It sounds like Sevan wanted to avoid scrutiny of his management activities in New York by encouraging auditors to focus their attention elsewhere. Limited Oil for Food Disclosure Hints at High Level Corruption

As reporters and commentators have digested the 58 internal audits and a briefing paper released this week by the U.N. commission investigating the Oil for Food scandal, many have concluded that they contained little significant information.

To no one’s great surprise, the audits revealed a pattern of mismanagement and an apparent disregard for basic common sense practices. In one of the more laughable examples, one contractor repeatedly billed the United Nations for 31 days of work in June, which has only 30 days. The U.N. blindly paid the bill. Nevertheless, U.N. defenders and many in the press have reported that the handful of released documents offer no evidence of corruption in the program.

Such an assertion overlooks the most significant nugget in this week’s disclosures ― namely, the Commission’s revelation that nearly all of the U.N.’s audits focused on operations in either Iraq or Geneva, leaving the actual management of the Oil for Food program in New York entirely unaudited. The Commission went on to criticize this misallocation of audit resources, pointing out that Oil for Food operations in New York "accounted for nearly 40% of the almost $1 billion in total administrative costs of the" program. "Given the size and complexity of a program such as [Oil for Food], there were a number of key headquarters’ functions that one would have expected an internal audit department to review."

The central question, then, is this: Why was the Oil for Food headquarters in New York, where the bulk of the money was handled, not subject to the same basic scrutiny as operations elsewhere? The Commission’s briefing paper offers this intriguing explanation: "The advice of [Oil for Food] management was to emphasize scrutiny of activities in Iraq."

Recall that Benon Sevan was U.N. Secretary General Kofi Annan’s hand-picked director of the Oil for Food program, and that he ran it from U.N. headquarters in New York. Recall also that Sevan allegedly took millions of dollars worth of oil vouchers from agents of Saddam Hussein’s government. Sevan has steadfastly maintained his innocence, claiming that he did nothing wrong and took no money.

But it sounds like Sevan wanted to avoid scrutiny of his management activities in New York by encouraging auditors to focus their attention elsewhere. Imagine what a full audit of the program’s New York operations might have found if Sevan was, indeed, on the take.

Unfortunately, for now, that’s all the information the Commission has deigned to provide. In that way, this week’s limited document dump highlights the U.N.’s continued stonewalling even as investigators in the United States, the U.K., Iraq and elsewhere try to get to the bottom of this mega-scandal.

Commission Chairman Paul Volcker promises more details in the Commission’s interim report, due out at the end of January. But on the question of corruption and the role of Mr. Sevan, Volcker dropped another hint last week in an interview with the New York Times. "There’s enough smoke there that we know there was some monkey business," he said.

This sounds like progress. And it’s about time. Volcker goes to great lengths in the same interview to downplay expectations for the January report, but it sounds as though, at a minimum, we can expect a more complete discussion of the corruption that plagued the program. More important, with this week’s document disclosure as precedent, there’s hope that the Commission will finally bow to demands from the U.S. Congress and others to release larger hunks of the trove of documents now in their exclusive custody. That would be progress, indeed, and not a second too soon. The foot-dragging has gone on long enough.

January 13, 2005
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