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THE UNITED NATIONS OIL FOR FOOD PROGRAM
Background
The United Nations Oil-for-Food Program was established on April 14, 1995 by
Security Council Resolution 986. Operations commenced in December 10, 1996
to allow Iraq to export oil to bona fide oil traders in exchange for imports
of food and other humanitarian necessities. The goal of the program was to
relieve the impact that UN economic sanctions on the Hussein regime were
having on ordinary Iraqis.
The program was also critical
to maintaining international support for economic sanctions against Saddam
Hussein. At the time, increased international concern for the impact of the
sanctions on the Iraqi people was eroding the support for the sanctions
regime. Both the United States and the United Kingdom, as permanent members
of the UN Security Council, and as principal proponents of sanctions against
the Iraqi ruler, 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 program ended in November 2003 when the Security Council
adopted Resolution 1483 which lifted the civilian sanctions on Iraq and
provided for termination of the program within six months. All remaining
activity was transferred to the administration of the Coalition Provisional
Authority and remaining funds to the Iraqi Development Fund.
Helping the Iraqi People
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. Nine different United Nations agencies,
programs, and funds developed and managed humanitarian operations in Iraq
across 24 economic and social sectors.
• The program delivered enough
food rations to feed all 27 million Iraqi residents, resulting in a 50% drop
in the malnutrition rate among Iraqi children.
• It contributed to national vaccination campaigns that helped reduce child
mortality and eradicated polio in Iraq for the last three years;
• The
program provided more dependable access to electricity and clean water.
•
Foodstuffs worth more than $13 billion and medical supplies totaling $2
billion entered Iraq.
• More than 2,500 Iraqis were empowered to carry out these projects.
It is also important to note that 0.8% of the program funds were provided to
UNMOVIC, the United Nations weapons inspections program in Iraq. The program
was key to destroying Iraq's weapons of mass destruction and preventing the regime
of Saddam Hussein from developing new weapons programs.
Allegations Against the Program and the UN's Actions
It has been alleged that mismanagement of the Oil-for-Food Program allowed
Hussein’s regime to embezzle millions of dollars through underpriced
oil contracts and overpriced contracts for some of the goods that Iraq
purchased under the program. There have also been allegations that UN
personnel illegally profited from 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.
Oversight over Oil-for Food rested
on the UN Security Council and the UN Secretariat’s Office of the Iraq
Program (OIP). 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. Regular program audits were undertaken by the UN’s
Office of Internal Oversight and the program’s escrow account was audited
every six months.
The OIP raised concerns about potential wrongdoing in the Oil-for-Food
program on multiple occasions.
• 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”
(36).
• On November 17, 2000, UN oil overseers informed the 661 Committee that
proposed formulas for oil pricing for the month of December would make oil
considerably under-priced and did not appear to represent “fair market
value.”
• In December of 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 address them. As a result, the
Security Council instituted a “retroactive pricing” mechanism designed to
curb the practice.
• Oil-for-Food administrators identified at least 70 cases for potential
overpricing between 2001 and 2002. None of these cases were held up for
pricing issues by the 661 Committee and most were later approved.
The Volcker Committee
As a result of the allegations, the UN Secretary General 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 and 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. The independent inquiry panel has three main
goals:
- 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 does not have the ability to subpoena witnesses,
as that is a function reserved exclusively for member states.
Deputy Secretary General Louise Fréchette noted that many internal changes
have been implemented since 1996 – the time period under scrutiny in Volcker’s
report. For instance, the UN website now posts all purchasing requirements
and awards, including details and the progress of all transactions. "As part
of an organization-wide attempt to improve the openness and transparency of
the organization, the Secretary-General intends to review in a more
comprehensive fashion the ruling guidelines pertaining to access to UN
documentation," she said at a press briefing in February.
On March 29, 2005, the inquiry cleared Secretary General Kofi Annan of any
personal wrongdoing while overseeing the program. It found insufficient
evidence that he was aware of his son's dealings with a Swiss contracting
firm. However, the report did criticize Annan for his inadequate
investigation into the affair. The final report by Volcker's team is due to
be presented in the summer.
Citizens for Global Solutions would like to credit the
Better World Campaign for much of this information.
Last updated on April 26, 2005
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