Saturday, August 18, 2018

Kofi Annan -An Honest Statesman hounded by Rogues!

Ian Williams has covered the United Nations since 1989.

And is the author of UNTold, the real story of the UN in Peace and War.

The True UN Scandal
Who Pocketed the $10 Billion for Iraq?
 World Policy Journal 2006/7

Ian Williams

In December 2006, Kofi Annan finished
his two-term tenure as secretary general of
the United Nations. Among his greatest
achievements was undoubtedly shepherding
the principle of "The Responsibility to Protect"
through to adoption by the Heads of
State Summit in the General Assembly in
September 2005. By beginning to put some
teeth in the Universal Declaration of Human
Rights and overturning the traditional
concept of absolute national sovereignty,
this prefigured a huge change in international
law, even if, as the ongoing conflict in
Darfur demonstrates, its implementation
leaves much to be desired.

Sadly, however, in the United States
at least, many commentators tied Annan's
name to the alleged "Oil for Food" (OFF)
scandal. It is perhaps timely to take a retrospective
look at this, not least since the
miasma it raised at the time still lingers
around both him and the organization.
Perhaps no molehill has ever been made
into such a mighty mountain.

Following attacks by the conservative
UN-hating media in the United States, and
to a lesser extent in the United Kingdom,
Secretary General Kofi Annan convened an
Independent Inquiry Committee into the
OFF program to be headed by the former
Federal Reserve chair, Paul Volcker. His
committee had unprecedented access to documents,
emails, and phone and financial
records across the world. Annan's act was
not that of a man who had anything to hide.

In October 2005, and with the investigation
costing almost $50 million dollars,
the report1 came out, and in summer 2006

it was followed with a prÈcis "Good Intentions
Corrupted: The Oil for Food Scandal
and the threat to the UN."2 Paul Volcker
wrote the introduction but two of the investigators,
Jeffrey A. Meyer and Mark G.
Califano, authored the content. In contrast
to the enthusiastic coverage from the conservative
media about the so-called scandal,
the report did not garner much media
attention, perhaps because, in general, it
exonerated the United Nations from the
hyperbolic accusations made against it. Its
conclusions are relatively sober, unexceptional,
and essentially repeat those of many
previous reports on the failings of UN

The book recounts examples of the five
ambassadors holding permanent seats on
the Security Council bypassing UN procurement
procedures, and of U.S. naval cover
occasionally being provided for oil smuggling
operations, which, in total, amounted
to $8.4 billion of revenue for Iraq in defiance
of sanctions. It notes the general apathy
of Security Council members to reports
of smuggling, kickbacks, and surcharges,
which netted the regime another $1.8 billion.
It also points out that the Security
Council gave the UN Secretariat and the

Oil for Food program the mandate and
framework that made it possible for Iraq-
and many companies and governments-to
manipulate the program.

In the precis to the report, Volcker
writes, "I did not, and do not today, believe
that the evidence developed by the committee
justifies a sweeping allegation that
financial corruption is or was characteristic

© 2007 World Policy Institute

of the institution as a whole. Rather...there
is a culture of inaction,' of a strong tendency
to evade administrative responsibility.
That culture is rooted both in the character
of the UN organization and in broadly political

It is, however, that political context that
is mostly missing from "Good Intentions
Corrupted," just as it was from the Volcker
report. There were good reasons why the
Iraq program was not robust in its enforcement
of sanctions, no matter how much
shock the report expresses about inattention
to such details. It is unlikely that the Security
Council, cognizant of the hardship that
Iraqi sanctions caused,will ever again agree
to impose such comprehensive and draconian
economic sanctions. Indeed, another
lesson from the affair may be that, in a
globalized world, any attempt to micromanage
the foreign trade of an entire country's
economy is not only futile, but risks
disastrous socio-economic consequences.
Since, the Security Council has limited
subsequent sanctions to rogue regimes or
against strictly military trade.

