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Weapons of Mass Destruction (WMD)


Oil-for-Food Final Report Names Powerful Individuals in Corruption Scandal

27 October 2005

The committee investigating the U.N. Oil-for-Food program has released its final report, placing responsibility on the United Nations and the Security Council for overlooking massive schemes that allowed Saddam Hussein's regime to collect almost $2 billion in kickbacks and illicit surcharges.

The investigators also named major international corporations and individuals well-known in circles of power.

The highly critical report is not only embarrassing to the United Nations organization, but to nations and individuals that the committee says were perceived to favor the lifting of sanctions against Iraq after the 1991 Gulf War.

The findings touch on differences among the veto-wielding permanent members of the Security Council on the issue of sanctions. Companies from Britain and the United States, which opposed lifting sanctions, were denied contracts, along with Japan. Preferential treatment was given to China, France and Russia because they were viewed as nations that favored lifting sanctions.

Committee Chairman Paul Volcker, a former head of the U.S. central back, says investigators found an overriding theme of politicization of the process. "It is also true as our earlier reports have emphasized that political differences and pressures within the United Nations organization itself, the Security Council, the Secretariat itself and some U.N. agencies, frustrated appropriate and effective response to the manipulation and corruption of the program," he said.

According to the report, Jean-Bernard Merimee, France's U.N. ambassador from 1991-1995, "began receiving oil allocations that would ultimately total approximately six billion barrels from the government of Iraq," for which he allegedly received more than 165-thousand dollars in commissions. Mr. Merimee also served as a special adviser to Secretary-General Kofi Annan on European issues until 2002.

UN spokesperson Stephane Dujarric stressed that when Mr. Merimee was working with the secretary-general he had nothing to do with the oil-for-food program. "The secretary-general was very shocked at this finding and disappointed that Mr. Merimee took money and admitted to taking this money. But I would stress that Mr. Merimee's temporary employ here, as a U.N. special adviser, had nothing to do with the Iraq file," he said.

Mr. Merimee is currently being investigated by French authorities, as is a former top French foreign ministry official, Serge Boidevaix.

The National Bank of France, BNP, comes under criticism in the report for not fully disclosing firsthand knowledge about the financial relationship that fostered the payment of illegal surcharges.

Russian oil giant Gazprom and Lukoil Asia Pacific are also named. The report alleges that the head of Russia's liberal party, Vladimir Zhirinovsky, received millions of barrels of oil that he could sell at a profit. Another prominent Russian included in the report is Alexander Voloshin, a former chief of staff to Russia's president.

The report also names Italian politician Roberto Formogoni, and a priest, the Reverend Jean-Marie Benjamin, who once worked as an assistant to the Vatican secretary of state and became an activist for lifting Iraqi sanctions.

But the charges were not limited to nationals of countries opposing the sanctions. The report also names British member of parliament George Galloway, who denies charges that he profited from oil allocations. He has been questioned on his role by the U.S. Congress.

Two Texas-based companies, Bayoil and Coastal Corporation, are named. The founder of Coastal, tycoon Oscar Wyatt, was arrested last week, on charges that he conspired to pay several millions dollars in illegal kickbacks to the Iraqi regime to win contracts through the program. He pleaded not guilty to the charges in a New York court Thursday. The report refers to Mr. Wyatt as a "long time and loyal customer of Iraq." The owner of Bayoil, David Chalmers, was arrested in April.

U.S. fugitive financier Marc Rich was also named.

South Korea's Daewoo International, the Belgium-based Volvo Construction, which is not related to the Volvo auto company, and German industrial giants Siemens and Daimler Chrysler are among those alleged to have paid illegal surcharges in return for contracts.

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