Iraq wants money back; Annan promises action
(Agencies)
Updated: 2005-02-05 09:55

Iraq said it wanted its money back from the scandal-tainted U.N. oil-for-food program on Friday as Secretary-General Kofi Annan vowed to get to the bottom of wrongdoing by U.N. staff.

"Huge sums of money which should have served the needs of the Iraqi people who were suffering at that time -- a lot of these resources were squandered and misspent," said Iraq's U.N. ambassador, Samir Sumaidaie.

Iraq, he said, should at minimum not have to pay for the independent probe set up by the United Nations from remaining oil-for-food funds. The inquiry panel has spent $30 million so far, with the approval of the Security Council.

United Nations Secretary General Kofi Annan speaks at a press conference at the United Nations in New York on February 4, 2005 where he discussed the interim report of the Independent Inquiry Committee into the United Nations Oil-for-Food Program and pledged to get to the bottom of the wrongdoing. The report was released on February 3, 2005. [Reuters]

A new report by Paul Volcker, the former U.S. Federal Reserve chairman appointed by Annan to probe the $67 billion program, found that the director of the plan, Benon Sevan, helped steer oil contracts to a relative of former U.N. Secretary-General Boutros Boutros-Ghali.

The report does not accuse any U.N. officials of getting bribes. But it says Sevan received $160,000 from an aunt in Cyrus, who has since died and had few resources.

"We are as determined as everyone to get to the bottom of this. We do not want this shadow to hang over the U.N.," Annan said as he arrived at headquarters.

Annan said U.N. officials would be disciplined and diplomatic immunity would be lifted if criminal acts were committed.

Among other questionable deals in the report was one in which another U.N. official, Joseph Stephanides, colluded with a former British U.N. ambassador so that Lloyd's Register Inspection Ltd. could get a lucrative contract. Volcker said Stephanides was anxious to get the program underway.

The report said a more thorough audit of the humanitarian program might have uncovered cheating by Saddam Hussein's government. A CIA report estimated Saddam skimmed $1.7 billion from the program and another $8 billion through illegal oil sales outside it, some permitted by the security council.

DUBIOUS CHOICES

Investigators questioned Boutros-Ghali for choosing the Banque Nationale de Paris, now BNP-Paribas, to handle the program's account. He did so after council members asked him to select a bank but was criticized for asking Iraq its preference.

The program began in late 1996 and ended in November 2003, after the United States overthrew Saddam. Iraq was allowed to sell oil to buyers of its choosing and contract for food and other necessities to ease hardships caused by U.N. sanctions.

In Washington, State Department spokesman Adam Ereli said, "One should not let the corruption and the distortion of the program completely overshadow the fact that it did, to an important extent, serve the purposes for which it was designed.

"Was it perfect? Was it free of manipulation? No. But did it help? Yes," he said.

Volcker's 240-page report was a preliminary survey, with a final one to be produced in June. He said he may have another interim report on the alleged role of Annan's son, who had worked for a Swiss company that replaced Lloyd's in 1998.

The Iraqi ambassador said the United Nations received $1.14 billion to administer oil-for-food and wanted to see how much reached its destination or was squandered by outside contractors working for the world body.

"The question arises whether the secretariat is subject to its own political culture, which tends to subvert the will of the Security Council," said Sumaidaie. "This is serious."

He did not blame the council, which approved contracts.

Several investigations are underway in the United States, the most extensive one in the U.S. Attorney's office in New York and at least eight in the U.S. Congress.

Sen. Richard G. Lugar, the Republican chairman of the Foreign Relations Committee, said "part of the blame for the current imbroglio lies with the U.N." but that one had to recognize that council members, including the United States, "must also answer questions as to why they, too, did not pay greater scrutiny to this program."

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