The Background to OFF

In a vindictive mood at the end of the
original Gulf War in 1991, the Americans,
with British and (at the time) French support,
instituted a crushing package of economic
sanctions, reparations, and monitoring
against Iraq. Not since Versailles had
victors imposed such measures on the defeated.
The sanctions did not have a "sunset
clause." A positive vote of the Security
Council was necessary to lift them. It was
only possible because, at that immediate
juncture, the Soviet Union, and then Russia,
cooperated. Later, other members asked for
"light at the end of the tunnel"-a demonstration
that Iraqi compliance with Security
Council resolutions would lead to lifting
the sanctions-but the United States
made it plain that it would veto any such
attempt while Saddam Hussein remained
in power.

The original sin was the rush of enthusiasm
in the aftermath of the Gulf War and
the Cold War, when the UN looked likely
to become the executor of Washington's foreign
policy. A more independent secretariat
might have warned of the pitfalls of the policy
the Security Council adopted, although,
to be fair, at the time few foresaw that sanctions
would still be in effect a decade later.

As the economy imploded and public
services collapsed, it soon became apparent
that the sanctions' primary victims were
ordinary Iraqis. Indeed, Secretary of State
Madeleine Albright ruminated on CBS's 60
Minutes in 1996: "We have heard that a half
million children have died. I mean, that's
more children than died in Hiroshima.... Is
the price worth it?... I think this is a very
hard choice, but the price-we think the
price is worth it." She has since regretted
the statement, but at least it had the benefit
of candor. Clearly, Washington did think
that the political and strategic benefits outweighed
the costs paid by Iraqi civilians,
otherwise it could have relaxed the sanctions.

Sadly, it was the United Nations that
tallied those casualty figures, though staff
members saw their job as developing
economies, not destroying them; saving
children, not starving them. They tended to
see the sanctions as an American-enforced
aberration from the true mission of the UN
system. High-profile officials-such as Assistant
Secretary General Denis Halliday, in
September 1998, and Hans Von Sponeck, in
March 2000-resigned in protest against
complicity in what Halliday called genocide.
It did not help that the resolutions
earmarked 30 percent of the proceeds of oil
sales to war reparations, which went mostly
to Kuwait and major oil companies and
which provided an additional pretext for
Baghdad's defiance.

Without firm opposition within the
United Nations, for a few years during and
after the Gulf War, Washington and its junior
partner in London promulgated instruc-
tions inside the UN as if it were an extension
of their own foreign policy apparatus.
It was a brave staff member who resisted
their wishes-as indeed Egypt's Boutros
Boutros-Ghali himself discovered when his
term as secretary general was not renewed,
in part because he was insufficiently cooperative
with Madeleine Albright.

In the Arab and Muslim world, and
even in Western Europe, the palpable suffering
of Iraqi citizens eroded support for sanctions
and diminished the moral standing of
the world organization. The stark contrast
between the relentless application of pressure
on Iraq, and the free diplomatic pass
given to Israel in enforcing compliance with
Security Council resolutions, also exacerbated
disaffection. While legally significant,
the contrast between resolutions censuring
Iraq, which contained their own means of
enforcement, and those against Israel, which
did not, merely reinforced the perceived disparity.
Even Saddam Hussein's cavalier disregard
for, and defiance of, UN disarmament
resolutions found defenders in the
face of Washington's relentless antipathy.
As the sanctions wore on and American officials
began to call for regime change, UN
members chafed at what seemed a blatant
attempt to flout the bedrock principle of
national sovereignty. (No UN resolutions
ever mentioned overthrowing Saddam-
indeed George H. W. Bush had deliberately
avoided that option at the end of Operation
Desert Storm in order to preserve the international
coalition.) Clearly, if the sanctions
had needed a reauthorization vote-as
peacekeeping operations do-it is unlikely
there would have been a Security Council
majority to re-impose them, apart from the
potential veto that the Russians, Chinese,
and later the French might have wielded.

