IRAQ NEWS, SUNDAY, FEBRUARY
2004
I. THERESE RAPHAEL, SADDAM'S GLOBAL
PAYROLL, WSJ, FEB 9
The WSJ op-ed, below, discusses
extensive corruption in the U.N.'s "oil for food program." It notes
"The system was ripe for abuse, in part because a divided Security Council gave
Saddam far too much flexibility within the program."
But it would be wrong to
blame this entirely on the UN. It was part of a more systematic US
disregard for the problems posed by Saddam Hussein.
At the time of the passage of
UNSCR 986 (dubbed by the Iraqi regime as "oil for food"), almost all major
powers, including the US, were treating Saddam as a joke--stupid
and otherwise in his cage.
In early 1995, it appeared
that the UN weapons inspectors (UNSCOM) were close to determining that
Iraq's weapons programs had been largely destroyed. Security
Council support for sanctions was weakening. The Clinton administration
even spoke of a partial lifting of sanctions.
The Republican-controlled congress,
however, strenuously objected. So the Clinton administration revived
an earlier US proposal--from the summer of 1991--for UN-supervised sale of
Iraqi oil, significantly increasing the sum involved to make it more
acceptable to Iraq and its friends on the UNSC, as well as authorizing the
dubious language, cited by Raphael.
Yet the situation regarding Iraq's
weapons changed drastically in the spring of 1995. The US could have
sustained support for sanctions, keeping the Iraqi regime weak and facilitating
on-going covert operations to overthrow Saddam.
On April 10, 1995, UNSCOM reported, for
the first time, that Iraq had an undeclared biological weapons (BW)
program. Suddenly, there was an entirely new proscribed program
that UNSCOM had to deal with, before sanctions could be
lifted.
Nonetheless, the administration
proceeded with the passage of UNSCR 986. It was approved by
the UNSC on April 14, 1995, over the strong protests of the
Iraqis.
In August, Hussein Kamil defected,
causing the Iraqis to reveal to UNSCOM that they retained
significant aspects of all of their proscribed programs and that
their BW program was much larger than they had just
acknowledged.
But all of this seemed to make
virtually no impression, perhaps because it was the height of the "peace
process," Oslo II. For example, a normally sober Israeli academic,
Ofra Bengio, writing in the scholarly and usually authoritative, Middle
East Contemporary Survey (1995), cited Madeleine Albright, then U.N.
ambassador, on Iraq's newly-revealed arms: "Baghdad still had enough
biological weapons to 'destroy all humanity.'"
So if that was the problem, didn't
you have to make sure that Saddam never used that material? That meant
aggressive action either 1) to take away those weapons,
particularly Iraq's BW program; or 2) to get rid of Saddam and his
regime.
Bengio's essay, which very much
reflected conventional opinion, also epitomized what was essentially a
non-response. Sanctions took care of the Iraqi threat. Absent
was any thought of the possibility that Saddam could inflict serious harm
through terrorism, including the covert use of his large BW
program.
Indeed, this point lies at the heart of
the bitter, highly politicized debate in the US and elsewhere over the Iraq
war. Was Saddam a real and major threat, even an imminent
threat? Iraq's BW program alone was sufficient to justify that
description.
The Iraqis never accepted UNSCR
986. Rather in early 1996, Iraq's U.N. ambassador announced
that Baghdad was prepared to negotiate on its
basis. Iraq began talks with Kofi Annan on a Memorandum of
Understanding (MOU). Annan asked Albright whether the US wanted to be
involved, but Albright declined, as if the matter was not worthy of her
time or attention.
Ehud Barak, who became Foreign Minister
after Rabin's assassination, visited New York in that period. He met
with UNSCOM Chairman Rolf Ekeus and warned about Iraq's weapons and
the coming implementation of UNSCR 986. The Clinton administration
asked him not to talk about the issue, saying the US was handling it
and it was counter-productive to have Israelis speak publicly about
it.
The talks over the MOU continued.
In July, the Iraqis rounded up a major CIA-backed coup plot. In August,
they attacked the Iraqi National Congress in its Irbil
headquarters.
That caused some postponement--but
not more--in implementing the MOU. Moreover, as Iraq began, in the
fall of 1997 to challenge UNSCOM's presence in Iraq, it was regularly rewarded
by increases in the amount of oil that could be sold under UNSCR 986, as the
Clinton administration sought to sustain a Security Council consensus against
allowing Iraq to sell its own oil--even though all weapons issues remained
outstanding.
