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Iraq: UN's Oil-For-Food Audits Suggest Systematic Mismanagement

  • Robert McMahon --> Saddam Hussein (shown at 2004 arraignment) is said to have profited enormously from oil-for-food The first assessment of the United Nations' handling of the Iraqi oil-for-food program points to systematic mismanagement. That conclusion, from an independent panel, accompanies the release of 58 UN audits of the program from 1996 to 2003, a time when former Iraqi leader Saddam Hussein is said to have profited enormously from the program. It says that, despite the concerns raised by the internal audits, the UN management of the program seemed either "unable or unwilling" to address the problems. The UN Secretariat is signaling that immediate changes to management practices are under way.

United Nations, 11 January 2004 (RFE/RL) -- A pattern of management lapses across a range of UN agencies dealing with Iraq emerges from the audits released this week.

The panel -- headed by former U.S. Federal Reserve Chairman Paul Volcker -- made the audits public on 9 January. Several other investigations in the U.S. Congress have sought the reports to help determine how much the United Nations was responsible for Saddam Hussein's abuse of the oil-for-food program.

Volcker's commission will issue a detailed assessment of UN management of the program later in January. But in a briefing paper accompanying the audits (which can be viewed here), the panel notes serious problems in UN oversight functions.

UN spokesman Stephane Dujarric read a statement yesterday saying the program fulfilled its main objective of providing humanitarian relief for Iraqis. But the statement also acknowledges problems that the United Nations is moving to correct.

"It is clear from the briefing paper that there were deficiencies in the management of this unique and highly complex program which had to be implemented in an acutely difficult political environment," Dujarric said.

The audits note poor performance of firms hired to monitor oil exports and humanitarian imports, finding numerous examples of overpayments to contractors.

They also estimate that the Geneva-based UN Compensation Commission made more than $4 billion in overpayments. The commission uses Iraqi oil revenues to compensate victims for losses suffered in the Iraqi invasion of Kuwait.

The commission has challenged those findings on its website.

Volcker's panel, in its briefing notes, said the top UN management of the oil-for-food program was either "unable or unwilling" to address issues raised by the audits. Benon Sevan, who headed the program, denies allegations he personally profited from Iraqi kickbacks.

The independent panel also faults the UN auditors for not reviewing the role of UN headquarters in depth and failing to examine and test the execution of the oil purchase and humanitarian aid contracts.
In a briefing paper accompanying the audits, the panel notes serious problems in UN oversight functions.

Two Republican lawmakers in the United States who are investigating the program -- Senator Norm Coleman and Congressman Chris Shays -- said the audits leave many questions unanswered about the UN's role in the abuses. Saddam is estimated to have gained more than $11 billion during the time of the program through smuggling and corrupt practices.

White House spokesman Scott McClellan reiterated the Bush administration's concerns about the program, but praised the release of the audits.

"We believe it should be fully investigated, and that that is a matter that should be done in an open and transparent way. And so [the release of the audits is] a good step, in that sense," McClellan said.

The UN statement released yesterday says some lessons from the scandal are already being applied. It notes the UN's acceptance of a no-fee offer from the accounting firm PricewaterhouseCoopers to help monitor aid to victims of the Indian Ocean tsunami.

The firm might also be asked to launch immediate investigations into allegations of fraud, waste, or abuse in connection with tsunami aid efforts.

Kevin Kennedy, a senior official in the UN Office for the Coordination of Humanitarian Affairs, said he does not believe the oil-for-food probe will cause donors to stop giving to other UN humanitarian programs. He said more than $2 billion in donations were made in 2004 to UN relief appeals.

"If there were real concerns on the humanitarian side about how monies were received and expended, I don't think we would have received over $2 billion. So we are reasonably confident with the procedures we have in place. However, this will certainly enhance our ability to track money and make sure it is used wisely," Kennedy said.

UN Secretary-General Kofi Annan recently signaled that he will be making a series of top management changes to strengthen reform efforts in the year ahead.

The UN statement yesterday says the organization is engaged in a review that will lead to a "broad overhaul of the UN's management structure and systems in order to improve performance and accountability."