Besides the moral considerations, Iraq
represented potential oil concessions and
trade with Russia, China, and France. By
1997, sanctions were losing support and
were about to crumble completely. For the
majority of the council, and for much of the
secretariat, since the U.S. veto was an insuperable
obstacle to lifting sanctions, the Oil
for Food program was seen primarily as a
way to mitigate the effect of the sanctions
on ordinary Iraqis by providing food supplies.
In contrast, for Washington, whose
basic assumptions the Volcker report reflects,
the purpose of the Oil for Food program
(to which it reluctantly agreed) was to
maintain sanctions in the face of growing
worldwide reluctance to cooperate.

Smuggling Condoned

Though a hostile conservative press has accused
the Oil for Food program of providing
billions of dollars to the Iraqi regime, most
of the smuggling was already under way before
the program was established. This was
known to Western intelligence services and
the media-or indeed anyone who wanted
to know. The Americans and the British
kept sending mixed messages-not officially
condoning, but never overtly condemning
Iraq's oil trade with Western allies. Under
Article 50 of the charter, Iraq's neighbors,
like Turkey and Jordan, were entitled to
compensation for costs they incurred in
maintaining sanctions. However, no one really
wanted to pay up, least of all a U.S. administration
that had for years found it difficult
to obtain congressional approval of
UN dues. So from the outset there was massive
oil-trading, referred to as "smuggling"
in the press and committee reports, across
the borders to Jordan and Turkey, which the
Volcker report confirms was well established
by the time Oil for Food had begun.

The American-allied Kurds in the north
siphoned a significant percentage from oil
sales to Turkey that passed through their
territory, and the Jordanian economy would
have collapsed without the oil trade across
the border-for which Amman did ask permission
of the Sanctions Committee, which
"noted" the request without delivering
an opinion. It was the diplomatic equivalent
of a wink and a nudge. The Western
powers only began to be irritated about the
"smuggling" in 1997, when Damascus negotiated
a rapprochement with Iraq and later
re-opened the Syrian pipeline. The flurry
of indignation from the British and others
was hard to sustain, as they could not explain
why this was in any way more censorious
than the leakage to Turkey and Jordan.

The Matter of Sovereignty

Anomalously, Iraq was formally a sovereign
member state of the UN even as it was being
treated as a defeated nation. For example,
to respect the letter of international law,
the UN applied for Iraqi visas for its personnel
in the Kurdish areas where Baghdad had
no practical authority whatsoever, and allowed
the regime to veto personnel.

The United Nations Special Commission,
the nominally UN weapons inspectors
team, had proven to be an extension of U.S.
intelligence, which played directly to Iraqi
Ba'athists' paranoia. The Iraqis did not want
a fresh team of weapons inspectors using the
cover of the Oil for Food program serving
on behalf of a state threatening military
action against them. When the Security
Council agreed to the Oil for Food program
after initial American resistance, Saddam's
regime showed that it could be equally opportunistic
in its feigned principles, and
initially cited national honor in resisting

To get the food to the population, UN
officials-who cared more about the Iraqi
citizenry than either Baghdad or Washington-
in effect had to compromise with the
Ba'athists' pretenses about "national honor"
to get the program running. As a result,
while the United Nations managed the escrow
fund into which all oil sale revenue
went, and which paid for the food, the program
had no say about which companies or
countries Baghdad chose to sell oil to, or to
buy food and supplies from.

Unsurprisingly, given hostility in Washington
and London, Baghdad did not award
many contracts to American or British companies,
and used commerce to reward and

influence countries like France, Russia, and
China, whose votes they coveted in the Security
Council. It would be naÔve to assume
that those contracts had no influence in determining
their votes. Certainly France's position
changed considerably over this period.
At least Baghdad's ill will towards Washington
had the effect of sparing most American
companies from the temptation to join
in the kickback scheme.

