UN failed to closely monitor Iraq deal, probe says
NEW YORK -- Internal auditors at the United Nations failed to investigate allegations that Iraq siphoned billions of dollars in illicit profits through kickbacks from companies that bought more than $64 billion in oil and humanitarian goods, depriving the organization of a "potentially powerful agent in helping to ensure accountability," a UN-appointed investigator said last night.
Paul A. Volcker, the former chairman of the Federal Reserve Bank, said UN auditors "capably reviewed" many aspects of the organization's largest humanitarian program, uncovering evidence of mismanagement that led to the loss of at least $5 million. The UN commission, established to compensate for losses from the Iraq invasion of Kuwait in 1990, may have wasted billions more, Volcker said.
He said the audits did not monitor several elements of the oil-for-food program, including activities of a French bank that disbursed payments and UN leaders' management of Iraqi funds.
Volcker's report accompanied release of 55 internal audits and other documents by the Internal Audit Division of the UN Office of International Oversight Services. Several congressional committees also are investigating the UN-Iraq program.
"There was no examination of the oil and humanitarian contracts by the IAD during the oil for food program," the Volcker commission said in a briefing paper. "The potential use of oil and humanitarian contracts by the former regime to gather illicit payments was a major concern" through the life of the program.
The Volcker commission focused on activities of companies hired to monitor and manage different parts of the program. Its initial findings are expected by the end of the month.
The United Nations' internal audits were posted on the Volcker commission's website last night.
The audits "shouldn't be seen as the final conclusions," said UN spokesman Stephane Dujarric.
The oil-for-food program was established in 1996 to allow Iraq, which was placed under a comprehensive trade embargo after its invasion of Kuwait, to sell oil to buy food and other humanitarian goods under strict UN supervision. Saddam Hussein's regime effectively siphoned $2 billion to $4 billion through illegal kickbacks from companies that did business with the regime.
UN Secretary General Kofi Annan appointed Volcker last year to probe allegations that UN officials -- particularly the program's director, Benon Sevan -- received payoffs from Iraq. A report by a senior CIA adviser, Charles Duelfer, alleges that Sevan received a voucher to buy millions of barrels of Iraqi oil on extremely favorable terms. Sevan denies the charges.
