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Volcker Report Says 2,000 Firms Made Illegal Oil-For-Food Payments

The commission led by former U.S. central bank chief Paul Volcker wrapped up its 18-month oil-for-food investigation Thursday with a final 600-page report. The document adds detail to earlier reports explaining how former Iraqi leader Saddam Hussein corrupted the humanitarian program, earning billions of dollars in illicit revenue and directing lucrative contracts to influential U.N. Security Council members.

In all, the report says about half of the 4,500 companies doing business under the program made illegal payments totaling $1.8 billion. Among them were well-known corporate names such as Volvo and Daimler-Chrysler, and the U.S.- based Bayoil Company, as well as individuals, including former French ambassador to the United Nations Jean-Bernard Merimee, former French interior minister Charles Pasqua, ultranationalist Russian lawmaker Vladimir Zhirinovosky, British lawmaker George Galloway, and Texas oilman Oscar Wyatt.

Groups and individuals from 66 countries were named.

Mr. Volcker said what stands out for him is not only the corruption of oil-for-food contractors, but how Saddam was able to turn the program to his political advantage.

His report notes that as the oil-for-food program progressed, Iraq increasingly favored friendly countries in awarding oil allocations. Eventually, U.S., British and Japanese companies were frozen out of the process, while French, Russian and Chinese firms were given preferential treatment because these countries were permanent members of the U.N. Security Council and were viewed as more favorable to lifting sanctions against Iraq.

"One overriding theme is the politicization of the process," said Paul Volcker. "Saddam plainly chose to favor those nations, companies that he felt, rightly or wrongly, would assist his efforts to end the sanctions imposed at the end of the Gulf War."

Mr. Volcker said the findings of this final report re-emphasize the conclusions of earlier installments that point out the failures of the United Nations. He said political differences within the world body frustrated any effective response to the manipulation and corruption of the program, grievously damaging the United Nations' reputation and credibility.

"What I do want to emphasize is that the corruption of the program by Saddam and many of its participants, and it was substantial, could not have been nearly so pervasive if there had been more disciplined management by the United Nations and its agencies," he said.

Washington's U.N. Ambassador John Bolton issued a statement Thursday noting that U.S. federal and local authorities have already indicted several key figures and companies for oil-for-food related activities. He called on law enforcement agencies in other countries to take similar action against their nationals, based on the findings of the Volcker report.