Taking all this into account, while the
Volcker report spreads the blame among
the member states, the Security Council,
and the secretariat for the program's failure
to enforce sanctions on Iraq, it misses the
point in reprimanding the UN staff. To
many, and very possibly a majority, while
the Iraqi sanctions may have been legal under
the UN Charter-they were illegitimate,
and arguably immoral. Hence the
contrast in outlook between the United
States, as reflected in the Volcker committee's
report, and much of the world. For
most of the UN staff, the OFF program was
about feeding Iraqis. For Washington it was
about starving the regime of funds for rearmament.
It needs reiteration that in both
contexts it was hugely successful. By the
end, the program was providing essential
food and medical supplies for over 80 percent
of the Iraqi population, and, as was
subsequently proved by both Hans Blix's
UN Monitoring Verification and Inspection
Commission inspectors and their American
successors, it was also successful in stopping
Iraqi rearmament.

Indeed, it was so successful that the
U.S. occupation authorities asked the UN
to continue the program after the 2003 invasion
and then praised its performance
after it ended. A surplus of more than $10
billion dollars was handed over to the Occupation's
"Iraq Development Fund" to be disbursed
under the scrutiny of an international
monitoring board. Such was the context
when Kofi Annan asked Paul Volcker to
establish and head the Independent Inquiry
Committee. Yet surprisingly, the committee
did not take into account the very political
circumstances of its own creation.

How Success Turned to Scandal

Within a year of the Iraq invasion, the anti-
UN media in the United States began to
trumpet the "UN Oil for Food Scandal,"
which was, according to the neo-conservative
columnist Charles Krauthammer, "the
biggest financial scandal in the history of
the world." Some of the wilder pundits
claimed it involved the mismanagement of
"hundreds of billions of dollars." The real
target of the attacks was the United Nations
itself, and, especially, the reputation of the
secretary general. When, in December
2004, Republican senator Norm Coleman
of Minnesota called for Kofi Annan's resignation,
the Minneapolis Star-Tribune provided
a succinct explanation of what lay
behind the attacks. Describing Coleman's
call as a "sordid move," a December 4,
2004, editorial explained, "For months before
the election, the right-wing constellation
of blogs and talk radio was alive with
incendiary rhetoric about Annan and the
oil-for-food scandal.... This is really all
about Annan's refusal to toe the Bush line
on Iraq and the administration's generally
unilateral approach to foreign affairs. The
right-wingers hate Annan and saw in the
food-for-oil program a possible chink in his
armor. They went after it with a venomous

The story of how Oil for Food mushroomed
into a UN scandal begins with
Claudia Rosett, a former Wall Street Journal
writer who is now journalist-in-residence at
the Foundation for the Defense of Democracies.
In a 2002 New York Times op-ed, just
after Bush went to the UN to seek authorization
for an invasion of Iraq, she called the
Oil for Food program "an invitation to kickbacks,
political back-scratching and smuggling
done under cover of relief operations....
If the oil-for-food operation is extended,
however, it will have a tremendous
influence on shaping the new Iraq. Before
that is allowed to happen, let's see the

The idea that the UN had failed by not
backing the U.S. invasion of Iraq, and that
Saddam Hussein's continued malfeasance
could be blamed on the UN, was very much
part of the house philosophy of the Foundation
for the Defense of Democracies. Its
board included such GOP eminences as Steve
Forbes, Jack Kemp, Jeane Kirkpatrick,
Frank Lautenberg, Newt Gingrich, and
James Woolsey, as well as Richard Perle
and Charles Krauthammer. Its own website
advertised its connections with the Iraqi
National Council and Ahmed Chalabi, its
leader-in-exile. Chalabi's position was crucial.
He disliked, in particular, Annan's
special representative, Lakhdar Brahimi,
who was assembling an interim government
in Baghdad and had correctly assessed the
lack of indigenous support for Chalabi
in Iraq. At one point, Chalabi had called
the secretary general's office in New York
to pressure Annan to appoint him to a position
commensurate with his self-perceived
importance. When Annan's office resisted,
Chalabi and his team carried out their
threat to propagate the claim that Benon
Sevan, the retiring Oil for Food chief, was
on a list of 267 people for whom Saddam
Hussein had authorized commissions on
oil trades. This claim provoked a rash
of stories focusing on the alleged UN

With so much smoke, the media
seemed to assume that there had to be a
fire. Interestingly, these stories were mostly
in the op-ed pages. The Wall Street Journal
news section undertook some sterling investigative
work that did not point at corruption
in the UN, but rather at collaboration
between private companies and member
states in providing revenue for Baghdad.

