QUESTIONS AND ANSWERS:  THE OIL-FOR-FOOD PROGRAM

What was the Oil-for-Food Program?
From December 10, 1996 until November 21, 2003 when the program was terminated, Oil-for-Food allowed the Iraqi government to sell oil to pay for food, infrastructure, medicine and humanitarian goods. Both the United States and the United Kingdom, as permanent members of the UN Security Council, voted for the creation of the program and for its expansion in 1998. From 1997 to 2002, Iraq sold more than $67 billion in oil through Oil-for-Food and issued $38 billion in letters of credit to purchase commodities for the Iraqi people, according to the U.S. General Accounting Office (GAO). The difference between these two amounts went toward Gulf War reparations to the Kuwaiti people and a small amount (2.2%) went toward the administrative costs of running the program. GAO reported that Saddam Hussein embezzled $4.4 billion through pricing irregularities.

Did the Oil-for-Food Program Accomplish Its Mission?
It is important to remember that the Oil-for-Food Program accomplished its goal. The mission of the Oil-for-Food program was to address the humanitarian impact of the sanctions on the Hussein regime, while maintaining the sanctions to keep Saddam from acquiring weapons of mass destruction. Under the program, enough food was imported to feed 27 million Iraqis and the average daily caloric intake of the people of Iraq increased by 83 percent, from 1,200 kilocalories to 2,200 kilocalories per person per day. In addition, malnutrition rates in 2002 in the central and southern part of the country were half those in 1996 among children under the age of five; in the three northern governorates, chronic malnutrition decreased 56 percent

Who Was Responsible for Overseeing the Oil-for-Food Program?
The UN Security Council oversaw the Oil-for-Food Program and the UN Secretariat's Office of the Iraq Program (OIP) implemented the Council's work on the ground in Iraq. Specifically, it was the role of the Security Council's 661 Committee to monitor all contracts awarded under the Oil-for-Food Program. The U.S., through its Permanent Seat on the UN Security Council, had a representative on the 661 Committee during the entire duration of the Oil-for-Food Program. The UN was not responsible for monitoring oil smuggling that occurred through unauthorized oil sales. That responsibility fell on UN Member States and, in the Gulf area, to the multinational Maritime Interception Force (MIF) which was established when the sanctions regime was put in place in 1990.

What is the Nature of the Allegations Against the Oil-for-Food Program? 
It has been alleged that mismanagement of the Oil-for-Food Program allowed Saddam Hussein's regime to embezzle millions of dollars through underpriced oil contracts and overcharging in contracts for some of the goods Iraq purchased under the program. According to a General Accounting Office report, Saddam Hussein embezzled $4.4 billion through pricing irregularities. It is also estimated that Saddam acquired an additional $5.7 billion through illegal oil smuggling. However, the Oil-for-Food program had neither responsibility nor enforcement capacity for checking for unauthorized oil sales. That responsibility was provided to UN Member States and, in the Gulf area, to the multinational Maritime Interception Force (MIF) which was established when the sanctions regime was put in place in 1990.

Did the UN Raise Concerns Regarding Discrepancies in the Oil-for-Food Program?
Yes, the UN raised concerns about potential wrongdoing in the Oil-for-Food program on multiple occasions.
o The Duelfer report notes that "Saddam introduced a 'surcharge' on Iraqi oil exports in September 2000. The UN objected to the surcharge because it would give Iraq more money than it was authorized under the OFF program," (pg. 36).
o On November 17, 2000, UN oil overseers informed the 661 Committee (a committee of UN Security Council members tasked with overseeing the program) that formulas proposed for oil pricing for the month of December were considerably under-priced and did not appear to represent "fair market value."
o In December, 2000, the Office of the Iraq Program referred various complaints on surcharges and side-agreements to the 661 Committee, which then directed oil overseers to advise buyers of Iraqi oil that they should not pay any surcharges by fax. In early March, 2001, the Secretary-General informed the Security Council of surcharge efforts in a report. That same month, the U.S. circulated information about oil and humanitarian aid surcharges, including recommendations to remedy the surcharges. As a result, the Security Council instituted a "retroactive pricing" mechanism designed to curb the practice.
o Oil-for-Food administrators identified at least 70 cases for potential over-pricing between 2001 and 2002. None of these cases were held up for pricing issues by the 661 Committee and most were later approved.

