Commission Details Illegal Food-for-Oil Payments

More than 2,000 companies — and the regime of Iraq's former leader Saddam Hussein — profited improperly from the United Nations oil-for-food program, according to an inquiry into U.N. corruption. Investigators blame the United Nations for failing to properly oversee the $64 billion program.

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Thousands of companies may have given kickbacks or paid illegal surcharges to Saddam Hussein. That word today from the final report on the UN's Iraq oil-for-food program. The independent commission led by former Federal Reserve Chairman Paul Volcker blames the UN for failing to properly oversee the $64 billion program. NPR's Corey Flintoff has the story.

COREY FLINTOFF reporting:

Paul Volcker presented the last report in his 18-month investigation to the UN Security Council this afternoon. The commission's earlier reports dealt with the UN's management of the oil-for-food program, but this volume discusses the companies, more than 4,500 of them, that received contracts to buy Iraqi oil or provide Iraq with food, medicine and other humanitarian supplies. Volcker told reporters this morning that investigators found that more than half those companies may have paid surcharges or kickbacks to Saddam Hussein. He stressed that simply having its name on the list doesn't mean that a company is guilty.

Mr. PAUL VOLCKER (Head of Independent Commission; Former Federal Reserve Chair): I want to emphasize that the identification of a particular company's contract as having been the subject of an illicit payment does not necessarily mean that that company made, authorized or even knew about illicit payments.

FLINTOFF: Volcker's colleague on the commission, South African Judge Richard Goldstone, said the companies named were identified from bank records and from other sources but that most of the evidence comes from records kept by Saddam's agents. Goldstone said that when they're compared with other information, the Iraqi records have proven to be impressively accurate.

Judge RICHARD GOLDSTONE (Commission Member): I think from the evidence that we got, it was done carefully because the lower minions--and they were fairly high up, having said that--wanted to prove that they were carrying out the instructions that they got from Saddam Hussein.

FLINTOFF: Russia had the largest number of firms linked to possible illegal activity, followed by France. Both countries favored the lifting of economic sanctions against Iraq. There were relatively few companies from the United States, in part because Saddam Hussein saw the US as an enemy and didn't want American companies to get part of his business. The US businesses on the list included two Texas-based oil-trading firms, Bay Oil and Coastal Corporation. Oscar Wyatt, the founder and former chairman of Coastal, pleaded not guilty today to federal charges that he conspired to pay Saddam's regime several million dollars in kickbacks. Other big companies named by the commission include the German-based automaker DaimlerChrysler and Volvo Construction Equipment based in Brussels. Goldstone said the companies were invited to respond to the evidence against them, but very few did.

Judge GOLDSTONE: The responses came from roughly 200 corporations and some of them admitted it, some of them denied it. The responses varied.

FLINTOFF: The report also names individuals who allegedly received allocations to sell Iraqi oil at a profit. They include Jean-Bernard Merimee, the former French ambassador to the UN, and British member of parliament George Galloway. Paul Volcker said that despite the large number of companies and people apparently involved, the ultimate responsibility for corruption in the program goes back to the UN.

Mr. VOLCKER: What I do want to emphasize is that the corruption of the program for Saddam and by many participants--and it was substantial--could not have been nearly so pervasive if there had been more disciplined management by the UN and its agencies.

FLINTOFF: The commissioners said they hope the report will result in wide-ranging investigations by the countries whose companies may be implicated in oil-for-food corruption. Corey Flintoff, NPR News, Washington.

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