In March 2004, Annan, backed by the
Security Council, appointed former Federal
Reserve bank chair Paul Volcker to head
an inquiry. Soon, however, the same people
who had demanded the inquiry began to
accuse Annan of under-funding it. When he
then obtained $30 million from residual OFF
funds set aside for administration, he was
immediately accused of taking bread from
Iraqi children's mouths.

The New York Post denounced the inquiry
as a cover-up, and New York Times
columnist William Safire referred to Annan's
"manipulative abuse of Paul Volcker," whose
reputation for integrity was "being shredded
by a web of sticky-fingered officials and see-
no-evil bureaucrats desperate to protect the
man on top who hired him to substitute
for-and thereby to abort-prompt and
truly independent investigation."

The chorus grew louder following the
leak of a letter in which Annan cautioned
the U.S.-led coalition against a frontal assault
on Fallujah. Fox television's Bill
O'Reilly declared that "it's becoming increasingly
clear that UN chief Kofi Annan
is hurting the USA." On November 24,
2004, the National Review declared "Annan
should either resign, if he is honorable, or
be removed, if he is not." And, on December
1, 2004, writing in the Wall Street Journal, Senator Norm Coleman called for An-
nan's resignation. When asked, President
Bush did not repudiate Coleman's call with
any expression of confidence in Annan, but
called simply for the investigation to take
its course. A week later, Prime Minister
Tony Blair joined much of the world in expressing
support for Annan, to whom delegates
in the General Assembly gave a standing

By this time, the Volcker committee
had won over the conservative press, albeit
inadvertently. The interim reports publicized
many allegations from the UN's own,
widely derided Office of Internal Oversight
Services, without publishing rebuttals from
UN staff. The hostile press also welcomed
the Volcker inquiry's censure of Annan over
his son's involvement with Cotecna, a company
contracted to inspect food deliveries.
Kojo Annan had lied to his father in declaring
that he had severed his relationship with

the company, and it was discovered that he
had concealed continuing payments from

Volcker's team found no evidence that
the Secretary General had in anyway been
involved in the procurement scandal but
held that he had not treated these allegations
seriously enough. Annan had asked for
the advice of his (U.S.-appointed) undersecretary
general for management, and of his
undersecretary general for legal affairs, who
told him that since he had no contact with
the procurement process, he did not need to
take further action. And, though Volcker
countered that he should not have believed
his son and authorized a major inquiry, the
published report effectively cleared Annan
and the UN of the vast majority of the corruption
charges leveled by the conservative
media. Apart from Annan's involvement,
this was a lesser matter than the ever-
growing billions that the critics alleged
the UN had squandered.

About Benon Sevan

In the face of allegations of tens of billions
floating from the gulf, the sole finding of
direct UN corruption was leveled at Benon
Sevan, the Cypriot head of the $100 billion
program, who declared $147,000 in gifts
over four years from an aunt, which the
committee decided had come as commission
on otherwise legitimate oil trades from a
company run by his friends. If true-and
the evidence the committee adduced was
circumstantial-this was clearly unethical,
but not necessarily illegal. They also took
Sevan to task for his style of management.
Sevan did run the program at arms' length
from the secretariat, but his colleagues,
while admitting that he could be stubborn
and idiosyncratic, also pointed out that
secretariat interference in OFF would have
slowed down its work. By insulating it from
bureaucratic interference, many believe the
Cypriot abetted the program.

