Tuesday, November 16, 2004

The Iraqi government of Saddam Hussein skimmed $21.3 billion from the United Nations oil-for-food program, nearly twice the amount of previous U.S. estimates, according to a Senate investigation.

“The magnitude of fraud perpetrated by Saddam Hussein in contravention of U.N. sanctions and the oil-for-food program is staggering,” said Sen. Norm Coleman, Minnesota Republican and chairman of the Senate Governmental Affairs permanent subcommittee on investigations.

Mr. Coleman disclosed the new figure of $21.3 billion over 11 years obtained from the U.N. humanitarian program at a subcommittee hearing yesterday. He said the conclusion was based on documents and on interviews conducted by the subcommittee’s Republican staff.

The subcommittee investigators found that Saddam used the cash to pay off foreign politicians, businessmen, journalists and possibly even terrorist organizations through an elaborate scheme that allowed friends of the Iraqi dictator to sell oil at inflated prices and pocket large commissions.

Mr. Coleman said the question still being investigated by the panel is “how high up does the corruption go” within the United Nations.

“The extent to which U.N. officials personally benefited from Saddam’s influence peddling has not been fully explored,” Mr. Coleman said. “We need substantially greater cooperation from the United Nations to answer these and other questions.”

The world body so far has refused requests from the subcommittee to provide witnesses and detailed information on U.N. audits that could shed light on the corruption.

The CIA-led Iraqi Survey Group, in a report made public last month, said Saddam obtained $10.9 billion from the program and used some of that revenue to buy weapons.

The subcommittee probe found that most of the $21.3 billion was obtained through $13.6 billion in oil smuggling, $241 million in surcharges on oil purchases; $4.4 billion from kickbacks on purchases of humanitarian goods, and $2.21 billion from skimming profits on purchases of substandard humanitarian goods that were bought abroad at inflated prices.

Mr. Coleman said Saddam’s use of oil vouchers — permits that allowed people and companies to buy Iraqi oil — rescued his regime from collapse.

The Iraqis also used the cash from the program to buy missiles, dual-use military goods and munitions, Mr. Coleman said.

Charles A. Duelfer, the director of the CIA survey group, told the subcommittee that Saddam used money from the oil-for-food program to buy influence at the United Nations, seeking to end sanctions that had been imposed after the 1991 Persian Gulf War.

“The infusion of funding allowed Iraq to begin efforts to refurbish conventional military capabilities, among other things, such as palace construction,” Mr. Duelfer said. “In 2000, we found Saddam made a decision to invigorate his long-range ballistic-missile programs. This was directly keyed to the availability of resources and material and expertise, in spite of sanctions.”

The three major beneficiaries of the oil-for-food voucher scheme were Russia, China and France, which received 30 percent, 15 percent and 10 percent of the vouchers, respectively, Mr. Duelfer said.

Mark L. Greenblatt, a counsel for the Senate panel, testified that the money obtained from the program funded terrorists.

“Rather than giving allocations to traditional oil purchasers, Hussein gave oil allocations to foreign officials, journalists, and even terrorist entities, who then sold their allocations to the traditional oil companies in return for a sizable commission,” Mr. Greenblatt told the subcommittee.

Among the recipients of oil-for-food cash were the Palestinian terrorist group Popular Front for the Liberation of Palestine and the Iranian Marxist group Mujahadeen Khalq, which is opposing the Islamic regime in Iran, Mr. Greenblatt said.

Mr. Coleman said Saddam used the oil-for-food money to maintain his grip on power and to cultivate international support against U.N. sanctions.

“The Iraqi people suffered, the world is more dangerous, and Saddam laughed at world opinions and U.N. sanctions,” Mr. Coleman said.

Sen. Carl Levin, Michigan Democrat and ranking member of the subcommittee, said the oil-for-food program can provide useful lessons on how to employ economic sanctions in the future.

“It is useful to learn from the Iraqi experience, in which sanctions basically achieved their goals, but were weakened in a number of ways, so we can make sanctions work as effectively as possible,” Mr. Levin said.

Documents obtained by the committee showed that the Iraqi government concluded deals to buy rotting foods and other damaged goods from companies that sold the goods for full price and kicked back a portion of the profits to the Iraqis.

The United Nations is conducting its own inquiry into the program, which is headed by former Federal Reserve Chairman Paul Volcker.

Mr. Volcker is expected to send a letter to Mr. Coleman and Mr. Levin soon that will explain whether the United Nations will cooperate with the Senate probe.

U.S. officials have said the U.N. probe is focusing on the activities of Benon Sevan, who headed the oil-for-food program and who was listed in the Iraqi Survey Group report as having been given oil vouchers by Saddam’s regime.

cBetsy Pisik contributed to this report.

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