Report Faults U.N. Leaders in Oil-for-Food Scandal

The Independent Inquiry Committee investigating the U.N. oil-for-food scandal finds that Secretary-General Kofi Annan and leading member nations failed to manage and supervise the $64 billion effort, giving former Iraqi leader Saddam Hussein a chance to steal billions of dollars.

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There was heavy criticism today for UN Secretary-General Kofi Annan and the UN Security Council. It came from a committee formed to investigate the United Nations' oil-for-food program in Iraq. The committee found that Annan and the UN's leading member nations, including the United States, failed to manage and supervise the $64 billion effort, and that gave former Iraqi leader Saddam Hussein a chance to steal billions of dollars. Here's NPR's Corey Flintoff.

COREY FLINTOFF reporting:

Former Federal Reserve Chief Paul Volcker heads the committee which has spent the past 18 months looking into the allegations of waste and fraud. He told the Security Council today that many of the failures can be traced back to the way the council itself designed the program.

Mr. PAUL VOLCKER (UN Inquiry Commission): In the first place, the program left too much initiative with Iraq. It was, as one past member of this council has put it, `a compact with the devil,' and the devil had means for manipulating the program to his ends.

FLINTOFF: Volcker said flaws in the program allowed Saddam Hussein to skim more than $8 billion in the seven years that the program operated. Gregg Rickman is an investigator for Congressman Henry Hyde's House International Affairs Committee. He worked separately from the UN investigators but found much the same thing. Rickman says a common scam that the Iraqi regime employed was to underprice the oil sold to traders, then require the traders to kick back a portion of their profit and put it in a foreign bank account.

Mr. GREGG RICKMAN (Investigator): And then the money would be repatriated back to Iraq either through wire transfer, diplomatic pouch or, in one case that we found, Iraqi central bank employees went--traveled by car to Beirut and brought back the proceeds from these kickbacks in gold bars in their trunk.

FLINTOFF: Paul Volcker said the UN had failed to provide effective auditing and administrative controls. He said weak planning and inadequate funding were all characteristic of the process.

Mr. VOLCKER: That's a litany of problems. And clearly there's another side to the story, one of positive success. An expert study commissioned by the committee confirms that the program averted the clear and present danger of malnutrition and a further collapse of medical services in Iraq. That is no small achievement.

FLINTOFF: Among its recommendations, the committee is calling for the appointment of a chief operating officer for the UN. Another member of the committee, South African Judge Richard Goldstone, says the oil-for-food program won't be the last of its kind.

Judge RICHARD GOLDSTONE (Committee Member): There are going to be more horrible situations in which there's really no substitute, there's no other organization than the United Nations to do it. So it's really important that our recommendations, with regard to taking reasonable efficient steps to ensure that this sort of thing doesn't happen, should be taken.

FLINTOFF: Secretary-General Kofi Annan, who was strongly criticized for a failure to properly oversee the program, told the Security Council that the report's findings were deeply embarrassing.

Mr. KOFI ANNAN (UN Secretary-General): The inquiry committee has stripped away the curtain and shown a harsh light into the most unsightly corners of the organization. None of us can be proud of what is has found. Reform is imperative.

FLINTOFF: Reform of the UN's management will be a main theme when world leaders attend next week's UN General Assembly meeting in New York. Corey Flintoff, NPR News, Washington.

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