Oil-for-food panel to finger Iraqi bribes to firms

By Evelyn Leopold

UNITED NATIONS (Reuters) – More than 2,500 companies from
at least 60 countries that did business with Iraq in the U.N.
oil-for-food program were the target of bribes and kickbacks to
Saddam Hussein’s government, a report on the program is
expected to disclose on Thursday.

It is the final report from a U.N.-established Independent
Inquiry Committee, and it aims to put into context the
manipulation of the now-defunct program by companies all over
the world as well as individuals, groups and governments.

South African Judge Richard Goldstone, one of the three
commissioners of the inquiry led by Paul Volcker, a former U.S.
Federal Reserve chairman, said earlier that the committee had
written to 4,000 companies and asked for explanation of
irregularities in the dealings of more than 2,500 of them. But
the report is not expected to accuse them all of wrongdoing.

“The manipulation of the program, which led companies,
entities and individuals to pay, directly or indirectly,
surcharges and kickbacks will be the focus of the report,” said
Reid Morden, executive director of the committee.

Illegal payments on oil and other goods are estimated at
more than $1 billion, sources close to the investigation said.
The surcharges on oil were finally stopped in 2001 by the
United States and Britain in the Security Council.

Previous reports from the inquiry, which has probed the $64
billion humanitarian program for 19 months, castigated
Secretary-General Kofi Annan and other U.N. officials for
mismanagement and faulted the 15-member Security Council for
turning a blind eye to known oil smuggling outside of the
program.

The operation, which began in December 1996 and ended in
2003, was aimed at easing the impact of the U.N. sanctions,
imposed in 1990 after Baghdad’s troops invaded Kuwait. It
achieved considerable success in feeding Iraqis, and allowed
Iraq to sell oil in order to pay for food, medicine and other
goods.

But illicit oil sale surcharges, kickbacks and smuggling
schemes provided Saddam with access to hard currency. Iraq was
allowed to write its own contracts and choose the contractors.

BNP IN REPORT

Definitely included in the report, investigators say, will
be an analysis of the role of the New York branch of Banque
Nationale de Paris, now known as BNP-Paribas, which held the
escrow account for Iraq’s legal oil sales.

The French bank was selected by then-Secretary-General
Boutros Boutros-Ghali in 1996 when the program was set up,
against objections from U.N. staff, the panel said earlier.

And in April, a U.S. congressional committee said BNP
oversaw at least 400 payments that appear to have violated its
contract with the United Nations.

In response, Everett Schenk, chief executive of BNP Paribas
North America, said the bank may have made some procedural
mistakes but these did not involve corruption.

But members of the House of Representatives subcommittee on
oversight and investigations said dozens of payments by BNP
were made to third parties for supplies delivered to Iraq.

Any follow-up would be left to countries involved and
Volcker was to address U.N. ambassadors on Thursday.

In the United States, federal prosecutors in the Southern
District Court of New York have already charged executives of
Bayoil, one of the largest traders with Iraq for engaging in
“prohibited financial transactions.”

Last week the same court charged Texas oil tycoon Oscar
Wyatt, the former chairman of Coastal Corp. and two Swiss
executives and their companies with paying kickbacks.

The companies included the Cyprus-based oil trading
companies Nafta Petroleum Company Ltd. and Mednafta Trading
Company Ltd., collectively known as the Wyatt Foreign
Companies.