Why did the Secretary General Commission a High-Level Inquiry? 
The Secretary General has taken these allegations seriously and in response to them, created an independent committee chaired by Paul Volcker, former Chairman of the U.S. Federal Reserve Bank, to thoroughly examine the allegations. The other members of this commission are South African Justice Richard Goldstone and Mark Pieth, a Swiss expert on international money-laundering and bribery. The panel members are independent of the UN and the terms of reference make clear that the panel will have unrestricted access to all relevant United Nations records and information, written or unwritten, and to interview all relevant UN officials and personnel, regardless of seniority. This mandate was endorsed by a unanimous Security Council Resolution. In the recent past, the UN has set-up similar inquiries into Rwanda and Srebrenica that have operated with full independence and autonomy and have issued findings critical of the organization.

Are the Details of Contracts a Secret?
No. Oil-for-Food contracts were submitted to the UN for approval via the contractor's national authority, and these authorities as well as every member of the UN Security Council (including the U.S.) had the power to approve or place a hold on any contract. On November 3, 2003, the UN provided the Coalition Provisional Authority with its entire database of contracts and information. In addition, thousands of contracts were copied to CD-ROM and transferred to Iraqi authorities and the CPA. On April 15, 2004, the Secretary-General reinforced the transparency of the UN's information management when he said,

"Transparency is the only way to deal with allegations [like those surrounding the Oil-for-Food Program], and by far the best way to prevent corruption from happening in the first place. That, I believe, will be one of the main lessons we have to learn from this affair, whatever the outcome of the inquiry."

What Authority is the Panel Being Given? 
The independent inquiry panel will look into three broad areas where questions have been raised relative to the Oil-for-Food program. The panel will:
- Investigate whether the procedures established by the UN for the administration and management of the program were violated;
- Determine whether any United Nations officials, personnel, agents or contractors engaged in any illicit or corrupt activities in the carrying out of their respective roles in relation to the Program, and;
- Determine whether the accounts of the Program were in order and were maintained in accordance with UN regulations and rules.
In addition, the inquiry panel is authorized to engage professional investigators, auditors, accountants, forensic experts, and similar personnel or firms to assist it in carrying out its work. The Secretary-General instructed all UN staff to cooperate fully with the panel's investigation as a condition of employment, so that while the inquiry lacks explicit subpoena power, access to important information is still assured. The UN has never had the ability to subpoena witnesses, because this is a function reserved to member states only; granting the UN or the independent inquiry subpoena power would infringe on the sovereignty of member states like the U.S.

Will UN Personnel, Including Senior Officials be Compelled to Cooperate with the Panel?
The UN Secretary General has required that all UN officials and personnel cooperate with the inquiry. The Secretary General has confirmed publicly on several occasions that he will waive the immunity of any staff member who is found to have committed a crime, regardless of whether the staff member has functional or diplomatic immunity. The panel will be authorized to approach and seek the cooperation of Member States and their relevant authorities in order to obtain information.

Will the Independent Panel Cooperate with Other Investigations?
Chairman Volcker is committed to fully investigating every relevant issue thoroughly and appreciates the efforts of other investigations. Chairman Volcker has pledged to share all documents with other investigations once the inquiry has determined that the release of information is consistent with his investigation's requirements.

When Chairman Volcker presented the panel's first status report to Secretary-General Kofi Annan and members of the UN Security Council on August 9, 2004, Chairman Volcker said that his inquiry is cooperating with a major investigation launched by Iraqi authorities so as to obtain the most accurate information. Chairman Volcker has also indicated that a spirit of cooperation characterizes all investigations at this point, although not every avenue of cooperation has yet been explored. However, Chairman Volcker has repeated stated that releasing all documents at this time would compromise the authenticity of his investigation.

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