US: An independent commission reviewing allegations of corruption in the UN-administered oil-for-food programme in Iraq has faulted internal United Nations auditors for incurring huge losses by failing to monitor the scheme properly.
In a "briefing paper" issued yesterday, the commission, headed by the former head of the US Federal Reserve Bank Mr Paul Volcker found glaring lapses in internal UN controls for the 1996-2003 programme.
In once case, Lloyd's Register was paid $1.38 million for 1,800 days when inspectors were not present at sites in Iraq as contracted. Under the oil-for-food programme, Iraq was allowed to by-pass sanctions and sell oil to raise money which the UN could use to buy humanitarian aid.
UN attempts to monitor the vast and complex scheme are revealed for the first time in 55 audits published yesterday by the Volcker Commission in advance of an interim report.
They reveal evidence of mismanagement that led to the loss of at least $5 million and the possible wastage of billions more.
The UN also apparently wasted $2 billion through reparation claims after Iraq's 1990 invasion of Kuwait: Iran claimed $2.7 billion for providing humanitarian assistance to Iraqi and Kuwaiti refugees and received $7.87 million; Jordan claimed $7 billion for the same reason and received $72 million, while Israel, which sought $1.06 billion in damages for Iraq's Scud missile attacks, got $74.6 million.
The internal UN auditors failed to investigate allegations that Iraq was making billions of dollars by demanding kickbacks from companies that bought more than $64 billion in oil and humanitarian goods.
The commission was established by UN Secretary General Mr Kofi Annan last year in response to allegations of widespread corruption in the seven year programme. Mr Volcker said last week that the audits contained "no flaming red flags", but several Republicans in Congress have called on Mr Annan to resign. Mr Volcker said that testing of the oil purchase and humanitarian aid contracts could have helped stop Saddam Hussein' generating income from the contracts in violation of UN sanctions.
Some audit reports represented "a wholesale failure of normal management ad controls," he found. The audits did not monitor for example the activities of a French bank that disbursed payments and UN officials' management of Iraqi funds.
The oil-for-food scheme was the UN's largest-ever aid programme and was designed to offset the debilitating effects of sanctions imposed on Iraq for its 1990 invasion of Kuwait. "It is already clear from the briefing paper that there were deficiencies in the management of this unique and highly complex programme," UN spokesman Mr Stephane Dujarric said. "We ourselves are already focused on issues of management and accountability," he said, and the UN was implementing greater transparency in the tsunami relief effort.