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Oil-for-Food Scandal: U.S.-Led Attack on the UN or Proof of Corruption That Could Take Down Kofi Annan?

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We host a debate on the United Nations oil-for-food scandal, a controversy that has been brewing for months. Some say it’s part of the US-led attack on the integrity of the United Nations as retribution for its stance on the invasion of Iraq; others say it shows corruption in the UN that reaches all the way up to the secretary general. [includes rush transcript]

It is a controversy that has been brewing for months. Some say it’s part of the US-led attack on the integrity of the United Nations as retribution for its stance on the invasion of Iraq; others say it shows corruption on the part of an institution that the US has termed soft on dictators and an obstruction to US policy. President Bush Thursday called for what he termed a “full and open” accounting of the U.N. oil-for-food program. But he would not say whether he thought U.N. Secretary-General Kofi Annan should resign.

Earlier this week, Republican Senator Norm Coleman of Minnesota called on Annan to resign. Coleman is investigating corruption in the now defunct oil-for-food program. He said former Iraqi President Saddam Hussein reaped some $21 billion from the program because of Annan’s lack of oversight. But Coleman’s estimate is higher than some others. A State Department official was quoted by Reuters as saying the calls for Annan’s resignation were “premature.” Here is some of what President Bush had to say on Thursday.

  • President Bush, speaking on December 2, 2004.

At issue is a $64 billion program for Iraq, administered by the United Nations and supervised by the 15-nation Security Council. For months, accusations of corruption within the program have been consistently launched at Annan and other UN officials.

In one of the more complicated twists in the story, Kofi Annan’s son, Kojo, worked for a Swiss firm that inspected goods under the program and is under investigation. On November 29, UN spokesperson Fred Eckhardt had this to say.

  • Fred Eckhardt, UN Spokesman speaking on November 29, 2004.

Here is what Annan himself had to say about his son and the oil for food controversy.

  • Kofi Annan, U.N. Secretary-General.

To discuss this issue, we are joined now by two people who have been following this story very closely.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Here’s some of what President Bush had to say on Thursday.

GEORGE W. BUSH: It’s very important for the United Nations to understand that there ought to be a full and fair and open accounting of the Oil-For-Food Program. In order for the taxpayers of the United States to feel comfortable about supporting the United Nations, there has to be an open accounting. I look forward to that process going forward.

REPORTER: Should he resign, sir?

GEORGE W. BUSH: Before the full disclosure of the facts, good honest appraisal of that which went on. It’s important for the integrity of the organization to have a full and open disclosure of all that took place with the Oil-For-Food Program.

JUAN GONZALEZ: That was President Bush speaking yesterday. At issue is the $64 billion program for Iraq administered by the United Nations and supervised by the 15-nation security council. For months accusations of corruption within the program have been consistently launched at Annan and other U.N. officials.

AMY GOODMAN: In one of the more complicated twists in this story, Kofi Annan’s son, Kojo, worked for a Swiss firm that inspected goods under the program and is under investigation. On November 29, U.N. spokesperson Fred Eckhardt had this to say.

FRED ECKHARDT: As to his son Kojo and the specific allegations that he continued to receive payment from Cotecna until February of this year, the Secretary General said he had been under the impression that those payments had stopped in 1998. When he recently found out they had been, in fact, continued until this year, the Secretary General said he was surprised and disappointed. He added that his son is a grown man and that the Secretary General doesn’t get involved in his son’s business and that his son doesn’t get involved in the U.N.’s business. The Secretary General also asked for reporters to be patient and await the conclusions of the independent Volcker panel which is examining these issues.

AMY GOODMAN: U.N. spokesperson Fred Eckhardt. Representatives of the Swiss firm that inspected goods under the Oil-For-Food program previously said Kojo Annan had no involvement in U.N. contracts. On Monday, the U.N. confirmed he had received payments after leaving the company in 1998 that did not end until February 2004. Here’s what Kofi Annan himself had to say about his son and the Oil-For-Food controversy.