I. THERESE RAPHAEL, SADDAM'S GLOBAL
PAYROLL
Saddam's Global Payroll
By Therese Raphael
February 9, 2004
The Wall Street Journal
On Dec. 5, during a trip to Baghdad, Claude Hankes-Drielsma faxed an urgent letter to U.N. Secretary-General Kofi Annan. Mr. Drielsma, the U.K. Chairman of Roland Berger Strategy Consultants, had recently been appointed to advise the Iraqi Governing Council. What he saw in Baghdad left him shocked. "As a result of my findings here, combined with earlier information," he wrote, "I most strongly urge the U.N. to consider appointing an independent commission to review and investigate the `Oil for Food Programme.' Failure to do so might bring into question the U.N.'s credibility and the public's perception of it. . . . My belief is that serious transgressions have taken place and may still be taking place."
By Therese Raphael
February 9, 2004
The Wall Street Journal
On Dec. 5, during a trip to Baghdad, Claude Hankes-Drielsma faxed an urgent letter to U.N. Secretary-General Kofi Annan. Mr. Drielsma, the U.K. Chairman of Roland Berger Strategy Consultants, had recently been appointed to advise the Iraqi Governing Council. What he saw in Baghdad left him shocked. "As a result of my findings here, combined with earlier information," he wrote, "I most strongly urge the U.N. to consider appointing an independent commission to review and investigate the `Oil for Food Programme.' Failure to do so might bring into question the U.N.'s credibility and the public's perception of it. . . . My belief is that serious transgressions have taken place and may still be taking place."
Just how serious these transgressions
were became clear late last month, when the Iraqi daily Al Mada published a
partial list of names, compiled by Iraq's oil ministry, of those whom Saddam
Hussein rewarded with allocations of Iraqi oil. Mr. Hankes-Drielsma, who says he
was among the first to see the list in early December, says it is based on
numerous contracts and other detailed documents and was compiled at the request
of the Iraqi Governing Council.
The list, a copy of which has been seen
by the Journal's editorial page, is in spreadsheet format and details (in
Arabic) individuals, companies and organizations, grouped by country, who oil
ministry and Governing Council officials believe received vouchers from the
Iraqi regime for the purchase of oil under the oil-for-food program. Mr.
Hankes-Drielsma said the recipients would have been given allocations at
below-market prices and then been able to pocket the difference when a middleman
sold the oil on to a refinery; 13 time periods are designated and with
indications of how much crude, in millions of barrels, each recipient allegedly
received.
The list reads like an official
registry of Friends of Saddam across some 50 countries. It's clear where his
best, best friends were. There are 11 entries under France (totaling 150.8
million barrels of crude), 14 names under Syria (totaling 116.9 million barrels)
and four pages detailing Russian recipients, with voucher allocations of over
one billion barrels. Many of the names, transliterated phonetically from Arabic,
are not well-known or are difficult to identify from the information given.
Others stand out. There's George Galloway, the Saddam-supporting British MP
recently expelled from the Labour Party, who has always denied receiving any
form of payment from Saddam. Other notables include Indonesian President
Megawati Sukarnoputri (also listed separately as the "daughter of President
Sukarno"), the PLO, the Popular Front for the Liberation of Palestine, the
Russian Orthodox Church, the "director of the Russian President's office" and
former French Interior Minister Charles Pasqua. Some -- including Mr. Pasqua,
the Russian Church and Ms. Megawati -- have denied receiving anything from
Saddam. Patrick Maugein, a close friend of Jacques Chirac and head of Soco
International oil company, says his dealings were all within "the framework of
the oil-for-food program and there was nothing illegal about it."
The list's breadth, and the difficulty
in reading and interpreting it, has slowed its exposure. There's also the
question of authentication. Mr. Hankes-Drielsma (who is not an Arabic speaker)
is convinced it is authentic and will be followed by more detailed evidence as
the Iraqi oil ministry and Governing Council conduct further investigations.
"I've seen the documents that have satisfied me beyond any doubt that we're
dealing with a genuine situation," he told me.
One of the most eye-catching names on
the list is easy to miss as it's the sole entry under a country one would not
normally associate with Iraq -- Panama. The entry says: "Mr. Sevan." That's the
same name as that of the U.N. Assistant Secretary-General Benon V. Sevan, a
Cyprus-born, New York-educated career U.N. officer who was tapped by Kofi Annan
in October 1997 to run the oil-for-food program.
When I tried Mr. Sevan for comment, a
U.N. spokesman wouldn't put me through to him directly but offered to pass on
emailed questions. In an email reply to questions about Mr. Sevan's apparent
inclusion on the list and interest in the Panama-based business that allegedly
received the discounted oil, the spokesman quoted Kofi Annan's statement Friday:
"As far as I know, nobody in the Secretariat has committed any wrongdoing. If
there is evidence, we would investigate it very seriously, and I want those who
are making the charges to give the material they have to me so that we can
follow up to determine if there has been any wrongdoing and I would take
necessary action. So far statements are being made but we need to get facts."
