March 10, 2004,
In the growing scandal over the United Nations Oil-for-Food program, which from 1996-2003 supervised relief to Saddam Hussein's Iraq, U.N. Secretary General Kofi Annan and his staff have excused themselves from any responsibility for the massive corruption involving billions in bribes and kickbacks that went on via more than $100 billion in U.N.-approved contracts for Saddam to sell oil and buy humanitarian supplies. U.N. officials have denied that this tidal wave of graft in any way seeped into their own shop, or that they even had time to notice it was out there. They were too busy making the world a better place.
That's fascinating, not least given the ties of Annan's own son, Kojo Annan, to the Switzerland-based firm, Cotecna, which from 1999 onward worked on contract for the U.N. monitoring the shipments of Oil-for-food supplies into Iraq. These were the same supplies sent in under terms of those tens of billions of dollars worth of U.N.-approved contracts in which the U.N. says it failed to notice Saddam Hussein's widespread arrangements to overpay contractors who then shipped overpriced goods to the impoverished people of Iraq and kicked back part of their profits to Saddam's regime.
Cotecna was hired by the U.N. on December 31, 1998. Shortly afterward, press reports surfaced that Kojo was a partner in a private consulting firm doing work for Cotecna, and that just 13 months previously he had occupied a senior slot on Cotecna's own staff. Asked about this in 1999 by the London Telegraph, a U.N. spokesman, John Mills, replied that the U.N. had not been aware of the connection, and that "The tender by Cotecna was the lowest by a significant margin."
It seems there's a lot the U.N. managed not to be aware of. But the information that Cotecna while employing Kofi's son in any capacity put in the lowest bid by far for the job of authenticating Saddam's Oil-for-Food imports, is not necessarily reassuring. Cotecna, which got paid roughly $6 million for its services during that first year (the U.N. will not release figures on Cotecna's fees over the following years) was bidding on work that empowered its staff to inspect tens of billions worth of supplies inbound to a regime much interested in smuggling, and evidently accustomed to dealing in bribes and kickbacks as a routine part of business. The issue was never solely whether the monitors were cheap, but whether they were trustworthy.
The whole setup raises disturbing questions. But this is a subject on which neither the U.N. nor Cotecna has been willing to offer illumination. Asked for details, both have stonewalled. The U.N. spokesman Mills, who fielded the question in 1999, is now deceased. A query to the U.N. Oil-for-Food elicits from a spokesman only the information that the five-year-old response by the late Mills "stands, as provided by the U.N." A recent query to Cotecna, asking for at least some detail on ties to Kojo Annan, elicits nothing beyond the reply that: "There is nothing else to add."
It is possible of course, that Kojo Annan had nothing to do with the Iraq program per se, as he told the Telegraph back in 1999: "I would never play any role in anything that involves the United Nations for obvious reasons." Though at the same time, in a comment that suggested at least nodding acquaintance with the Oil-for-Food program, Kojo added: "The decision is made by the contracts committee, not by Kofi Annan."
Then why the reluctance from the U.N., or Cotecna, for that matter, to provide any further details whatsoever? Beyond that, it is disingenuous to suggest Annan had no responsibility for the contracts. Oil-for-Food was run out of the U.N. Secretariat, reporting directly to Annan, who regularly signed off on the six-month phases of the program. Without his approval, the contracts would not have gone forward.
Even if we assume that everyone on the U.N.'s Oil-for-Food staff, as well as Kofi Annan himself, was indeed ignorant of Kojo Annan's involvement with Cotecna, it is hard to buy the argument that Kofi, while signing off regularly on the program's workings, was simply oblivious to the details. Not only was Kofi Annan the boss, but he was directly involved from the beginning. Kofi Annan's official U.N. biography notes that shortly before his promotion to Secretary-General "he led the first United Nations team negotiating with Iraq on the sale of oil to fund purchases of humanitarian aid."
It was Annan, who in October 1997 brought in as Oil-for-Food's executive director Benon Sevan, reporting directly to the Secretary-General, to consolidate Oil-for-Food's operations into the Office of Iraq Program. And it was shortly after Sevan took charge that Oil-for-Food, set up by Kofi Annan's predecessor, Boutros Boutros-Ghali, with at least some transparency on individual deals, began treating as confidential such vital information as the names of specific contractors, quantities of goods, and prices paid.
