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US Lawmakers say Companies, Foreign Governments Allowed Saddam to Abuse UN Food Program - 2004-10-06

U.S. lawmakers have criticized foreign governments, companies, and the United Nations, accusing them of acquiescing to corruption that diverted billions of dollars from the former U.N. Oil for Food Program to former Iraqi dictator Saddam Hussein. A congressional hearing Tuesday heard officials of contracting companies involved in the U.N. program defend their role.

In a stinging opening statement, Congressman Christopher Shays said the United Nations, its members, as well as foreign companies, were basically used by Saddam Hussein, who exploited weaknesses in how the Oil for Food Program was being managed.

"Through cynical yet subtle manipulation, he and an undeclared coalition of the venal on the [U.N.] Security Council exploited structural flaws in the program and institutional naiveté at the U.N. to transform a massive humanitarian aid effort into a multi-billion dollar sanctions-busting scam," he said.

Last month, three members of Congress who visited Iraq to inspect Oil for Food documents held by the interim Iraqi government said there was anecdotal evidence of corruption leading, in their words, to very high places in various organizations outside of Iraq.

Reports emerged Tuesday quoting congressional investigators that Saddam Hussein used funds from the U.N. program for routine purchases of weapons and vehicles.

Company representatives at Tuesday's hearing described efforts to deal with complex credit arrangements, and a steadily increasing volume of transactions in the Oil for Food Program, as well as complex methods to authenticate documents, but denied any deliberate wrongdoing.

David Smith, director of Corporate Banking Operations for the French bank BNP Paribas, said his organization fulfilled all of its obligations, adding that it had no discretion over how money was being spent.

Peter Boks, managing director of Netherlands-based Saybolt International, also defended his company's work, which involved monitoring oil shipments from Iraq. But he said a range of problems made the job more complicated.

"The entire program was also characterized by highly-charged political interests and sensitivities," he said. "The simultaneous operation of the humanitarian Oil for Food Program and a comprehensive U.N. imposed sanctions regime created a variety of practical and logistical complications."

Allegations of corruption involving senior U.N. officials have not been proven. However, congressional anger over what many see as U.N. incompetence was reflected in this statement by Tim Murphy, a Republican Congressman from Pennsylvania.

"Despite repeated criticisms and questions of concern, U.N. member countries and U.N. personnel continually turned a blind eye to the corruption of a program designed to get humanitarian assistance to the people living under one of the most corrupt regimes in the world," he said.

Patrick Kennedy, U.S. Representative to the United Nations for U.N. Management and Reform, acknowledged there were difficulties with the Oil for Food program but said that it did help the Iraqi people.

"The Oil for Food Program was in no way perfect, but was at the time, the best achievable compromise to address the ongoing humanitarian crisis in Iraq in the mid-1990s while maintaining effective restrictions on Saddam's ability to re-arm," he said.

In other testimony, Andre Pruniaux, senior vice president with Cotecna Inspection, said Iraqi government officials used various methods to try to pressure suppliers involved in oil for food contracts.

A French Embassy official attending the hearing issued a statement describing as unjust allegations that the French government turned a blind eye to corruption in the U.N. Oil for Food Program.

The U.S. Government Accountability Office (GAO) puts the amount of money illegally diverted over the life of the program at between five and ten-billion dollars, including unauthorized surcharges and kickbacks.

In addition to congressional investigations, and one by the Iraqi interim government, the former U.S. Federal Reserve chairman Paul Volcker is heading an independent probe.