Jolie Rouge

Largest Financial Scandal In History Just Doubled
by Gary D. Halbert
December 7, 2004

The Senate subcommittee investigating the Oil-For-Food scandal revealed last month that Saddam Hussein and his cronies skimmed over $21 billion out of the UN program that was intended to provide food and medicine to the Iraqi people. That is twice the amount we were led to believe earlier this year.

The United Nations has been stonewalling the Senate investigation of the scandal. UN Secretary-General Kofi Annan has found himself in the crosshairs, and Senator Norm Coleman who heads the investigation publicly called for Annan to resign on December 1 and several times since then. I expect Annan will be forced to resign before this is over.

The US pays 25% of the UN’s annual budget, compared to the United Kingdom that pays only 8.9%. Given how stridently anti-America the UN is, maybe we should also consider relocating the world body to some other country (France comes to mind). Hopefully, with a new Secretary of State and a new UN ambassador, the Bush administration will force reforms on the UN.

Finally, we look briefly at President Bush’s agenda for his second term and some things that have changed since the election.

The Oil-For-Food Scandal Explodes

I first wrote about the United Nations’ “Oil-For-Food” scandal with Iraq on May 25. In that issue, I explained how the scandal worked, who benefited from it and how it went on for years. In May, we knew it was a huge scandal, that it lined Saddam Hussein’s pockets, that it did not feed the Iraqi people, and that it could have contributed to terrorism. We just didn’t know to what extent.

On November 16, I again wrote about the Oil-For-Food scandal and reported that it was far worse than anyone initially thought. In that E-Letter, I reported that the latest estimates were that the UN allowed Saddam to skim $10-$11 billion from the program into his own pockets and those of his cronies. Even at $10-$11 billion, it was called “the greatest financial scandal in history.”

Well now we have learned that the UN allowed Saddam to skim at least $21-$22 billion from the Oil-For-Food program! In late November, the Senate Permanent Subcommittee On Investigations released these initial findings from its seven-month probe into the Oil-For-Food program. The Senate subcommittee investigating the scandal emphasized in its first public hearing that these are only preliminary estimates, and that the real numbers will likely be even higher when the final results are released early next year.

Senator Norm Coleman, the subcommittee’s chairman, underscored the urgency of the investigations, noting not only that the size of the fraud “is staggering,” and that some of Saddam’s vast illicit stash might still be funding terrorists and costing American lives.

United Nations Stonewalls The Investigation

It should come as no surprise that the UN is resisting the Senate subcommittee investigation. The UN maintains that it is conducting its own “independent inquiry”into the Oil-For-Food scandal, led by former Fed chairman Paul Volcker. While Paul Volcker is widely respected, the UN guidelines on his investigation require that he funnel his findings first through Kofi Annan, the UN Secretary-General.

It is also interesting to note that the UN’s “independent inquiry” is funded to the tune of $30 million out of one of the old Oil-For-Food accounts it is supposed to be investigating. The UN says it is not planning to release any specific results of the investigation until sometime next summer. Next summer??

Thus far, Mr. Annan has refused to cooperate with the Senate subcommittee investigation. In the spirit of shooting the messenger, Annan has complained often in recent months about criticism of the Oil-For-Food program, and has denounced the Senate investigation as a “campaign that has hurt the UN.”

Kofi Annan Comes Under Heavy Pressure

The Senate subcommittee claims that the United Nations allowed Saddam Hussein and his cronies to embezzle at least $21.3 billion in oil money during 12 years. Most of that huge amount - a staggering $17.3 billion- was pilfered between 1997 and 2003 while Annan was the UN Secretary-General.

Annan’s director of communications, Edward Mortimer, sent a letter to The Wall Street Journal in November asserting that Mr. Annan was “not involved” in designing the Oil-For-Food program. But one wonders how he could not have been involved. For example, Annan’s own official UN biography states that before becoming Secretary-General, he “led the first United Nations team negotiating with Iraq on the sale of oil to fund purchases of humanitarian aid.”

Once he became Secretary-General, Annan accelerated the plans for the Oil-For-Food program. In October 1997, just 10 months into the job, he formalized the program from a temporary relief effort into the “Office of the Iraq Program,” a large UN department that reported to him directly. To run the Oil-For-Food program, Annan picked Benon Sevan who is now alleged to have received oil money from Saddam (which he denies, of course)

Annan’s formalization of the Oil-For-Food program vastly expanded the amount of oil Iraq could sell. It was at this point, apparently, that Saddam Hussein decided that he could start gaming the system with impunity. Shortly thereafter, Hussein began denying the UN weapons inspectors access to certain sites, and eventually kicked them out of Iraq altogether.

Annan’s response during this period was not to curtail Oil-For-Food sales. In fact, he went before the UN Security Council a few months later and urged that Baghdad be allowed to import oil producing equipment, along with the food and medicine, to which the program had been initially limited. This set the stage for the ensuing burst in Saddam’s oil production, kickbacks, surcharges and smuggling of oil.

Under the Oil-For-Food deal, the UN’s Secretariat was paid a 2.2% commission on Iraq’s oil sales, totaling a whopping $1.4 billion over the life of the program. This money was supposed to be used for supervising the program and to ensure the proper use of the oil revenues by Saddam Hussein. Yet according to the Senate investigation, the Secretariat did not:
1) fully account for the amounts of the oil shipments;
2) did not conduct full inspections of all goods entering Iraq;
and
3) did not find (or reveal) the pricing scams and smuggling that let Saddam and his cronies rake in billions in kickbacks on the oil or the relief contracts that were awarded.

As we now know, other than Saddam and his cronies, it was France, Germany and Russia who were the main beneficiaries of the Oil-For-Food scandal. They got the big contracts with Iraq. This explains why they were so opposed to the war in Iraq. It was their gravy train.

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Laissez les bon temps rouler! Going to church doesn't make you a Christian any more than standing in a garage makes you a car.** a 4 day work week & sex slaves ~ I say Tyt for PRESIDENT! Not to be taken internally, literally or seriously ....Suki ebaynni IS THAT BETTER ?