September 09, 2005, 9:24 a.m.
Talking Their Way Out of the Scandal
United Nations talking points avoid taking responsibility.

AUTHOR'S NOTE: On September 7, Paul Volcker’s United Nations-authorized Independent Inquiry Committee delivered its main report on the corrupt Oil-for-Food program through which the U.N. from 1996-2003 supervised oil sales and relief purchases for Saddam Hussein’s U.N.-sanctioned Iraq. The Volcker committee found that as the years passed, the “successes” of the program “fell under an increasingly dark shadow” and “reports spread of waste, inefficiency and corruption, even within the United Nations itself.” Of that, noted the Volcker committee, “Some was rumor and exaggeration, but much — too much — has turned out to be true.”

Volcker’s report comes at a difficult time for the U.N., where other recent scandals have included two Russian U.N. officials — one of them the head of the U.N.’s own budget-oversight committee — indicted in a Manhattan federal court on bribery and money-laundering charges; sex scandals among U.N. peacekeepers in West Africa; financial misconduct by Ukrainian peacekeepers in Lebanon, and assorted other cases of alleged waste, fraud, and larceny, all overseen by a secretary-general who next week plans to host a combination 60th-anniversary party for the U.N. and a reform pow-wow attended by more than 170 heads of state.

The day Volcker released his report, Annan’s under-secretary general for communications, Shashi Tharoor prepared a set of talking points for U.N. officials having to contend with media questions. As it happens, his memo leaked. In the spirit of the newfound transparency the U.N. proposes to adopt, NRO is sharing it here. In the interest of even further transparency, I offer a few talking points of my own, interspersed in italics. — C.R.

Subject: GUIDANCE FROM USG THAROOR - IIC FINAL REPORT - 7

SEP 05

Dear Colleagues,

Intense media interest has accompanied the release of the Independent Inquiry Committee's final report on the oil-for-food scandal. While the UN's response is chiefly being handled by the Secretary-General's spokesman and other senior officials at Headquarters, attached please find the text of the Secretary-General's statement to the Security Council this morning as well as taking points that may be of use in response to media inquiries.

Individual agencies may also wish to correct any factual errors in the coverage, but the main story is focused on broader roles and responsibilities, including those of the Security Council, as well as UN management reform. Agencies which pursue an overly aggressive press strategy are likely to risk attracting more attention to their activities at a time when the primary media focus is elsewhere. As such, any contacts with the media should please be consistent with the overall message conveyed here of seeking to use the report's findings to give further impetus to UN reforming, particularly in the context of the upcoming
summit.

Thank you.

U.N. Agencies, if they make too much noise right now, risk calling attention to their misappropriation of at least $50 million in Oil-for-Food money earmarked to buy relief under the program for sick and hungry Iraqis, which the agencies took for their own already well-padded administrative budgets — and Volcker is recommending they give back.

TALKING POINTS

IIC FINAL REPORT

September, 2005

A TOUGH AND THOROUGH INVESTIGATION. Over the course of the last 16 months, the IIC has conducted an exhaustive inquiry into the oil-for-food programme both on the management and contracting sides. This comprehensive final report shines a bright light on both problems and successes. It follows three major interim reports as well as the review of more than 50 audits. Over 75 investigators, lawyers and forensic accountants conducted over 1,000 interviews across six continents, and more than 12 million pages of documents were collected. No stone was left unturned. As Mr. Volcker himself said, few organizations have been willing to subject themselves to this level of scrutiny.

Who said the U.N. was willing to subject itself to scrutiny? Despite public reports of gross corruption for years while Oil-for-Food was underway, Annan refused to authorize an investigation until April, 2004 — five months after the program came to an end, and a full year after the overthrow of Saddam. Even then, it was only after Congress threatened to hold hearings, following press reports implicating the head of the program in graft, and the son of Annan in U.N.-related business, that Annan finally conceded the need for an “independent inquiry.”

And while maybe no stone was left unturned, a lot of questions remain unanswered, including some that involve documents shredded by Annan’s former chief of staff, Iqbal Riza, as well as memory lapses of both Kofi Annan’s special adviser Maurice Strong and Annan himself.

