July 16, 2005 in Nation/World

Investigators find problems with oil-for-food program

Nick Wadhams Associated Press

UNITED NATIONS – Investigators probing the U.N. oil-for-food program have found evidence of “gross mismanagement” and possible corruption by the U.N. agency that oversaw compensation for victims of Iraq’s 1990 invasion of Kuwait, Iraq’s deputy U.N. ambassador said Friday.

Investigators with the Independent Inquiry Committee had been investigating $5 billion in questionable expenditures by the U.N. Compensation Commission for months. It had denied any wrongdoing.

But Fesial al-Istrabadi told the Associated Press that the investigators believe some of the allegations were legitimate, particularly in how the commission handled currency exchange rates with the Iraqi dinar.

“There appear to have been some irregularities that are at the very least gross mismanagement at the level of currency exchange,” al-Istrabadi told the Associated Press.

The line of inquiry comes as the probe, led by former Federal Reserve Chairman Paul Volcker, examines whether several other United Nations agencies overcharged Iraq for their work under the oil-for-food program. The committee is considering whether the Iraqi government should be compensated.

Those agencies helped implement humanitarian operations in Iraq under oil-for-food, a $64 billion program created in 1996 to alleviate the suffering of ordinary Iraqis caused by U.N. sanctions imposed on Iraq after the Kuwait invasion. It was dismantled in 2003.

The executive director of the probe, Reid Morden, refused to confirm al-Istrabadi’s claim but said investigators had long wanted to scrutinize the U.N. Compensation Commission.

“It’s a program which so far has submitted itself to very little in the way of transparency,” Morden said.

The U.N. Compensation Commission, a subsidiary body of the U.N. Security Council, was founded in 1991, well before oil-for-food. U.N. audits released in January concluded that the commission overpaid various parties more than $5 billion, a claim the commission disputed.

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