The cover-up in the office of the U.N. secretary general of a multibillion-dollar financial fraud known as the Iraqi oil-for-food program is beginning to come apart.
The scandal has been brewing for years. The first I learned of it was in a New York Times Op-Ed article last April by the journalist Claudia Rosett charging that the U.N.'s secretive oversight of more than $100 billion in Iraqi oil exports and supposed humanitarian imports was "an invitation to kickbacks, political back-scratching and smuggling done under cover of relief operations."
After checking with Kurdish sources in Iraq, I reported that half the money allocated to their people had been blocked by Saddam "conspiring with bureaucrats in the U.N. Plaza."
Kofi Annan's right-hand man, Benon Sevan, had been named by the secretary general to head the oil-for-food program and report directly to him. Though he could not deny a favored French banking connection, Sevan branded as "inaccuracies" charges by Ms. Rosett and me of secrecy, citing a hundred audits in five years. But he refused to make public what companies in what countries got Saddam's largess.
Now, thanks to evidence of systematic thievery on a huge scale, discovered by free Iraqis in Baghdad, the whole rotten mess of 10 percent kickbacks on billions in contracts is coming to light. In detailed accounts, Susan Sachs in The Times, Therese Raphael in The Wall Street Journal, and Charles Laurence and Inigo Gilmore of London's Daily Telegraph have flipped over the flat rock of corruption.
Assistant Secretary General Sevan, now on an extended vacation until his retirement next month, denied through a spokesman "that I had received oil or oil monies from the former Iraqi regime" and demanded that his doubters produce documentary evidence. The Journal then produced a document in Arabic that suggests Sevan received an allocation of 1.8 million barrels of oil.
Under the U.N. bureaucracy's nose — and I suspect, in some cases, with its collusion — nearly three-quarters of the suppliers jacked up their prices to pay the 10 percent kickback. These included European manufacturers, Arab trade brokers, Russian factories and Chinese state-owned companies. Corruption's take — out of the mouths of hungry Iraqi children — was estimated by Sachs of The Times at $2.3 billion.
Hired by the U.N. to monitor these imports was a Swiss-based firm, Cotecna, which was paid out of the exorbitant fee the U.N. charged for overhead. Ms. Rosett, writing in National Review last week, notes that Kojo Annan, the secretary general's son, was once on staff and later a consultant to that tight-lipped company. In denying to The Telegraph in 1999 that he worked on the U.N. oil-for-food account, Kojo Annan said, "The decision is made by the contracts committee, not by Kofi Annan."
About that "661 compliance committee," on which the U.S. has a seat and to which the secretary general now wants to pass the buck: a U.S. official familiar with its operation tells me that "its purpose was formally to approve what the U.N. staff recommended. Only the U.S. and the U.K. experts ever put a hold on a contract, and that about items that had dual use in weaponry. Few U.S. firms got contracts, and those that did worked through middlemen to avoid the General Accounting Office."
Annan's office kept blaming the 661 committee and stonewalling the press until an irate Iraqi Governing Council hired the accountants KPMG and a law firm to investigate what its advisers told Annan was "one of the world's most disgraceful scams."
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