The UN's money trail

International | UNITED NATIONS: International body's Iraqi Oil for Food deal is finally under the microscope, but can the UN police itself?

Issue: "Why the long face, Fidel?," May 1, 2004

Get out your graphing calculator, clear out a file drawer, allocate some extra RAM. If you want to stay on top of investigations into the UN's Oil for Food program, you will need all that and more.

With last week's announcement that former Fed chairman Paul Volcker will head the UN investigation-with staff and funding that should have been used to run the program properly in the first place-more Iraq-related scandal news is sure to be off and running. In addition to the UN probe, two more are underway: a congressional inquiry headed by Rep. Henry Hyde (R-Ill.) and an Iraqi probe headed by Governing Council members.

Proceedings that span New York, Washington, and Baghdad are not the only reasons getting to the bottom of the program will be complicated. The Oil for Food program ran virtually without scrutiny for seven years; took in revenue for Iraqi oil exported at a rate of more than 2 million barrels per day; deposited the funds in four unnamed (until last week) bank accounts; divided the funds into half a dozen escrow accounts; distributed funds via nine different UN agencies; converted its accounting procedures midstream from dollars to euros at Saddam Hussein's request; and has lost, stolen, or otherwise mismanaged a whole lot of money.

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The basic facts are these: The UN took in roughly $60 billion in Iraqi oil revenue. The purpose was to give Iraqis the bare necessities of life because UN sanctions were so punishing. From 1996 until the invasion last year, the UN approved $34 billion in imports to Iraqis and delivered on less than $25 billion.

So the bottom line is actually very simple: Where did the rest of the money go?

That's a question that should have been asked at any point in the seven-year history of the program, but particularly in the 2001-2003 run-up to war. Yet until now, it is a question that was never asked by Congress, by any other Western government, nor by the UN Security Council-even after a delegation representing Iraqi opposition leaders in January 2003 traveled to New York to ask specifically for a Security Council investigation and audit.

Iraqis have been ready to talk about it for years. They gave reporters, including WORLD, plenty of information critical of UN administration ("Outsmarting sanctions,"Aug. 10, 2002) long before the war. But no major media outlets, except The Wall Street Journal, took it seriously until now.

Iraqis know better than to follow the news cycle. The Governing Council is desperately trying to get ahead of what is sure to be a tainted UN investigation by hiring accounting firm KPMG to go over the books. Their British adviser Claude Hankes-Drielsma this week warned UN officials in Baghdad not to throw roadblocks. "I expect shredders are working round-the-clock at this very moment," he said.

An American and former UN worker in Baghdad now assisting Iraqi officials said investigations must answer these questions:

What's the reasonable minimum and maximum amounts earned given fluctuating oil prices?

How much was earned in interest on unspent funds?

What benefits should Iraqis have received under the program?

How will the UN compensate them?

"These probes should not be limited to only the allegations of corruption, which are only a limited and negative reason for the probes," he said. "The investigations should also carefully, comprehensively, clearly, and completely examine UN leadership and management of the program." Until then, few Iraqi leaders will cheer another UN role in Iraq.


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