The pro forma U.N. response certainly seems inadequate. Mr. Sevan should take
the opportunity to defend himself against the inference that the presence of his
name on this list could help explain how Saddam was able to get by with so much
influence-buying around the world with little apparent objection from the
U.N.
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In the seven years that Oil-for-Food
was operational, (it was shut down in November and its obligations are being
wound up) Saddam was able to skim off funds for his personal use, while at the
same time doing favors for those who supported the lifting of sanctions,
supplied him with his vast arsenal of weapons, and opposed military action in
Iraq. Indeed, it was clear from the outset that Saddam would be able to use the
program to benefit his friends. The 1995 U.N. resolution setting out the program
-- Resolution 986 -- bends over backwards to reassure Iraq that Oil-for-Food
would not "infringe the sovereignty or territorial integrity" of Iraq. And to
that end it gave Saddam power to decide on trading partners. "A contract for the
purchase of petroleum and petroleum products will only be considered for
approval if it has been endorsed by the Government of Iraq," states the
program's procedures. Predictably, Saddam exploited the program for
influence-buying and kickbacks, and filled his coffers by smuggling oil through
Syria and elsewhere. With Oil-for-Food and smuggling, he was able to sustain his
domestic power base and maintain a lavish lifestyle for his inner circle.
The system was ripe for abuse, in part
because a divided Security Council gave Saddam far too much flexibility within
the program. Oil-for-Food not only gave Iraq the power to decide with whom to
deal, but also freedom to determine the official price of Iraqi oil, revenues
from which went legally into the U.N.'s Oil-for-Food account. U.N. rules did not
allow it to order Iraq to deal directly with end-users and bypass all those
lucky middlemen who got deals from Saddam. Nor was the U.N. allowed to view
contracts other than those between the oil ministry and the first purchaser, so
it had no way of verifying that surcharges were being imposed by the middlemen
on end-users. That enabled him to add surcharges to finance his own schemes
while still making the final price competitive.
U.N. rules were ostensibly devised to
prevent pricing abuses, but in one of the many indications of administrative
failure, those safeguards appear not to have been enforced. In response, the
U.S. and Britain tried often from 2001 to impose stricter financial standards,
but Russia blocked changes. Then the U.S. and Britain instituted a system of
retroactive pricing -- delaying approval of the Iraqi selling price so that they
could take account of the market price when giving their approval. This too met
with grumbling from Friends of Saddam and while it reduced oil exports, it
didn't end the corruption.
Throughout most of the program's life,
Mr. Sevan's office seemed to see no evil. When overwhelming evidence finally
surfaced that Oil-for-Food had become a gravy-train for the Iraqi regime, U.N.
officials acknowledged some of the abuses but refused any of the blame.
Criticism is routinely portrayed as politically motivated. "The [program] has
existed in a highly politicized environment from day one," explains the U.N. Web
site. "The scale of these operations has also made it a rather large target."
Its last line of defense was to punt to the Security Council, whose sanctions
committee (authorized by the 1990 sanctions resolution and composed of Council
members) was meant to oversee the program, receive reports and review
audits.
The record of systemic abuse of the
program lends credence to claims that the oil ministry list is genuine and
should be investigated. The Iraqi Governing Council says it's considering legal
action against anyone found to have profited illegally from Oil-for-Food. The
U.S. Treasury's Bureau of Immigration and Customs Enforcement is investigating
possible violations of U.S. law. But the U.N. has resisted calls for an
independent investigation into abuses. Says Mr. Hankes-Drielsma: "I would urge
the U.N. to take the high moral ground and instigate a truly independent
investigation."
To this end, he wrote a second letter
to the U.N. secretariat on Feb. 1, this time addressed to Hans Correll, Under
Secretary for Legal Affairs and Legal Counsel of the U.N., with a copy to
British Foreign Secretary Jack Straw. He catalogs questions on areas "which need
urgent investigation," e.g. "Why did the U.N. approve oil contracts to non-end
users?" His letter alleges that "not less than 10% was added to the value of all
invoices to provide cash to Saddam . . . why was this not identified and
prevented?" The letter also asks "What controls were in place to monitor BNP
[the French bank] who handled the bulk of the LCs, the total value of which may
have [been] in the region of $47 billion?"
In a June 2000 statement on
Oil-for-Food, Mr. Sevan said, "As [Mr. Annan] put it recently, we, as
international civil servants, take our marching orders from the Security
Council." It might have been more accurate to acknowledge the U.N. took its
marching orders from Saddam.
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Ms. Raphael is editorial page editor of The Wall Street Journal Europe.
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Ms. Raphael is editorial page editor of The Wall Street Journal Europe.