- The Washington Times - Thursday, May 27, 2004

NEW YORK — The U.S.-led administration in Iraq said the probe of the United Nations’ oil-for-food scandal could take up to 18 months — well past the date set for Iraqi elections being organized by the United Nations.

Officials of the Coalition Provisional Authority, briefing reporters in Baghdad, denied that the lengthy investigation was designed to short-circuit a probe under way by the Iraqi Governing Council (IGC), one many believe could embarrass the world body.

The CPA-endorsed probe, to be conducted by the international accounting firm Ernst & Young, could last from six to 18 months and cost up to $20 million, the CPA officials said.

Critics in Washington and Baghdad say the CPA’s insistence on controlling the process has delayed the investigation, sparing the United Nations a potential public relations disaster before June 30. That is when a U.N.-picked interim government takes over from the IGC to prepare for national elections in early 2005.

The General Accounting Office has estimated that the regime of Saddam Hussein siphoned about $10.1 billion from the U.N. program, which was intended to allow Iraq to buy food and humanitarian aid through tightly controlled sales of oil.

The United Nations’ oversight of the program, including charges U.N. officials were among those bribed by Saddam, is the focus of multiple investigations in Baghdad, on Capitol Hill and at the United Nations.

The Ernst & Young estimate could delay a final assessment of the program until 2006.

“Ernst & Young will be doing all the analytical work and documentation,” said one senior CPA official, who asked not to be identified. “The $20 million is ceiling” for the job.

The official said the work could go faster and more efficiently “if there are savings and synergies” among the various investigations into the scandal.

At least four congressional panels in Washington are looking into the oil-for-food scandal. Some lawmakers have been critical of Iraq’s American civilian administrator, L. Paul Bremer, for opposing the IGC’s efforts to expose corruption under the U.N. program.

The CPA and Mr. Bremer canceled an earlier contract the IGC had signed with the accounting firm KPMG to investigate the scandal, saying there had not been competitive bids for the work.

Claude Hankes-Drielsma, a London-based financial adviser who has been working with Iraqi politician Ahmed Chalabi and the IGC since December on the probe, told a House hearing last month that the delay caused by the CPA “is most unfortunate and carries a great deal of risk.”

The IGC investigation originally hoped to present its findings to Mr. Bremer and U.N. officials by the end of next month, just before the scheduled transfer of power to a U.N.-endorsed interim government.

CPA officials yesterday said a memorandum of understanding had been negotiated that would allow the United Nations and the Iraqi investigations to share some information and documentation. It is not clear who would have controlled documents compiled by KPMG and Mr. Chalabi.

CPA officials have denied Mr. Chalabi’s accusations that an Iraqi police raid on his offices last week was designed to seize oil-for-food records.

Former Federal Reserve Chairman Paul Volcker, named by U.N. Secretary-General Kofi Annan to head the United Nations’ probe of the scandal, has signed the memorandum.

However, the Iraqi Board of Supreme Auditors, an independent auditing board working with Ernst & Young investigators in Baghdad, has not.

David R. Sands contributed to this report from Washington.

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