Oil-For-Food: Facts

109th Congress, S. Res. 291 & H. Res. 1092
“United Nations Oil-for-Food Accountability Act of 2005”

Senator Ensign (R-NV) and ten cosponsors introduced a bill in February 2005 (S. Res. 291) placing conditions on the U.S. payment of UN dues, and Congressman Flake (R-AZ) and 58 House colleagues introduced a nearly identical bill in March. The bills stipulate that full funding to the UN would be contingent upon the President’s certification of the UN’s “cooperation” with investigations into the Oil-for-Food Program. Several of the bills’ findings are inaccurate or misleading, and their demand for direct access to UN documents circumvents established procedures for requesting documents through the U.S. State Department.

1. “The United Nations received 2.2 percent of the proceeds of the sale of the oil exported from Iraq under the oil-for-food program, approximately $1,400,000,000, to fund the programs administrative and operational costs.”

The UN spent significantly less than the $1.4 billion allocated to it for the administration of OFFP. In fact, $372 million or 27% were transferred to the humanitarian account to directly benefit the Iraqi people. UN procedures obliged the Office of the Iraq Program to submit detailed semi-annual and annual needs-based budgets, which were always significantly below the amount of funds available.

Although some quarters have derided the UN for taking “commissions” on Iraqi oil, the Volcker Commission interim report states that the 2.2 per cent account “was not treated by the United Nations as a commission, either by design or practice, but rather as a necessary pool of funds dedicated to covering the significant administrative expenses associated with the Programme.”

2. “The Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs of the Senate estimates that during the period from 1991 through 2002, the former Iraqi regime received $21,300,000,000 in illegal revenues from the oil-for-food program, including $13,600,000,000 received from oil smuggled out of Iraq, $4,400,000,000 received from kickbacks on humanitarian goods, and $644,000,000 received from surcharges on oil purchases and investment of illicit revenues.”

Estimates of illicit Iraqi revenue vary widely, from the Government Accountability Office’s (GAO) figure of $10.1 billion to the Permanent Subcommittee on Investigation’s (PSI) $21.3 billion figure. While the $21.3 billion figure can be disputed, it is also misleading to say that it encompasses “illegal revenues from the oil-for-food program.” According to the Volcker Commission, “the major source of external financial resources to the Iraqi Regime resulted from sanctions violations outside the Programme’s framework. These illicit sales, usually referred to as ‘smuggling,’ began years before the Programme started.” 29% of the $13.6 billion in oil smuggling revenue was obtained prior to the creation of OFFP in 1996.

Of the $21.3 billion quoted by PSI, only $7.5 billion can truly be said to have been obtained from OFFP, and the Volcker Commission estimates that this figure is probably inflated by about $2.5 billion, because it overestimates the profit obtained through oil surcharges and kickbacks on humanitarian purchases.

3. One of the bill’s findings states:
“Any illicit activity by United Nations officials, personnel, agents, or contractors, including entities that have entered into contracts under the oil-for-food program, is unacceptable and must be thoroughly investigated.”

The bill reiterates this point, saying that payment of dues to the UN should be contingent on the President’s certification that:
“the United Nations has waived any immunity enjoyed by any United Nations official from the judicial process in the United States for any civil or criminal acts or omissions under United States Federal or State law in connection with the oil-for-food program”

From the outset, when the Independent Inquiry Committee began its work, Secretary-General Kofi Annan announced that disciplinary measures would be taken against any UN staff implicated in wrongdoing as part of the Oil-for-Food Program. When the Volcker Commission released its first interim report on February 3, 2005, the Secretary-General immediately announced the initiation of disciplinary proceedings against the two UN staff members named in the report. He also pledged to lift the diplomatic immunity of any staff members who are the subject of criminal charges resulting from the Inquiry’s findings. The UN has urged contractors who worked for the Oil-for-Food Program to cooperate with subpoenas from other investigations and they are doing so. For example, the three major contractors employed under the program, Banque Nationale de Paris, Cotecna, and Saybolt, have all provided testimony before congressional committees.

