Wall Street Journal April 28, 2004 THE REAL WORLD Oil-for-Terror U.N. Iraq money may have ended up in accounts tied to al Qaeda and the Taliban. BY CLAUDIA ROSETT Wednesday, April 28, 2004 12:01 a.m. EDT
It's looking more and more as if one of the best reasons to get rid of Saddam Hussein was that it was probably the only way to get rid of Oil-for-Food. The problem wasn't simply that this huge United Nations relief program for Iraq became a gala of graft, theft, fraud, palace-building and global influence-peddling--though all that was quite bad enough. The picture now emerging is that under U.N. management the Oil-for-Food program, which ran from 1996-2003, served as a cover not only for Saddam's regime to cheat the Iraqi people, but to set up a vast and intricate global network of illicit finance. And though much debate has focused on the list published this past January in the Iraqi newspaper Al Mada--cataloguing some 270 individuals and entities world-wide alleged to have received illicit oil vouchers worth millions from Saddam--the Al Mada list may be the least of it (apart from the last name of the executive director of the Oil-for-Food program himself, Benon Sevan). Dwarfing the Al Mada list for size, scope and menace was the U.N.-piloted mothership, the entire $111 billion U.N. Oil-for-Food program. Supplied by Iraq's oil wells, the sums involved in Oil-for-Food's transactions were so enormous that even the routine rounding errors of a few hundred million here or there easily rivaled, for example, the $300 million or so in family money believed to have given Osama bin Laden his terrorist start. In a world beset right now by terrorist threats--which depend on terrorist financing--it's time to acknowledge that the U.N.'s Oil-for-Food program was worse than simply a case of grand larceny. Given Saddam's proclivities for deceit and violence, Oil-for-Food was also a menace to security. By letting Saddam pick his own business partners and draw up his own shopping lists, by keeping the details of his contracts and accounts secret, and by then failing abjectly to supervise the process, the U.N.--through a program meant to aid the people of Iraq--enabled Saddam to line his pockets while bankrolling his pals world-wide. In return, precisely, for what? That is a question former Federal Reserve Chairman Paul Volcker might want to keep in mind as he heads up the official investigation, finally agreed to by U.N. Secretary-General Kofi Annan, into Oil-for-Food. In tallying various leaked lists, disturbing leads and appalling exposés to date, what becomes ever more clear is that Oil-for-Food quickly became a global maze of middlemen, shell companies, fronts and shadowy connections, all blessed by the U.N. From this labyrinth, via kickbacks on underpriced oil and overpriced goods, Saddam extracted, by conservative estimates of the General Accounting Office, at least $4.4 billion in graft, plus an additional $5.7 billion on oil smuggled out of Iraq. Meanwhile, Mr. Annan's Secretariat shrugged and rang up its $1.4 billion in Iraqi oil commissions for supervising the program. Worse, the GAO notes that anywhere from $10 billion to as much as $40 billion may have been socked away in secret by Saddam's regime. The assumption so far has been that most of the illicit money flowed back to Saddam in the form of fancy goods and illicit arms. But no one really knows right now just how much of those billions went where--or what portion of that kickback cash Saddam might have forwarded to whatever he deemed a worthy cause. A look at one of the secret U.N. lists of clients authorized by the U.N. to buy from Saddam is not reassuring. It includes more than 1,000 companies, scattered from Liberia to South Africa to oil-rich Russia. And though the U.N. was supposed to ensure that oil was sold to end-users at market price--thus minimizing the graft potential for Saddam and maximizing the funds for relief--there is an extraordinary confetti of clients in locations known less for their oil consumption than for their shell companies and financial secrecy. Why on earth, for instance, did the U.N. authorize Saddam to sell oil to at least 65 companies in the financial lockbox of Switzerland. What was the logic behind approving as oil buyers at least 45 firms in Cyprus, seven in Panama and four in Liechtenstein? At the other extreme, would Mr. Annan care to explain why the U.N. authorized Saddam to sell oil to at least 70 companies in the petroleum-soaked United Arab Emirates? In Oil-for-Food, "Every contract tells a story," says John Fawcett, a financial investigator with the New York law firm of Kreindler & Kreindler LLP, which has sued the financial sponsors of Sept. 11 on behalf of the victims and their families. In an interview, Mr. Fawcett and his colleague, Christine Negroni, run down the lists of Oil-for-Food authorized oil buyers and relief suppliers, pointing out likely terrorist connections. One authorized oil buyer, they note, was a remnant of the defunct global criminal bank, BCCI. Another was close to the Taliban while Osama bin Laden was on the rise in Afghanistan; a third was linked to a bank in the Bahamas involved in al Qaeda's financial network; a fourth had a close connection to one of Saddam's would-be nuclear-bomb makers. U.N. secrecy--in deference to the privacy of Saddam and his former clientele--makes it extremely difficult to confirm the many whiffs of sleazy and sinister dealings in these lists. But for an example of how dirty Oil-for-Food could get, take the case of one of Saddam's U.N.-authorized relief suppliers, a company called Al Wasel & Babel General Trading LLC, set up in Dubai, in 1999. This same Al Wasel & Babel was designated by Treasury earlier this month as a front company set up by senior officials of Saddam's regime to serve as a foreign seller of goods to Saddam's regime, through Oil-for-Food (while trying to procure for Iraq a surface-to-air-missile system). And although full information is hard to come by, partial lists leaked from the U.N. show that in 2000-2001 alone, Saddam's regime ordered up from Al Wasel and Babel more than $190 million in construction materials, trucks, cars and so on. Over Mr. Annan's and Mr. Sevan's protests, the U.S. and U.K. blocked some $45 million worth of those contracts; that still left the Saddam front company of Al Wasel & Babel with about $145 million of Oil-for-Food business for that two year period alone. Basically, Oil-for-Food was Saddam--just slightly harder to spot, swaddled as he was in that blue U.N. flag. Ms. Rosett is a fellow at the Foundation for the Defense of Democracies and the Hudson Institute. Her column appears here and in The Wall Street Journal Europe on alternate Wednesdays. A version of this article appears in the May issue of Commentary.
