Editorial - The UN inquiries

Jan. 24, 2005
Serious days lie ahead for the United Nations. The Independent Inquiry Committee (IIC) investigating the UN's Oil-for-Food Program soon will issue its first interim report.

Serious days lie ahead for the United Nations. The Independent Inquiry Committee (IIC) investigating the UN's Oil-for-Food Program soon will issue its first interim report. A preliminary report by the committee Jan. 9 and a kickback conviction in a federal court Jan. 18 foreshadow trouble.

Revelations of abuse of the Oil-for-Food program touch issues crucial to the oil and gas industry—from the effectiveness of international sanctions to the regrettable tendency of oil money to find its way into wrong hands. Overriding them all, however, is the UN's future. In that, the industry has a large stake.

Apparent corruption

A congressional committee investigating Oil-for-Food abuse estimates that illicit use of program proceeds exceeded $20 billion. That figure probably includes smuggling technically outside of the program but still subject to UN oversight. Even if the total for which the UN is responsible proves to have been considerably less, the apparent corruption was too widespread to sweep under the rug as a mere obsession of UN antagonists. And no one should ignore the likelihood that some of the money now helps pay for terrorist killings in Iraq.

Disclosures so far point to, at best, alarming mismanagement. It has long been clear that former Iraqi President Saddam Hussein manipulated the Oil-for-Food program in pursuit of his political ambitions and personal enrichment. Last week, the first person charged in a US Department of Justice investigation of the program, Iraqi-American Samir A. Vincent, pleaded guilty to acting as an agent of Saddam's regime in exchange for cash and vouchers for 9 million bbl of Iraqi oil. A report last year by Charles Duelfer of the Central Intelligence Agency said Saddam used oil vouchers in a scheme of illegal kickbacks worth an estimated $1.7 billion.

Vincent faces a prison sentence of as long as 28 years but is cooperating with the Department of Justice investigation. In a statement following his guilty plea, IIC said it has been aware of his activities and wants to interrogate him. According to the Associated Press, Vincent said in federal court that during discussions of the Oil-for-Food program in 1996, Iraqi cash flowed to someone "whom I understood was a United Nations official."

IIC's Jan. 9 preliminary report made public for the first time 55 audit and 3 summary reports on various aspects of the Oil-for-Food program by the UN's Internal Audit Division. In a briefing paper, the IIC said the reports "raise a variety of serious issues concerning the operation" of the program. Saying it would comment more broadly in the imminent interim report, IIC noted that the IAD didn't examine oil or humanitarian contracts during the Oil-for-Food program. It said IIC staff members told it the contracts fell outside their jurisdiction and might not have been auditable.

The preliminary report also noted that the audit reports "demonstrate a preoccupation with elements of the [Oil-for-Food program] outside New York and UN headquarters." That could become important if investigations uphold allegations that key UN staff members profited from Saddam's vouchers. The report further highlighted the absence of follow-up to audits critical of the accounting for oil-field studies by Saybolt Eastern Hemisphere BV and of import inspections by Cotecna Inspection SA. Cotecna's work has come under scrutiny because UN Sec. Gen. Kofi Annan's son, Kojo, once worked for the firm and is reported to have received payments from it after his departure.

Crucial report

IIC's first interim report thus could be crucial to the UN. What's clear so far is that the target of international sanctions easily had his way with a UN-administered program that was supposed to help innocent sanction victims. And he did so partly with a kickback scheme that program administrators should have seen and stopped. Still open are questions about UN officials who might have benefited from Oil-for-Food graft.

The oil and gas industry, to do its work, needs the peaceful, cooperative world the UN envisions. It also needs the UN itself as the vision's essential mechanism. Most of all, the industry needs the UN to work—competently and with no toleration of corruption or despots. Investigations of the Oil-for-Food program will determine not whether the UN should remain in business, but how much of it needs repair.