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Congress Hears Testimony on Oil-for-Food Program - 2004-04-28

Members of Congress have heard more testimony about alleged abuses of the "Oil-for-Food" program administered by the United Nations during the regime of former Iraqi dictator Saddam Hussein. Witnesses appearing Wednesday before the House International Relations Committee offered more details about billions of dollars diverted from the program and implications for the United Nations.

With investigations underway or planned by an independent panel, the U.S.-led Coalition Provisional Authority in Iraq and a future interim Iraqi government, lawmakers continue their own efforts to obtain a clearer picture.

"Oil-for-Food" was set up in 1996 to allow Iraq to use oil sale profits to purchase food and other goods to ease the impact of international sanctions imposed after the Gulf War in 1991.

The U.S. General Accounting Office (GAO) has found that more than $10 billion in illegal surcharges and oil smuggling occurred, involving hundreds of companies based in a number of countries.

"This included $5.7 billion in oil smuggled out of Iraq and $4.4 billion in surcharges on oil sales and illicit commissions on imported commodities," said Joseph Christoff, a GAO official.

The Republican chairman of the House committee, Henry Hyde, said that although "Oil-for-Food" helped the Iraqi people, in the end the repercussions of corruption stretch much wider than depriving Iraqis of resources.

"The massive windfall resulting from this alleged organized theft allowed Saddam to maintain his grip on the country, line his pockets and to make companies and countries dance to his tune with consequences we are still struggling to contain," he said.

The ranking Democrat on the committee, Congressman Tom Lantos, added that anyone found to have taken part in corruption must face disciplinary action or prosecution. However, he called the case against the United Nations "far from clear."

"The United Nations is being blamed for Iraqi sanctions violations such as oil smuggling for which the U.N. had no responsibility for enforcement," he noted. "The United Nations took action to prevent some of the 'Oil for Food' abuses of which it is being accused and that much responsibility for the problems that beset the Oil for Food program lies with the members of the Security Council, including our own government."

Many lawmakers fault the Bush administration and key countries such as Russia, France and China for not sounding sufficient alarms about abuses, such as overcharges on oil contracts.

However, witnesses noted that the program was supported by both the Clinton and current Bush administrations. Two were sharply critical of the United Nations, among them Claudia Rosett, of the Foundation for the Defense of Democracies.

"If the U.N. is unable to contain something like this, if the Secretary-General will not call attention to problems that start to approach this scale, then it is not a good idea to entrust the U.N. with any mission as important as containing a Saddam or re-building an Iraq," she said.

Another witness, Danielle Pletka, with the American Enterprise Institute, called assertions by U.N. officials that they were unaware of abuses "absurd."

Michael Soussan, a Former Program Coordinator for the Oil-for-Food Program, defended what the program attempted to achieve.

"We should have spoken out when we came across indications that the Iraqi government was demanding kickbacks as the cost of doing business," he said. "We should have spoken out when members of the Iraqi government made intimidating threats against our staff. We should have spoken out when the Iraqi government delayed or sabotaged our humanitarian program in Iraqi Kurdistan. We should have spoken out on a range of issues, but in most cases we did not."

In other testimony, Howar Ziad, representing the Iraqi Kurdistan Regional Government, said that the effects of corruption and mismanagement in the U.N. program were felt most acutely by Iraqi Kurds.

"The results of the U.N. mismanagement of 'Oil-for-Food' program were not confined to shaving a few dollars that ended in Saddam's pockets or in the hands of U.N. officials," he stated. "Rather, the amounts were in the billions of dollars and the loss was born disproportionately by the Kurds."

At a news conference Wednesday, U.N. Secretary General Kofi Annan called it unfair that the United Nations is being blamed as a whole for something that was, in his words, beyond its control.

He has reiterated that U.N. officials, including a senior official who was in charge of the Oil-for-Food program, will cooperate with an independent investigation headed by a former chairman of the U.S. Federal Reserve, Paul Volcker.