02/07/2005, 00.00
IRAQ – UNITED NATIONS
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Evidence of corruption in the UN's Oil-for-food programme

Kofi Annan's son is said to be among those who profited from kickbacks, a tortuous tale that links big and small companies

Rome (AsiaNews) – The Volcker report shows that high-ranking officials from both international agencies and private companies were involved in a kickback scheme in the Oil-for-food programme, among them Benon Sevan, the UN official who ran the programme, state-controlled French bank Banque nationale de Paris, and Saybolt, a Dutch company that offers inspection and testing services in the Petroleum and Petrochemical industry.

What role, if any, Kojo Annan, the son of UN Secretary-General Kofi Annan, played as an employee of Cotecna Ispectation, a Swiss company responsible for supervising the UN programme, will be revealed in the next few months.

After the preliminary report's release, Kofi Annan condemned Sevan's actions but defended the UN saying that nine UN agencies had to work with a corrupt Iraqi regime under very difficult conditions; yet, these agencies successfully managed humanitarian and economic operations across Iraq, delivering enough food rations to feed more than 27 million Iraqis, thus reducing malnutrition among Iraqi children by 50 per cent. However, an Iraqi minister said UN officials were parasites and called for the restitution of the "money stolen from the Iraqi people".

Mr Annan stated that "there are many important lessons for all of us to learn and recommendations for us to study as a result of this report which will apply to all of the work of the UN worldwide and in many sectors."

The Volcker report has refocused attention on the corruption charges linked to the Oil-for-food programme established by the United Nations in 1996 to allow Iraq to sell oil on the world market in exchange for food, medicine and the like. The ostensible intent of the program was to help the Iraqi government provide for the needs of ordinary Iraqi citizens affected by international economic sanctions imposed on the government in the wake of the first Gulf War, without letting the country rebuild its military.

Eventually, it became clear that Saddam Hussein enriched himself by smuggling oil to neighbouring countries and western companies thanks to the complicity of UN officials.

Sold at US$ 7-8 a barrel, Iraqi crude was taken in trucks to Turkish ports in the Mediterranean or to Syrian refineries or in barges (with loads of up to 2,000 tonnes) from Basra to oil tankers waiting outside the Strait of Hormuz using phoney Iranian papers. The sea smuggling route was the least expensive but the most dangerous because of ships patrolling the area.

Once reached its destination, the crude was mixed with other oil to prevent identification of place of origin.

Prices for Iraqi oil sold through the Oil-for-food programme were thus highly competitive. Some of the largest US, European, Chinese and Indian companies were among the list of buyers; however, they took precautions. To avoid stricter supervision, the big players used the services of small companies, which dealt directly with the UN, Such companies also dealt with SOMO, Iraq's state-owned oil company.

They normally used middlemen, usually from the Middle East, who were paid anywhere between 20 to 70-80 cents a barrel according to market conditions.

Companies that were allocated oil traded their quotas to larger oil trading companies such as Vitol, Glencore, Arcadia and Trafigura, which in turn rented tankers and resold the cargo to refineries. This left no trace, kept the dirty business under wraps, and allowed the middlemen to pay back Hussein's family and SOMO managers.

Now we know that high-ranking UN officials were also paid pack for services rendered.

 

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