The UN's oil-for-food scandal: Rolling up the culprits
The Economist
March 13, 2008
America's legal authorities (but not many others) are still clearing debris from the UN programme that an ingenious Saddam Hussein turned to his own advantage.
“THE biggest financial scandal ever.” That is what one American senator called the shenanigans over the UN's oil-for-food programme. Designed to soften the impact of UN sanctions on the Iraqi people by allowing the supervised sale of some Iraqi oil, it ended up enabling Saddam Hussein to haul in lots of money and enriching many other shady types. The affair threatened to discredit the whole United Nations system and almost brought down Kofi Annan, its then boss. Even now, the scandal is quietly claiming victims, though in a lot of places it seems to have vanished mysteriously from the radar.
In its final report in October 2005, a committee of inquiry, headed by Paul Volcker, a former chairman of America's Federal Reserve, found that 2,253 firms, many of them household names, had made illegal payments totalling $1.8 billion to the Saddam regime.
That was not quite the world-beating scam claimed by some: the diversion of less than 2% of the value of transactions amounting to nearly $100 billion ($64 billion in oil sales, and humanitarian purchases worth $35 billion) looks almost squeaky-clean by the commercial standards of some energy-rich states. But it was a blot on an arrangement in which every cent was supposed to be monitored. And the Volcker panel's access to ministry files in post-war Iraq threw light on many deals that were meant to stay secret.
Four years after the scandal broke, how many beneficiaries have been brought to book? None in Russia, the country that won the lion's share (nearly a third) of oil deals. As Mr Volcker noted, the programme gave Iraq a freeish hand in choosing its oil clients. It used oil sales to reward people, firms and countries (such as Russia) that were known to be pro-Iraqi.
Predictably, the authorities in Russia shunned the Volcker panel and its findings, which name three Russian bigwigs as beneficiaries of Iraqi oil sales: Alexander Voloshin, a former presidential adviser; Gennady Zyuganov, the leader of Russia's Communists; and Vladimir Zhirinovsky, a nationalist firebrand. Other countries, including China, Cyprus, Yemen, Egypt, Vietnam, Malaysia and the United Arab Emirates, have similarly ignored the report. Of the 52 countries it named, only 28 have asked to consult the tonnes of incriminating documents assembled by Mr Volcker and his 75 investigators. And time is running out. This December all confidential papers will be locked away for 50 years—unless Ban Ki-moon, Mr Annan's successor, extends the deadline.
Although the scandal has disappeared from the headlines, it has not been forgotten: not, at least, in the half dozen or so Western countries most heavily implicated. The United States has led the way. Of just seven people so far convicted worldwide on oil-for-food charges, all were prosecuted in America, which began its legal moves before the Volcker panel reported. Three, including Samir Vincent, an Iraqi-American businessman, and Alexander Yakovlev, a UN procurement official of Russian origin, are awaiting sentence. The other four, including two Americans, got jail terms from one to five years. They also forfeited most of their dubious gains.
David Chalmers, the Texan head of Bayoil, was sentenced on March 7th to two years in jail and ordered to repay $9m in fines and restitution. Oscar Wyatt, another Texas oil man, was jailed in November for one year and ordered to pay $11m. Vladimir Kuznetsov, the Russian ex-chairman of the UN's budget oversight committee, is serving 51 months for money laundering. And Tongsun Park, a South Korean who lobbied for Iraq, is serving five years. Five others are facing oil-for-food charges in America, but have not yet been convicted.
