[Mb-civic] EDITORIAL The Oil-for-Food Report

[Michael Butler]

 The New York Times
February 5, 2005
EDITORIAL
The Oil-for-Food Report

A commission investigating the United Nations' oil-for-food program in Iraq
has issued an interim report that sheds some light, but not much, on the
nature and scope of this much-ballyhooed scandal. The panel has found
persuasive evidence that Benon Sevan, who ran the program, used his
influence with Iraq improperly to help a small company gain profitable
rights to sell Iraqi oil while he was simultaneously urging the U.N. to
provide greater help in rebuilding Iraq's oil equipment. That was a clear
conflict of interest that raises the possibility that Iraq bribed Mr. Sevan.
If the allegations are true - Mr. Sevan claims that he is being scapegoated
- they would constitute the first real evidence of corruption at high levels
of the program.

But whether this amounts to small-scale corruption by a greedy official or a
large-scale subversion of the entire program is not clear. Nothing in this
initial report gets at the core element of the scandal: how was Iraq able to
manipulate the program to amass perhaps $2 billion in illicit revenues to
sustain the regime and buy embargoed goods?

The most disturbing findings, according to Paul Volcker, the panel's
chairman, are that Mr. Sevan, a Cypriot, asked senior Iraqi officials to
grant oil allocations to Africa Middle East Petroleum, a small company owned
by a distant relative of Boutros Boutros-Ghali, the former U.N. secretary
general, and was evasive in answering questions about it. The company resold
the allocations for a $1.5 million profit. The report does not charge that
Mr. Sevan profited personally, but it notes that he claimed to have received
$160,000 in cash from an aunt, an elderly woman who lived modestly and would
not plausibly have big wads of cash to give away.

During this period Mr. Sevan also urged the U.N. to increase the funds for
oil-machinery repairs in Iraq and release "holds" put on oil parts destined
for Iraq. The report stops short of accusing him of taking a bribe to do
Iraq's bidding, possibly because he had long sought to rebuild Iraq's oil
facilities and might have championed that cause even without the oil
allocations. But Secretary-General Kofi Annan said he was shocked at Mr.
Sevan's behavior.

The other major charge in the report is that the U.N. violated its own
competitive bidding rules in hiring three major contractors. That seems
undeniably true, but how heinous it is remains murky. Mr. Boutros-Ghali,
then the secretary general, for example, picked a French bank to handle the
program's escrow account because Iraq wouldn't accept an American bank and
the United States opposed using a Swiss bank that was deemed the top choice
by U.N. procurement officials.

The choice of a Dutch company to inspect oil shipments out of Iraq and of a
British company to inspect imports of humanitarian goods also violated U.N.
bidding procedures. The Dutch may have been favored because they were deemed
tough on enforcing sanctions, and the British may have been chosen to spread
the contracting around. Whatever the motivation, the U.N. official most
centrally involved faces disciplinary action.

Still to come are a report on the role of Kofi Annan's son in working for a
contractor and a final report that will delve into the sensitive issue of
whether members of the Security Council knew that Iraq was getting illicit
revenues from the oil-for-food program and separate trade protocols but did
nothing to stop it.

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