U.N. staff, such as Under-Secretary General Shashi Tharoor in a letter last month to the Wall Street Journal, have argued that the U.N. was not responsible for Saddam's misdeeds, and that U.N. staff were not concerned with such kickback-relevant matters as business terms of Saddam's contracts. The disturbing implication is that the U.N. while collecting a commission of more than $1 billion on Saddam's oil sales to cover its own overhead in administering Oil-for-Food was indifferent to Saddam's short-changing the Iraqi people, whose relief was supposed to be the entire point of the program.
Beyond that, the U.N., during the final months of Oil-for-Food, gave every indication of knowing just where the problems lay. Last May, shortly after the fall of Saddam's regime, the U.N. Security Council voted to end the Oil-for-Food program and gave the U.N. Secretariat six months to tie-up loose ends before handing over any outstanding import contracts to the U.S. Coalition Provisional Authority. With Saddam's regime gone as a contracting party, the U.N. began a frenzied process of "renegotiating" billions in contracts, basically winnowing out the graft component that Oil-for-Food had previously approved.
By the end of this sudden housecleaning, the U.N. had scrapped more than 25 percent of the contracts for which, under Saddam, it had already agreed to release funding from the U.N.-controlled Oil-for-Food bank accounts. Uncharacteristically, the U.N. on its website has posted explanatory notes next to some of the dropped contracts. These do not suggest a U.N. that was living in ignorance of Saddam's 10-percent-overpricing-and-kickback scheme.
For instance, in the U.N.'s own footnotes, there is reference to the welding-machine contractor from Lebanon, "unwilling to accept the 10% deduction"; likewise the Belgian and Jordanian suppliers of medicine, both refusing a "10% reduction." In other cases there is a vaguer note, such as the Russian backhoe supplier, who "refused to accept extra fee deduction." Or the supplier of "fork lift and spares" from Belarus who "stated that the supply of remaining parts cannot be cost effective under the current circumstances." Asked to further explain these notations, an Oil-for-Food spokesman offers no comment except that all available information is already posted on the U.N. website.
Altogether, according to U.N. records, 728 previously approved and funded deals were "removed from the list of amendable contracts," a few because the supplies had already been delivered, but many because the contractors appear to have run for the hills. For instance, there's the Jordanian supplier of school furniture, whose contract was dropped during the U.N.'s post-Saddam frenzy of "prioritization" because the "Company does not exist and the person in charge moved to Egypt." Or the Russian supplier of "vehicle spare parts," who "could not be contacted despite all efforts." Or the Algerian seller of "adult milk" who "has no interest in renegotiation"; the Egyptian seller of "generator" for educational purposes, who "is not enthusiastic about proceeding with the amendment"; the Syrian seller of "laboratory equipment" who is "not possible to contact."
Another 762 contracts set aside indefinitely by the U.N., post-Saddam because of their "questionable utility" were deals for goods that sound handy and humanitarian enough on the generic U.N. face of it. These include medicine from China; sugar and ambulances from Egypt; laboratory materials and medical equipment from France; educational materials from Pakistan; wheat, medical equipment, and ambulances from Russia; and yet more wheat, from Saudi Arabia. One has to wonder if the revised assessment of utility lay in the nature of the goods described, or in the actual terms of the contracts previously blessed by the U.N.
It's commendable that the U.N., facing imminent handover of the program, tried to clean up the remaining contracts. It is plausible, perhaps, that no one at the U.N. knew of the links between Kofi Annan's son, Kojo, and the firm monitoring Iraq's U.N.-approved imports, Cotecna, and that these ties had no bearing on a massively corrupt program. It is possible that only after Saddam fell did anyone among the 1,000 or so U.N. international staff administering Oil-for-Food, or Sevan, or Kofi Annan, notice that they'd been approving Saddam's deals with suppliers that were, in various combinations, paying kickbacks, hard to contact, or even, as in the case of the Jordanian school-furniture contractor, nonexistent.
But what has to be clear by now is that the U.N. itself was either corrupt, or so stunningly incompetent as to require total overhaul. There are by now enough questions, there has been enough secrecy, stonewalling, and rising evidence of graft all around the U.N. program in Iraq, so that it is surely worth an independent investigation into the U.N. itself and Annan's role in supervising this program. If Kofi Annan will not exercise his authority to set a truly independent inquiry in motion, it is way past time for the U.S., whose taxpayers supply about a quarter of the U.N. budget, to call the U.N. itself to account for Oil-for-Food in dollar terms the biggest relief operation it has ever run, and by many signs, one of the dirtiest.