WASHINGTON, Nov. 11 (UPI) -- An ongoing senate investigation has revealed that American oil companies were complicit in the embezzlement of $1.8 billion by Saddam Hussein through the United Nations Oil-for-Food Program.
Last week the Permanent Subcommittee on Investigations held its fourth hearing relating to its investigation into corruption and mismanagement in the Oil-for-Food Program.
According to a committee report released at the end of October, in early 2001 Houston's BayOil financed the payment of illegal surcharges demanded by the Hussein Regime. BayOil appears to have generated millions in illicit revenue by diverting Iraqi oil shipments to unapproved destinations in violation of U.N. requirements and U.S. sanctions on Iraq.
Among the findings of the report were that BayOil deliberately misled the United Nations with details of the shipping of Iraqi oil and that BayOil, by delivering four million barrels of Iraqi oil to unapproved locations, generated at least $7.5 million dollars in illicit revenue.
The fourth hearing also focused on the need for U.N. reform following the scandal. Sen. Norm Coleman, R-MN said, "Member states received billions of dollars in financial incentives to turn a blind eye to kickbacks and corruption."
Coleman, who chaired the committee, said "The Secretary-General did not report the kickbacks to the Security Council and did little to oppose the surcharges. As the U.N.'s Chief Administrative Officer, it is untenable to suggest that the Secretary-General is not ultimately responsible for those failures." Coleman has repeatedly called for Kofi Annan's resignation.
Sen. Carl Levin, D-MI, who did not attend the hearing, criticized U.N. duplicity in a letter to the committee: "The head of the Oil-for-Food program appears to have accepted bribes, and management weaknesses, including weak auditing, procurement, and personnel functions which left the U.N. open to abuse."
Former head of OFF, Benon Sevan, resisted repeated efforts to review and investigate the program while in power. According to the Volcker Report, the result of a U.N. investigatory panel into OFF, Sevan accepted nearly $150,000 in bribes over the course of the program. As a result of these findings, Sevan was suspended from his position in February.
Saddam manipulated the OFF program by requiring companies that bought Iraqi oil to pay an illegal surcharge of 30 cents per barrel to Iraq instead of to the U.N. escrow account. An escrow is a legal arrangement whereby money is delivered to a third party to be held in trust pending the fulfillment of agreed upon conditions at which time the money is transferred to the proper recipient.
This illegal surcharge netted Saddam's regime about $229 million. In addition, companies selling Iraq humanitarian goods purchased with oil sale proceeds paid Saddam a 10 percent kickback disguised as a "after sale service charge" or "inland transportation fee." Those kickbacks produced more than $1.5 billion for Saddam.
Coleman said of Saddam's manipulation of OFF, "The program was set up in a way which allowed Saddam Hussein to choose to whom he sold oil. He used this power to influence foreign policy and reward those who spoke out favorably about the regime or opposed sanctions."
Coleman denounced Saddam's manipulation of the OFF program, calling it a "cash cow of illicit income to the regime."
