UN Oil-for-Food Program Criticized by Independent Committee

Strategic Insights -

The latest report from an independent committee investigating the UN's oil-for-food program has delivered scathing criticism of the management team headed by Secretary General Kofi Annan and the Security Council. The committee, headed by Paul Volcker, a former Federal Reserve chairman, faults Mr. Annan for loose management, his staff for corruption and bungling, and the Security Council members for ignoring Iraqi oil smuggling and failing to restrain surcharges and kickbacks. Despite acknowledging the program's achievements, the report reveals that Iraqi machinations drained the program of $1.8 billion in illicit revenues and earned Baghdad an additional $11 billion through oil smuggling.

Key Takeaways:

  • The oil-for-food program achieved its main objectives, but illicit revenues drained the program of $1.8 billion.
  • Iraqi machinations earned Baghdad an additional $11 billion through oil smuggling in violation of UN sanctions.
  • The Security Council mostly ignored oil smuggling due to its benefits for allies of various Council members.
  • The Council's structure for the oil-for-food program allowed Iraq to decide where to sell its oil and from whom to buy humanitarian goods, leading to kickbacks and surcharges.
  • Benon Sevan, a longtime UN official, repeatedly withheld critical information from the Security Council and failed to curb abuses or monitor the program aggressively.
  • The Volcker report dispels allegations of Mr. Annan's corruption, but finds that he failed to exercise meaningful oversight over the oil-for-food program.

Statistics:

  • $1.8 billion: Illicit revenues drained from the oil-for-food program due to Iraqi machinations.
  • $11 billion: Additional earnings by Baghdad through oil smuggling in violation of UN sanctions.
  • $147,000: Amount of illegal kickbacks allegedly banked by Benon Sevan.
  • 1%: Estimated share of global oil imports coming from Iraq.

Sources:

  • The report by Paul Volcker (former Federal Reserve chairman) and the independent committee.
  • The United Nations.