KOFI ANNAN: I think this is an issue that, as I have said, Volcker and the committee members are dealing with it, and I hope it will be expeditious and will get the facts out quickly. But there’s no doubt neither constant campaign and [inaudible] the discussions have hurt the U.N. This is not something we would like, and that’s why we want to get to the bottom of it and clear it as quickly as possible. It has done damage, yes.

AMY GOODMAN: U.N. Secretary General Kofi Annan. When we come back, a debate on the U.N. Oil-For-Food controversy.

AMY GOODMAN: As we talk about the Oil-For-Food controversy, now raging over at the United Nations, we are joined by Claudia Rosett who is one of those who broke the story. Her latest piece is “Secretary and Son: Kofi Annan Isn’t Kojo’s Keeper But He Can’t Shirk Responsibility For The U.N.” We’re also joined by Joy Gordon who has written extensively about the oil for-food program in The Nation and Harper’s. Her piece, “The U.N. Is Us: Exposing Saddam Hussein’s Silent Partner.” We will begin with Claudia. Can you lay out what you see the controversy or scandal to be?

CLAUDIA ROSETT: Oh, the basic scandal is that the U.N. began by providing what was supposed to be a relief program to feed sick and hungry people in Iraq and ended up providing cover for an enormous scam in which billions, pick your estimate, but without any question, billions upon billions were grafted by Saddam Hussein and his many business partners out of the money pumped from the oil wells of Iraq that was supposed to fund this relief program. And part of the question is to what extent was the U.N. oblivious and to what extent was it actually complicit. That’s really what the investigations at this point, at least some of them, are looking into. As far as it concerns the U.N. itself. That’s the core of the problem. How on earth did it happen? I mean such, this is the largest amount of money grafted out of a relief program probably in history.

JUAN GONZALEZ: And the particular twist of the connection now or the taint to the Secretary General himself?

CLAUDIA ROSETT: The Secretary General himself has a son, Kojo Annan, who worked for a company that was—on the day that his contract lapsed with them at the end of 1998, this company, which is based in Geneva, Switzerland, was hired to inspect the relief goods arriving in Iraq under this program, to authenticate that they were what they were supposed to be. And there’s some question about how well that got done, according to the U.N.'s own internal audit, one of which leaked this spring. The story gets very complicated. There are many layers to this thing. But the, and at that point, sometime back, the understanding given out by the U.N. was that Kojo Annan's connection with this company called Cotecna had ended. It’s then turned out that no, Cotecna had continued to send payments to the son of the Secretary General under the label of paying him not to set up competing operation with their business in West Africa. These payments had continued until February of this year, is what we have now learned. In other words, the payments continued for three months longer than the full duration of Cotecna’s contracts with the U.N. under the Oil-For-Food program. We don’t know at this point whether anything wrong was done in that, this particular piece of the story, but what we do know, this qualifies by any lights as a conflict of interest, and it’s the kind of thing where at the very least, it should be disclosed. It’s the kind of thing the public should have known about from the start.

AMY GOODMAN: Joy Gordon, you are a professor of philosophy at Fairfield University, completing a book on the sanctions program in Iraq and your piece in Harpers begins, “The Bush Administration was still reeling from the revelations about Abu Ghraib prison this year when supporters of the President suddenly took note of a dramatic new scandal involving Iraq. 'The richest rip-off in world history,' wrote William Safire.” Can you talk about your take on what’s happening?

JOY GORDON: Sure. I actually think that this thing with Cotecna is something of a red herring. If you look at, well, and if you look at how the accusations are typically framed, it’s the U.N. failed to do this or how could the U.N. have done nothing in the face of the smuggling and kickback. In fact, what’s crucial here is to make a distinction about the different entries within the U.N. There’s a difference between the Security Council and the Secretariat, and many of the policies that permitted the smuggling and kickback to take place were, cannot be laid at the feet of the Secretary General. They are the policies of the Security Council and the Secretary General has no control over the Security Council. And if we look at the claim that the U.N. failed to catch contracts with pricing irregularities, well again, that goes to the Security Council whose job was to review all of these contracts and if we look at the policies and the failures of, that are now being laid at the feet of the United Nations, many of them, in fact, are due not only to the Security Council but to particular members within the Security Council. For many of these things, the policy for example that allowed the Iraqi government to choose who it would trade with, well that was a Security Council Resolution 986 in combination with a Security Council-approved memorandum of understanding. And the member states, including the United States, were in support of that. If we look at the committees, if we look at the Council’s failure to block contracts with pricing irregularities, and it was the Security Council’s responsibility, not the Oil-For-Food staff, they did not have the authority to block contracts, only to present information to the Security Council, then in fact what we see is none of the members of the Security Council, including the United States, chose to block contracts where there were obvious price irregularities, even when U.N. staff presented that information with documentation to them.

