” fee, for all oil exports.

Any company that wanted to do business with Saddam had to play by his rules, and did.

At this point, it doesn’t seem that Mr. Volker will find a willing partner in the Security Council quickly.

“We don’t mind for the secretary-general to appoint the commission, but we don’t see the need to support his decision in the form of a resolution,” Russian Deputy Ambassador Gennady Gatilov told the Associated Press on Friday.

Other diplomats on the Security Council have made vague offers to cooperate with any investigation.

• E-mail Betsy Pisik at UNear@aol.com.