During Oil-for-Food, the U.N. refused to answer vital questions from the press on grounds that much of the information was “confidential.” When the program ended, Annan stonewalled questions from the press on grounds that “As far as I know, nobody in the Secretariat has committed any wrong-doing.” Once the Volker inquiry began, the U.N. refused to answer questions from the press on grounds that the investigation was “ongoing.” And the day after Volcker delivered his report, when correspondents at the U.N.’s Sept. 8 noon press briefing figured the U.N. would finally answer questions about it, the secretary-general’s spokesman Stephane Dujarric refused, on grounds that the “definitive” report has been delivered and “we’re not going back into details of that investigation.”

IT IS TIME TO FOCUS ON THE IMPORTANT REFORM AGENDA. The Inquiry’s findings underscore the vital importance of proposed management reforms. For his part, the Secretary-General has taken action where he can. His proposals for further improvements are now being negotiated ahead of next week’s summit. Next week’s summit gives world leaders a golden opportunity to strengthen the UN so that it can best rise to the inevitable challenges that the future holds.

At the moment, the secretary-general’s inevitable challenge centers chiefly on brassing out this scandal long enough to hang onto his job. He is doing this regardless of the cost to the U.N., and despite his record of dereliction, incompetence, and odd obliviousness to, if not conscious tolerance of, massive graft, waste, and corruption evident even to many outside the organization. Annan would have us believe he never noticed his son’s abuse of U.N. perquisites for everything from lobbying for business to shipping a Mercedes to Ghana. He failed abysmally to ensure honest management or even adequate auditing of Oil-for-Food, the biggest relief program the U.N. has ever undertaken. And U.N. staff members are now receiving instructions to tout the virtues of Annan as a leader of reform.

UN WAS FULLY COOPERATIVE. As the Secretary-General pledged when he commissioned the IIC, the UN has cooperated fully with the investigation, providing unrestricted access to all relevant UN records and information as well as officials and personnel, regardless of seniority.

Vanished down the U.N. memory hole is the shredding of U.N. documents last year by Annan’s former chief of staff Iqbal Riza, after the Volcker committee had ordered them preserved. The shredded documents covered the same period, 1997-1999, in which Annan appointed Benon Sevan to head Oil-for-Food, Sevan began taking bribes from Saddam, Kofi Annan repeatedly petitioned the Security Council to greatly expand the program, and Kojo Annan worked for a company that on Dec. 31, 1998, won a U.N. contract to inspect Oil-for-Food imports into Iraq.

UN HAS ACTED IMMEDIATELY ON PAST FINDINGS. The Secretary-General has made good on his promise to take disciplinary action against those found to have committed wrongdoing. The UN cooperated with US government criminal inquiries and when former UN procurement official Alexander Yakovlev was indicted, the Secretary-General immediately waived his diplomatic immunity. The Secretary-General is also prepared to lift the diplomatic immunity of Benon Sevan, the former head of the oil-for-food programme, in response to any properly supported request from an appropriate law enforcement authority. Another official, Joseph Stephanides, was dismissed by the Secretary-General after the IIC found he had acted improperly in influencing a decision on contracting.

O.K., but Yakovlev, who worked in procurement, not Oil-for-Food, ran his schemes for years, and got nabbed by the feds only after a media report, not a U.N. inquiry, outed details leading to his secret offshore bank account. All things considered, it would have looked bad even by U.N. standards for Annan to defend Yakovlev’s immunity, especially after he had already resigned. Sevan was given enough warning to cash out his U.N. pension and make his getaway to Cyprus, which has no extradition treaty with the U.S.

So, with both Annan and his deputy secretary-general, Louise Frechette, hanging onto their jobs, the only U.N. employee actually penalized so far over the multibillion dollar Oil-for-Food scandal is Joseph Stephanides — who had a far lesser role in the program, wasn’t accused of taking money and is now appealing Annan’s decision to fire him.

IIC REFORMS ADOPTED. The Secretary-General has already taken measures not requiring General Assembly approval that are in line with the IIC recommendations aimed at correcting management lapses. These include:

*Announcing the creation of his own internal oversight committee to follow-up on audit recommendations.

*Proposing that the General Assembly establish a totally independent Oversight Advisory Committee which would guarantee the operational independence of the Office for Internal Oversight Services.