Sevan returned to Cyprus in 2005 and
has not been in New York since, which does

not necessarily imply an admission of guilt.
In New York, he faced a politically motivated
prosecution in an atmosphere poisoned
by media allegations. In January 2007, a

U.S. district attorney filed charges against
him. He denies guilt and cannot be extradited.
Indeed, one suspects that the Volcker
team's report devotes a chapter to him because,
in the end, this was the only substantial
accusation of serious impropriety against
any UN official directly related to the program.
For all the time, money, and effort put
into the Volcker report, there are several
significant omissions that obscure an accurate
overall judgment of the Oil for Food
program. For example, the inquiry does not
look into what happened to the $10 billion
in OFF surpluses that were handed to the
American occupation authorities for the Development
Fund for Iraq, for which no accounting
has been provided either to Congress
or to the International Advisory and
Monitoring Board. It was not in his committee's
mandate, said Volcker, to determine
how much money was handed out, much of
it in no-bid contracts, to companies close to
the White House. Stuart W. Bowen, the

U.S. special inspector general for Iraq reconstruction
since October 2004, has also been
unsuccessfully trying to find out what happened
to the $10 billion, which had been
augmented by a matching amount from
frozen Iraq reserves. Notably, the press that
had fulminated against the United Nations
has been silent on this matter.
Similarly, little attention has been paid
to the fact that the Oil for Food program
funneled $20 billion of Iraqi oil revenues to
the largest reparations scheme since Versailles.
Even at current reduced rates, 5 percent
of Iraqi oil money will be diverted indefinitely
to pay the balance of $30 billion
in accepted claims. Kuwait has refused to
discuss dropping these reparation demands.
These figures clearly overshadow Sevan's alleged
$147,000 in payoffs-both in quantity
and their effect-but have not had one-

The True UN Scandal

hundredth of the media coverage. The Security
Council voted for both handovers of
cash, which perhaps makes a much stronger
case for political reform of the organization
than the Volcker report makes for the long
accepted need for managerial reforms.

Neither the United Nations nor any
other organization should be allowed to excuse
incompetence or corruption by pointing
the finger at other organizations and
countries. There were serious faults in the
OFF program, inherent in the mixture of political
controls and motives behind it, and,
as Annan himself said, it was far too ambitious
a program for the UN to undertake.

But, it is legitimate to contrast the froth
and indignation over OFF with the relative
silence from the same critics over the missing
funds provided to Iraq. What was immediately
apparent was that the UN reconstruction
effort proved incapable of defending
itself against a politically motivated assault
on its integrity. Though there is a big
constituency for the United Nations within
the United States, it is essentially passive:
with a few honorable exceptions, no leading
figures stood up to defend the organization.
Even as Kofi Annan retired, the stains lingered
on both him and the organization.

Among the obvious lessons are that the
international community should never impose
such draconian economic sanctions on a
nation, and that such resolutions should, in
any case, contain a sunset clause to prevent
veto holders maintaining penalties in pursuit
of selfish national interests. The biggest
lesson, however, is the need for an independent
and strong international civil service in
the secretariat. This has not been helped by
the failure of successive U.S. administrations
to pay UN assessments on time and their
tacit connivance in slander campaigns. In an
interview with Kofi Annan just before he
resigned, he put it with typical understatement:
"There have been times when it has
been tough, particularly when some people
on the Hill or the right wing begin attacking
the UN and the secretary general, and

no one pulls them back even though that's
the same organization that you are going to
turn to tomorrow. If you undermine the organization
to that extent, your own population
may ask you ëWhy are you going to
this organization that you've discredited so
much?'" Why, indeed?ï


1. The Volcker reports are available online at
2. Jeffrey A. Meyer and Mark G. Califrano, Good
Intentions Corrupted: The Oil-for-Food Scandal and the
Threat to the U.N., introduction by Paul A. Volcker
(New York: PublicAffairs, 2006).