Press Releases

    28 October 2005

    Head of Oil-for-Food Inquiry Calls for Wide-Ranging Reform within United Nations

    NEW YORK, 27 October (UN Headquarters) -- More than 2,000 companies that did business with the United Nations now-defunct Iraqi "oil-for-food" programme were involved in bribes and kickbacks that allowed Saddam Hussein's sanctions-bound regime to divert nearly $2 billion, said the Chairman of the panel probing abuse of the programme.

    "What stands out is not only individual instances of corruption but the politicization of the process", said Paul Volcker, in a special briefing to United Nations Member States, just hours after the release of the fifth and final report of the Independent Inquiry Committee (IIC).

    The report documents Hussein's extensive manipulation of the $64 billion programme, which was launched by the United Nations in 1996 to allow Iraq to sell oil to buy food, medicine and other humanitarian goods.  The report also notes that the initiative's "gatekeepers" -- the Secretariat, the Security Council and United Nations contractors, failed "most grievously" in their responsibilities to monitor the programme's integrity. 

    Mr. Volcker added that political differences and pressures within the United Nations frustrated an effective response and contributed to the corruption of the programme.  Saddam Hussein targeted cooperation with countries that he hoped would end the sanctions, and the corruption of the programme by the Iraqi regime would not have been nearly as effective if there had been more disciplined management by the world body and its agencies.  

    The Committee spent 18 months investigating how the oil-for-food programme went wrong.  The fourth report, issued in September, focused on malfeasance and maladministration by United Nations management and staff.  Earlier reports also concluded that the world body's procurement process was politicized and in some instances corrupt, and that the head of the programme, Benon Sevan, received payoffs.  Mr. Sevan resigned from the United Nations, but had denied wrongdoing.

    Secretary-General Kofi Annan had previously vowed that the United Nations would act vigorously to ensure there are no more "bad apples" in its procurement department, pledging that the corruption outlined by the Inquiry Committee "will not happen again".  He said that he would initiate other system-wide reforms in the wake of the Committee's findings.

    This afternoon, Mr. Volcker called for wide-ranging reform within the Organization, stressing that the oil-for-food programme had been "the mother of all United Nations humanitarian programmes"; one part had focused on providing relief aid and another aimed at maintaining sanctions and preventing Iraq from acquiring weapons of mass destruction.  Its measure of success had come at an intolerable cost, however, wounding global confidence in the integrity of the United Nations, he said.

    Other complex challenges were sure to crop up in the future, either alone or in combination with other events or emergencies, he said, warning that, "What is at stake is whether this Organization will be able to act effectively, whether it will have the funds, the competence and the administrative leadership to respond."

    Saying that the world would be a poorer, more dangerous place without an effective United Nations, Mr. Volcker called for a broad upgrade in the Organization's management discipline and professionalism.  Strong oversight, auditing and inspection functions should also be a priority.  Such things should not automatically fall to a Secretary-General, who was usually chosen for diplomatic and political skills and occupied by security issues.  There needed to be a strong chief operating officer, who can have the respect of general staff, as well as the Secretary-General and other top officials.  Such changes should be designed and put into effect by the General Assembly, he added.

    "There is an overwhelming common interest, a common interest in a strong, competent United Nations, an Organization that can in practice respond to the various challenges sure to arise that no country or group or countries has the capacity or legitimacy to deal with effectively", he said.

    Asked to distinguish between the activities of companies involved in the programme and United Nations administration reform, Mr. Volcker said that the connection between the two had become increasingly clear during the investigation.  As financial corruption became very widespread, and was imposed by Iraq in the form of surcharges, why was that not known and why was no action taken by the United Nations, he asked.  "Enough was known, or should have been known, that some type of action could have been taken from within the Organization against this.  Internal management needed to act, and they didn't -- so the two are intertwined", he said.

    Responding to other questions, Mr Volcker said that although the programme presented some unusual challenges, some of the weakness in administration seemed to reflect a systemic problem most evident in the United Nations auditing, inspecting, and oversight role.  Indeed, it seemed the "gatekeepers" did not have the necessary clout, independence or staffing. 

    He added that the report was quite critical of the Security Council's role.  Part of the problem with the programme was that the Council did not delegate the administration to the Secretariat in any clear way. Throughout the lifespan of the programme, the Secretariat appeared unclear in its responsibilities.  As a result, administration was clouded, decisions were not taken, and agreement was not reached on effective action even when symptoms of difficulty emerged. 

    Faced with a programme of this sort, the Security Council ought to "make up its mind" about what to do and sufficiently delegate authority to the Secretariat to get it done.  "If unable to do that, it raises a real question of whether the United Nations ought to get involved at all," he said.

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