Last week, the U.N. committee investigating the Oil for Food scandal released its first “interim” report of its findings and recommendations. In releasing the report, Committee Chairman Paul Volcker made it clear that the most important elements of the investigation had not yet been completed. In his words, “It is not the whole story by a long shot.”
That’s unquestionably true. The report focuses on four narrow aspects of the committee’s investigation, and virtually all of the most critical lines of investigation are left for later.
Nevertheless, the limited findings in the report, though they may be narrowly focused, are about as damning as one could imagine. If it’s only going to get worse, as Volcker seems to predict, the U.N. is in for a very long spring and summer.
The report pronounced the committee’s findings in four areas:
The role and activities of Oil for Food Executive Director Benon Sevan. (For more on this part of the report, click here.) The report explains how Benon Sevan, Secretary General Kofi Annan’s hand-picked chief of the Oil for Food program, frequently pressed positions favorable to Iraq both publicly and in the Security Council. Sevan repeatedly insisted that the Security Council should allow Iraq to import spare parts for its oil infrastructure and pay for them with Oil for Food money. (To learn more about why this was so important to Iraq, read a sidebar about this topic here.) Next to having the U.N. sanctions lifted entirely, this was Iraq’s top U.N. priority. In exchange for assisting Iraq, Sevan solicited a number of oil allocations for AMEP, an Egyptian oil company whose owner Sevan knew. While the report stops short of demonstrating that Sevan received any of these proceeds directly, its implication is clear, with an entire section dedicated to questioning a number of large cash payments that Sevan claimed he received from an aunt.
The capability and performance of the U.N.’s internal auditors. (To read a sidebar about this part of the report, click here.) The committee’s evaluation of the U.N.’s internal auditors concluded that they were under-funded and under-staffed. Furthermore, to the extent that the Oil for Food program was audited at all, those audits often focused on the wrong areas of the program. Audit recommendations were often ignored and follow-up audits were rare. The report scolds auditors for failing to discover the kickbacks and other corruption plaguing the program and urges the world body to make its audits more transparent and to alter its procedures to allow for more follow-up audits and better audit programs in the future.
Selection of Oil for Food contractors. The report describes, in painstaking detail, the U.N.’s process for selecting the three major Oil for Food contractors. The conclusions are disturbing. In all three cases, senior U.N. officials interfered with the selection process in violation of the U.N.’s own guidelines. In the most important case, then-Secretary General Boutros Boutros Ghali selected French bank BNP to administer the multi-billion dollar Oil for Food account in spite of lower bids from other banks that were arguably better qualified to provide the service. According to the report, he made his selection, at least in part, under pressure from Iraq to select BNP.
Management of the U.N. Administrative Fund (the so-called 2.2% account): The committee conducted a forensic analysis of how U.N. managers allocated and spent funds from the Oil for Food administrative account. The fund resulted from the world body collecting a 2.2% commission on Oil for Food purchases in order to cover its costs. The committee concluded that the funds were not misspent or misappropriated, though it’s worth noting that no one has ever alleged that they were. Questions have instead focused on the propriety of the world body benefiting financially from a program it was managing.
Obviously, the two most devastating findings are Sevan’s misconduct and the dismal oversight of the program. But countless other less notable criticisms fill the report’s pages. (For example, as a result of the committee’s findings about contracting, one senior U.N. official has been suspended ― the first step in the U.N.’s internal disciplinary process.)
With this sliver of the committee’s investigation projecting a program full of problems and the promise of more significant revelations yet to come, it’s interesting to see Volcker trying to spin the committee’s findings into something they’re not. In a January interview with The New York Times before the report’s release, Volcker said that it would not contain any “smoking guns.” In other interviews and appearances, Volcker has gone out of his way to downplay the investigation’s findings and their impact on the world body.
No doubt Volcker feels that he is doing his best to protect the United Nations, an organization which, he said recently, he attaches great importance to. “We’re not here to tear down; we’re here to restore,” he explained.
That’s all well and good, but Volcker’s spin isn’t helping. Volcker’s own report demonstrates that the United Nations is rife with problems and struggles with rampant mismanagement. According to other reports, corruption and misconduct abound in a wide range of the world body’s operations.
The best thing Volcker could do is let the findings speak for themselves. They send a very clear message that the U.N. needs a massive overhaul of its leadership, bureaucracy and operations if it’s ever going to be relevant, respectable and credible on the world stage.