4. “[The IIC] inquiry is led by Mr. Paul Volcker and the investigators carrying out the inquiry do not have subpoena powers.”

Mr. Volcker has made it clear that he doesn’t find the lack of subpoena power to be an obstacle. To quote from the IIC website: “Mr. Volcker explained that concerns about the Committee’s lack of subpoena power are exaggerated. It would be nice to have subpoena power, but it is not clear how much it hurts not to have it; it is certainly not crippling. The Committee is conducting an international investigation, and most companies involved are not US companies, therefore the lack of subpoena power is not critical. There is a UN Security Council resolution calling on all Member States to cooperate, and that is important. More important is that the public is watching and non-cooperation will get the attention and the pressure implicit in public scrutiny. Finally, some local law enforcement with subpoena power have agreed to cooperate with the Committee and they have subpoena power.”

5. The bill would require the UN to report directly to Congress, the GAO, and U.S. law enforcement authorities as a condition of the full payment of U.S. dues to the UN, in circumvention of established lines of communication between the U.S. and the UN via the U.S. State Department. The bill proposes the following conditions:
“the United Nations has in effect procedures that provide the Government Accountability Office access to all documents relating to the oil-for-food program so that the Comptroller General of the United States may perform nationally mandated reviews of United Nations operations;

“the United Nations Secretary General has formally confirmed that the United Nations will not assert the inviolability of United Nations papers and internal records that concern the oil-for-food program or a sanction imposed on Iraq related to the oil-for-food program;

“the United Nations has authorized the release, upon request, to the law enforcement authorities of any member state of the United Nations authentic copies of any document, including any document in the custody of a person that was engaged on a contract basis to provide goods or services to the United Nations, that in the judgment of the requesting authority directly or indirectly concerns the oil-for-food program or a sanction imposed on Iraq related to the oil-for-food program.”

Paul Volcker, Chairman of the Independent Inquiry Committee, has pledged to share all documents with other investigations once the inquiry has determined that the release of information will not jeopardize his investigation’s integrity. For example, on January 9, 2005, the IIC released all UN internal audits related to OFFP since it had completed its analysis of these documents. The Committee released an interim report on February 3, 2005, but the investigation is on-going and a final report is not expected until the mid to late summer of 2005.

There have also been developments related to UN procedures for releasing documents that were previously unavailable to Member States of the UN. In late December 2004, the General Assembly passed a resolution introduced by the U.S. Mission to the UN that said all UN internal audits must be released to a Member State’s government upon request. In his testimony before the House International Relations Subcommittee on Oversight and Investigations on March 2, 2005, Patrick Kennedy, U.S. Ambassador to the United Nations for Management and Reform said of this resolution, “Transparency has now been written into UN code.”

The Volcker Commission report addressed the issue of granting law enforcement authorities access to UN documents as follows: “Law enforcement authorities in one country have no power to subpoena witnesses or records of international institutions or compel testimony in another country, and international requests for information, even expedited, routinely take months, if not years. With an international investigation involving allegations of illicit or corrupt activity in multiple countries, the subpoena power of a single jurisdiction, while potentially useful in certain circumstances, has limited impact across the breadth of a transnational inquiry.”

Both Ambassador Kennedy and Congressman Tom Lantos caution against the withholding of dues as a means of forcing the UN’s compliance with U.S. wishes. At the March 2nd hearing, Ambassador Kennedy said that Congress and the U.S. Mission to the UN should work together and not at cross-purposes to achieve their objectives at the UN. “I need to be able to say that my legislature is very interested in improvements, but … when I’m negotiating improvements, the sanction of withholding [U.S. dues to the UN] is too blunt, because it’s not targeted enough… If I’m withholding [dues] then it doesn’t achieve our joint goals of improving UN operations and improving the ability of the United Nations to serve as a tool that assists us in achieving our national security goals.” In a separate House Committee on International Relations on March 15, 2005, Congressman Lantos expressed a similar sentiment, saying, “Refusing to pay our dues in order to force reform violates our international obligations and may also be counter-productive.”