Oil-for-food rife with corruption, insiders say

UNITED NATIONS – Half the 4,500 companies that took part in the U.N. oil-for-food program in Iraq paid kickbacks or illegal surcharges and are being given a chance to respond to the accusations, two top investigators told the Associated Press.

The U.N.-backed probe is expected to release a major report in early September on the $64 billion operation and a final report in October on the companies involved in the purchase of Iraqi oil or sale of humanitarian goods under the program, the investigators said.

“We will report on the management and the corruption,” former U.S. Federal Reserve chairman Paul Volcker, who heads the investigation, said in an interview Monday. “We will talk about the benefits and the shortfall.”

The oil-for-food program, launched in December 1996 to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam Hussein’s 1990 invasion of Kuwait, was one of the largest humanitarian programs in history. By most accounts, it achieved what it set out to do, becoming a lifeline for 90 percent of the country’s population of 26 million.

Under the program, Saddam’s regime could sell oil, provided the proceeds went primarily to buy humanitarian goods or pay war reparations. Saddam allegedly sought to curry favor with former government officials, activists, journalists and others by giving them vouchers for Iraqi oil that could then be resold at a profit.

Volcker said “the definitive list” of more than 4,500 private contractors involved in the program will include for the first time the entities behind so-called front companies.

“It will provide information of known or alleged beneficiaries of oil allocations or purchase contracts, and it will report the apparent payment of illicit surcharges on oil contracts and kickbacks on humanitarian contracts,” Volcker told a news conference Monday.

Richard Goldstone, a former Yugoslav war crimes prosecutor and a member of Volcker’s Independent Inquiry Committee, said afterward that many contracts were accompanied by side letters containing “evidence of kickbacks.”