AMY GOODMAN: We are talking to Joy Gordon, author of among her pieces, “The U.N. Is Us: Exposing Saddam Hussein’s Silent Partner,” and Claudia Rosett, who has exposed this story in the Wall Street Journal and the New York Sun. We want to turn now to Denis Halliday. He was in our studios about a week ago, the former Assistant U.N. Secretary General who was in charge of the Oil-For-Food program. This is what he had to say about it.

DENIS HALLIDAY: I think it’s because the U.N. has become irritating. The Secretary General has finally woken up to his responsibility and has announced that the war is illegal, which has sort of threatened the United States I think, and Britain perhaps. And the old frustration of the neo-con right wing who feels the U.N. is a threat, international law is unacceptable. Its part of the rejection by the Bush regime of Kyoto, of the ICC, of all the other international laws which the rest of us in the world feel are so important, but are rejected by Congress, because they feel it impinges on the constitution and their function, and so on.

AMY GOODMAN: When Charles Delfer addressed the congressional subcommittee, he singled out a former U.N. Official, Benon Sevan, as a recipient of some 13 million barrels of oil from Saddam Hussein. Sevan has denied the charges. He was your boss in Iraq?

DENIS HALLIDAY: No, I worked directly for the Secretary General, but he became the boss of Von Sponeck a few years after my period in Baghdad.

AMY GOODMAN: And what do you believe? Do you believe his denials?

DENIS HALLIDAY: I believe Mr. Sevan is innocent until proven guilty. I think the point to make, however, is that we put together $64 million — sorry, $64 billion from Iraqi oil sales, gross. The U.N. took off 35%. They gave 30% to Kuwait while Iraqi children were dying for lack of water and adequate foodstuffs. That’s a crime in a sense in my view, and many of us believe sanctions in fact turned out to be genocidal. But the Oil-for-Food program did extraordinarily good work. We fed over 20 million Iraqis every day for many years. We saved, I would think, hundreds of thousands of lives. This so-called scandal is a fiction in my view. Now if some members of the Secretariat broke the rules, they must be prosecuted like any other normal human being. I don’t believe the Secretariat is the problem. The problem is the United Nations and its member states, particularly Washington and London, who make the decisions, who designed the sanctions, who designed the Gulf War and the most recent invasion. These are the people who make the decisions that impact on Iraq. They are the ones who knew who was happening. They allowed the Baghdad government to have hard currency from Jordan and Turkey and other smuggling arrangements and kickbacks. They know all about this, it’s nonsense to put the finger on Kofi Annan or the Secretariat.

AMY GOODMAN: Do you think, so Kofi Annan should open all the documents, just make the U.N. transparent on this?

DENIS HALLIDAY: Absolutely. I cannot understand why he’s holding back information. They should open the doors, open the files. People like Von Sponeck and myself and others should be made available to Volcker and to those in Washington who are concerned. I think we can show a different light here. This is not a complex issue. This is a known private sector quantity, approved by Washington.

AMY GOODMAN: Former Assistant U.N. Secretary General Denis halliday who is in charge of the Oil-For-Food program in Iraq. Claudia Rosett, your response?

