Subscribe
to TIC!

Oil-For-Food Scandal Haunts United Nations

By Melissa Bruno

In the wake of the Iraq War, we are learning the depth and scope of Saddam Hussein's treachery. In late November, the Senate Permanent Subcommittee on Investigations concluded that the total amount of money that Saddam swindled out of the Oil-For-Food program is $21 billion, where previously it was estimated to be $10 billion. The money, which was stolen over a period of years, was part of Saddam Hussein's master plan to reconstitute his WMD programs.

United Nations Secretary-General Kofi Annan. (Photo courtesy of United Nations)

The Oil-For-Food program saw its start in 1995, when Saddam's regime was on the verge of collapse. After the first Gulf War, sanctions were put in place to put pressure on the regime. Sanctions, in effect, put pressure on the Iraqi people, creating a humanitarian crisis. The Oil-For-Food program was created in order to alleviate some of this pressure. In exchange for oil, medicine, food, and other supplies would be shipped to Iraq to aid needy citizens.

The reality of the situation, however, is that Saddam Hussein used the Oil-For-Food program for his own profit, at the expense of the citizens of Iraq and at the cost of $21 billion.

The Duelfer Report, presented to the Senate Armed Services committee in October, details the methods Saddam used to manipulate both the Oil-For-Food program and the U.N. Security Council. While the Duelfer Report states that Saddam did not possess weapons of mass destruction (WMDs), it does state that Saddam had a broader plan to get rid of U.N. weapons inspectors and erode the sanctions imposed against him in the hopes of one day reconstituting his weapons program. The report paraphrases the mindset of Saddam in this respect: "We will never lower our heads as long as we live, even if we have to destroy everybody." Saddam destroyed his WMDs in order to allay suspicions of weapons inspectors at the same time he boasted of his arsenal in order to appear strong.

He soon learned that he could manipulate the Oil-For-Food program to generate funds for anything he wanted, including munitions. Here is how the scheme worked: Saddam was supposed to sell Iraqi oil at a fair market price, but instead he sold it off at much lower prices. The buyers, handpicked by Saddam, would then resell at normal market value and reap a large profit. Buyers split this profit with Saddam (often a 30-50 cent profit on every barrel) and the money was funneled off to illicit banking accounts. In addition to this, Saddam overpaid for supplies coming into the country and charged vendors "service" charges and then received a kickback of up to 10%, resulting in $2 billion in cash into Saddam's pocket. Supplies that were often useless: bad food, expired medicine, broken-down farm equipment. All told, Saddam's regime pulled in over $21.3 billion dollars in illicit revenue.

In addition to monetary profits, Saddam was after a more sinister goal: ingratiating himself with nations on the U.N. Security Council in order to lift sanctions against Iraq. The U.N. itself took a 2.2% cut to fund the Oil-For-Food program, about $1.4 billion. Benon Sevan, the official in charge of overseeing the program allegedly received vouchers for 13 million barrels (7 million which had been marked received), totaling $1.5 million. A total of 270 individuals and organizations received oil vouchers from Saddam in countries such as France, Russia, China, including a former French Interior Minister and several members of the Russian parliament. Russia received 30% of the total oil vouchers, as is stated in the Duelfer report: "Iraqi attempts to use oil gifts to influence Russian policy makers were on a lavish and almost indiscriminate scale." Even a member of Russian presidential office was on the take. Russia also held a veto seat on the U.N. Security Council and also was a supplier of arms and munitions. French companies and individuals received 15% of the vouchers (over $1 billion) and included on the list was Patrick Maugein, "whom the Iraqis considered a conduit to [French president Jaques] Chirac." The French connection was, as Iraqi Lieutentant Teriq Azzia said, was to award vouchers to French individuals so that, they could "reciprocate[d] through efforts to lift UN sanctions, or through opposition to American initiatives within the Security Council." Saddam's master plan being to erode U.N. sanctions and to stymy any U.S.-led effort to oust the dictator, hence his plan to court nations with veto power on the Security Council.

China came in third, with 10% of the total oil vouchers. Oil vouchers, which are as good as cash, also were received by several American entities, most notably Chevron, Mobil, Texaco, Bay Oil, and oil mogul Oscar Wyatt, who reportedly received $22 milllion alone.

And independent commission headed by former U.S. Federal Reserve chairman Paul Volcker was set up by U.N. Secretary General Kofi Annan with a preliminary report expected in January. According to Volcker, most of the $20 billion Saddam obtained through the program came from "so-called smuggling, much of which was known and taken note of by the Security council, but not stopped." Volcker's final report, due in the summer, is likely to address the reason why the Security Council did nothing to stop the smuggling.

Complicating the situation further is the discovery of an elaborate network front companies set up to cover Saddam's tracks. Many of the ghost firms have been dissolved or had hidden ownership, which is hampering the investigation. According to Mark Pieth, a Swiss lawyer working with Volcker, authorities in both Switzerland and Liechtenstein, have agreed to help in the investigation. Records in the Swiss banks should provide a way of finding who profited from the transactions of front companies.

Volcker's final report is due in the summer of 2005 and will further illuminate the methods Saddam Hussein used to cheat his own people out of vital aid as well as deceive the U.N. and the rest of the world as to what his motives truly were.

What is the FBA?  |  FBA Website Prototype  |  Cost Estimates  |  The Team

Publishers of The Informed Constituent.

Contact the FBA