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Iraq Oil for Food Scandal Plays Out on Capitol Hill


Representatives of companies monitoring the shipment of oil and delivery of humanitarian goods under the former U.N. Oil for Food Program for Iraq have denied any wrongdoing. The denial came in testimony before a congressional committee looking into abuses of the program. The latest chapter of the Oil for Food scandal played out on Capitol Hill this past week.

The two companies, Netherlands-based Saybolt International Group, and Swiss-based Cotecna SA, are among U.N. contractors under investigation in connection with the Oil for Food Program.

Intended to help ease the impact on Iraqi civilians of economic sanctions imposed in 1990 during the rule of Saddam Hussein, it allowed Iraq to sell a certain amount of its oil for food and medicine and other civilian items.

Results so far from probes by the U.S. Government Accountability Office, an independent commission headed by former U.S. Federal Reserve Chairman Paul Volcker, and congressional committees, indicate billions of dollars were diverted through unauthorized surcharges and kickbacks to the former Iraqi dictator.

Congressman Dana Rohrabacher spoke at a hearing of the House Oversight and Investigations Subcommittee. "The United Nations I believe has much to answer for,” he said. “Nearly 10 years after the Oil for Food Program we still have not heard all of the answers," he said.

The congressman was hoping for some answers from a representative of John Denson, General Counsel of Saybolt.

He echoed previous statements that the company performed its work well in difficult and politically sensitive conditions, but went into detail on one factor connected to the tracking of outgoing oil shipments under the program.

"Iraq never did undertake to put into place functioning meters at Mina al-Bakr,” said Mr. Denson. “As a result, Saybolt could not measure the flow of oil into individual tankers. Instead, Saybolt had to utilize an alternative method of measurement. This method, while compliant with international commercial standards, was not as foolproof as a meter nor as accurate as a meter would be."

Mr. Denson said the company alerted the United Nations both before and during the U.N. Oil for Food Program about monitoring inadequacies at the port.

Attention focused on Saybolt in connection with monitoring of oil shipments and two incidents in 2001 in which a tanker was topped off with more than 200,000 barrels of oil after inspectors had formally certified a lower amount.

Saybolt suspended an employee, a Portuguese national, after allegations emerged indicating he accepted a $105,000 bribe from Iraqi officials. He later resigned.

Mr. Denson also pointed out that Saybolt's responsibilities covered only two loading locations, adding the company's job was not to act as a police force in all of Iraq.

Similar testimony came from Eveyln Suarez, U.S. Counsel for another contractor, Cotecna Inspection, S.A.

The company had a very limited role, she said, of authenticating that humanitarian goods arriving for the Iraqi people under the Oil for Food Program matched those listed in U.N. contracts.

"Cotecna was not empowered by the United Nations to enforce sanctions or to police the Iraqi border. Cotecna was not responsible for end-user verification," she noted.

She says Cotecna employees visually inspected all goods, and conducted closer random inspections of 10 percent of these, but were not authorized to act regarding goods that did not arrive, interdict prohibited items not covered by contracts, assess the value of goods or verify prices. Had any employee been involved in bribery, she says, appropriate action would have been taken.

Testimony by both companies turned the focus squarely back on the United Nations, which they said provided no enforcement at Iraq's borders as part of the Oil for Food Program.

In other testimony to the committee, former U.N. official Rehan Mullick who served in Baghdad from 2000 to 2001, renewed charges that U.N. supervisors there and in New York ignored his warnings about lack of adequate verification of delivery of humanitarian goods.

Mr. Mullick, who was fired from his U.N. job after making his allegations, said Saddam Hussein's intelligence agents had penetrated the U.N. humanitarian office in Baghdad, where they were able to control and or manipulate delivery records.

U.S. lawmakers have charged that U.N. officials repeatedly turned a blind eye to rampant corruption in the Oil for Food Program, and congressional committees are continuing their own investigations as the Volcker commission prepares to issue additional findings in coming weeks and a more extensive report later this year.

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