*Committing to a proactive approach to oversight of large donor-funded humanitarian aid programmes, including enhanced standards of documentation, financial controls, oversight and reporting.

*Enhancing the UN procurement system to make it more transparent and accountable by full disclosure of details of all contracts on the Internet.

*Commissioning an internal investigation and thorough, external review of UN procurement with a view to strengthening supervision and controls over individual procurement officers.

*A host of internal management improvements such as stronger protection for whistleblowers, greater disclosure of potential conflicts of interest and mandatory ethics training are nearing completion.

The one promising note in here is the word “transparent.” That would be more reassuring had U.N. officials not been insisting this spring that the procurement department was already transparent (which it was not) as well as clean (which was the U.N. talking point just before the bribery scandal broke, leading to the two recent indictments of Russian U.N. officials). The U.N. has run through most of these reforms before, establishing the Office of Internal Oversight Services in 1994, engaging in sweeping” reform” under Annan when he took charge in 1997; reforming again under Annan in 2002, and announcing last year a whole new set of protections for whistleblower — a species so endangered at the U.N. that they evidently need stronger protection every year.

OFFP ACHIEVED ITS PURPOSE. The inquiry makes clear that the UN achieved much of OFFP’s mission to provide humanitarian aid to the Iraqi people living under sanctions. The inquiry found that a variety of UN agencies delivered much-needed relief aid, cutting malnutrition rates and preventing the outbreak of disease.

Hey, give anyone $39 billion (or $46 billion or $64 billion or $67 billion, depending on whether you count relief contracts approved, total oil revenues, or oil-revenues plus bank interest), and you can probably get goods delivered. Just don’t let anyone ask about the cost, in terms of fortifying Saddam’s totalitarian regime, filling his secret bank accounts, funding his traffic in arms — conventional, perhaps, but still deadly, and — oh, yes — corrupting the U.N.’s own Secretariat and Security Council. Also, don’t invite anyone to look too closely at those relief numbers, which according to the Volcker committee’s own expert study were based on inconclusive, incomplete data, widely at odds with even less reliable, earlier U.N. figures.

RESPONSIBILITY FOR MANAGEMENT INCLUDES THE UN SECURITY COUNCIL. The IIC found that roles and responsibilities between this Council, the 661 Committee and the Secretariat were unclear. The Council retained substantial elements of operational control within the 661 committee, composed of national diplomats working under highly politicized instructions from their home governments, yet willing to take decisions only when there was unanimous consent among its fifteen members.

The fat budget for oversight belonged to Annan’s Secretariat, not the Security Council. Over the life of the program, the Secretariat got 2.2 percent of Saddam’s oil revenues, amounting to $1.4 billion, to administer Oil-for-Food. The only point of entrusting the Secretariat with this whopping amount of money was to ensure the integrity of Saddam’s commerce and the equitable distribution of goods to the Iraqi people. Oops.

WHOLESALE CORRUPTION WITHIN OFFP TOOK PLACE AMONG PRIVATE COMPANIES WHILE SMUGGLING PROVIDED MOST REVENUE. One of the most important findings of the IIC report is that illegal oil smuggling between Iraq and its neighbors was a major source of revenue for the Hussein regime during OFFP. Of the $12.8 billion earned illegally, more than 90 per cent — nearly $11 billion — was derived from smuggling and illicit border trade. Responsibility for monitoring the smuggling fell to a multinational force — not the UN.

It was Annan whose Secretariat hired the inspectors to monitor oil sold by Iraq, and who urged the Security Council repeatedly, at length, and in detail, to let Saddam use some of the Oil-for-Food relief money to import billions worth of oil parts. That series of events allowed the big increase in Iraqi oil output that enabled the vast rise in smuggling that accompanied the Oil-for-Food program. Like many others, Annan knew about the smuggling at the time, but in his special capacity as top official at the U.N., he failed to speak up. Now he is urging his staff to “step out boldly” while he promises “to do whatever I can to ensure that in the future we all have the highest expectations of each other, and that we actually meet them.” Fascinating; but if Annan’s reform is all about living up to high expectations, then why is his staff getting instructions to deflect, divert, forget, fudge, stonewall, and if all else fails, blame somebody else?

— Claudia Rosett is a journalist in residence at the Foundation for the Defense of Democracies.