CLAUDIA ROSETT: Sure. Kofi Annan, the Secretary General, does have one thing he can do with the Security Council. And it can be a powerful thing. He can speak up. And it’s true that he can’t tell the member states, he can’t force the member states to do something, but he has been quite outspoken on some of the things that, on which he’s disagreed. On this program, in fact, he spoke up quite often protesting the U.S. and U.K. putting contracts on hold. But he never got up and used his considerable public platform to say we are seeing evidence of massive corruption going through this program. There are huge pricing irregularities, also the Secretariat collected $1.4 billion from Saddam’s oil funds. That’s a huge amount of money to basically monitor the integrity of this program. They did not use that money to sufficiently monitor the oil revenues, the amount of oil flowing out, plus the many billions that ended up becoming the illicit money that we are talking about. They did not use their $1.4 billion to really adequately look at the pricing problems. Whenever they presented to the Security Council, it was, as far as we can see, given the U.N. secrecy, which is part of the problem here, it was pretty minimal. They were not beating on drums and saying Saddam is scamming 20% out of contracts for baby formula, which appears to have been the case. They were very quietly relaying now and then odds and ends, but they really made no per se systematic attempt to use their enormous funding to really keep track of this. So, that’s part of the problem. And I think when the, it’s the fact that the secretariat had the actual budget to monitor the program, hire the inspectors. That’s where it’s not a red herring.

JUAN GONZALEZ: But I’d like to ask you on that point, Joy Gordon in one of her articles in The Nation has noted that on at least 70 occasions, the staff of the United Nations did bring to the attention of the 661 committee, the Security Council body that was in charge of implementing the sanctions, pricing irregularities, and yet the Security Council, the member states which include also the United States, chose not to do anything about it. So to what degree is our own government, was our own government, complicit or had knowledge of these problems beforehand and did not do anything about it until now?

CLAUDIA ROSETT: Well it was the least culpable of all of them. We are the only one who tried to stop anything here. Far worse were the other three. The U.S. and the U.K. were the only one whose tried to stop anything. Far worse were the other three permanent five members, Russia, France and China, who just never protested anything here, who wanted the program to continue and expand. But again, if you go back to the Secretariat, can you point me to a single instance where Kofi Annan, who has spoken out quite freely with his views about the U.S. approach to Iraq, you know, he felt in recent times he’s talked about he thinks it was illegal, he finds it inconceivable. He put his opinions quite strongly on record. Inconceivable that France, Russia or China could ever let corruption influence their votes in the Security Council. So, we have him speaking up quite boldly on these scores. Can you point to a single instance where he spoke up to say this program has going on within it major problems of graft and fraud and theft, which is basically taking the money, taking money meant to feed the people of Iraq, which is ending up scamming things like functional medicine out of their supplies and sending them substandard goods? Can you point to a single instance where he got up and said that?

AMY GOODMAN: Well, Joy Gordon, we give you the last word. Can you respond to this point and the larger one of where this story should go from here.

JOY GORDON: Sure. I do think we need to look at the U.S. role in this and I do think we need to acknowledge how much of this information was completely known to every member of the Security Council, including the U.S. and the U.K. If you look for example at the smuggling, according to now the Delfer report as well as the Congressional Research Service report, what we see is that there was no lack of information that it was going on. What we see is that every single year from 1994 on, the U.S. administrations issued waivers saying we would not impose sanctions against Jordan and Turkey, which were jointly engaged in over $5 billion of smuggling in the most visible public way. So it’s not for lack of information. And I think again, we just have to look, if we, if there’s a concern about information, there was not enough information made public and, by the way, there was an enormous amount of information made public, but if the objection is this piece of information should have been posted on the web site in addition to the massive amount that was already there, well, we have to look at the Security Council. That was the body that said here’s what will be released publicly, here’s what will be not released publicly. We have to look at the Security Council. What are the criteria for reviewing contracts? What do we require in them? That was the Security Council. What are the procedures? That was the Security Council. What the Secretariat did was simply implement the procedures established by the Security Council and, on multiple occasions, informed the Security Council when there were irregularities in the case of the kickbacks on the import contracts over 70 times. It was not the secretariat’s job to block contracts. They simply didn’t have authority. When there were pricing irregularities, they took it exactly to the body that could act on that. If we look at the surcharges on the oil, again, it’s exactly the same thing. As soon as it became apparent, U.N. staff, the oil overseers, went to the Security Council, said this is what’s going on and it was up to the Security Council members to act. I think that’s where we need to look.

AMY GOODMAN: Joy Gordon, Claudia Rosett, I want to thank you for being with us. We will certainly continue to follow this controversy.

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