Fallen behind on your scandal news lately? Well, don't look now, but the doozy the United Nations has brewed up in its Iraqi oil-for-food program is about to come to full boil. The Treasury Department, the Department of Justice, the Manhattan district attorney's office,
five legislative committees, at least three foreign governments, and, oh yes, the United Nations itself are asking who's responsible for the more than $4 billion in illegal kickbacks on Iraqi oil sales and goods from suppliers exporting food, medicine, and other materials to Baghdad. Former Federal Reserve Board Chairman Paul Volcker, who is heading the U.N.'s investigation of itself, is due to weigh in later this month with his findings and has already given a
glimpse of the mess with a "provisional" assessment of a program plagued by
sloppy, myopic management that may or may not turn out to have included criminal
conduct. The Volcker report should be good reading, as the former Fed chief has
had unfettered access to U.N. documents and personnel. U.S. News has learned
that the Justice Department has lent him some experienced federal prosecutors,
while the Manhattan district attorney's office is providing information gained
through its subpoena power.
Excerpt #2Politics aside, there is abundant evidence of substantial fraud and mismanagement in the U.N. program. A Pentagon audit that examined just 10 percent of the oil-for-food contracts pending at the time of the U.S.-led invasion in 2003 found that the costs of nearly half the contracts appeared to be inflated. On just the food contracts alone, Pentagon auditors found evidence of overpricing in 87 percent of them. The audit, reviewed by U.S. News , also found five contracts that included "after sales service charges" of between 10 and 20 percent. It is now believed that Saddam and his agents tacked on such surcharges to the aid contracts in order to siphon money out of the program and divert it to the regime's purposes, using millions meant to buy food to instead shore up his army and construct lavish presidential palaces. In order to pay the surcharge fees, it appears, some companies either inflated the cost of goods sold or delivered fewer goods than called for in their contracts. Former Iraqi ministries, the Pentagon report related, said surcharges and kickbacks were "standard practice."