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Volcker to Head Investigation of U.N.'s Iraq Oil-for-Food Program

United Nations -- Secretary-General Kofi Annan announced April 21 the appointment of former U.S. Federal Reserve System Chairman Paul Volcker to head an independent panel to investigate allegations of mismanagement in the Oil-for-Food Program, and the U.N. Security Council unanimously backed his decision with a resolution calling for full cooperation from all involved.

The panel will have the authority to investigate whether the procedures established by the United Nations for the administration and management of the Oil-for-Food Program were violated; determine whether any U.N. officials, personnel, agents or contractors engaged in any illicit or corrupt activities while on the job; and ascertain whether the accounts of the program were in order and were maintained in accordance with U.N. rules and regulations.

Other members of the panel are Justice Richard Goldstone of South Africa, who was the first chief prosecutor of the U.N. International Criminal Tribunals for the former Yugoslavia and Rwanda, and Mark Pieth of Switzerland, a University of Baselwith professor of criminal law and criminology with expertise in international bribery and money-laundering.

Volcker was chairman of the Board of Governors of the Federal Reserve System from 1979 to 1987. After his term as chairman ended, Volcker returned to private life joining an investment-banking firm. He recently headed a private commission on public service, which has recommended a sweeping overhaul of the organization and personnel practices of the U.S. federal government. He also chairs the International Accounting Standards Committee, which works toward converging accounting standards internationally.

"I didn't agree to do this lightly," Volcker said April 21 at a press conference after his appointment was announced. "I think there are very important accusations made about the U.N., accusations about the administration of the program, accusations about activities outside the U.N. which need to be resolved."

"The U.N. is an important institution and these questions once raised have to have a deliberate and full investigation and an answer so that the U.N., in fact, can fulfill its responsibilities . . . and contribute to the situation not only in Iraq but situations that are bound to come along in the rest of the world," Volcker said.

The secretary general decided to launch the independent investigation in March after news media around the world reported allegations of fraud and corruption in the program, including overpricing and kickbacks to U.N. officials and high-ranking members of Saddam Hussein's regime in order to secure contracts. Under Secretary General Benon Sevan, who headed the program, has been mentioned in news reports as being involved in the scheme to skim billions of dollars from the program, which was established to aid Iraqi civilians hurt by sanctions.

Announcing the panel, Annan said that "obviously these are serious allegations which we take seriously, and this is why we've put together a very serious group to investigate it. The organization will take whatever steps may be appropriate to address the issues raised by the inquiry. We have assembled a group of respected individuals that I hope will complete its work as soon as practicable."

"As to the impact on our activities in Iraq, I hope the Iraqis realize that even if there have been wrongdoings by certain members on the U.N. staff, the U.N. as a whole did make a genuine effort to fill in their humanitarian needs," the secretary general said.

"There were hundreds of U.N. staff who worked very hard and diligently to establish the food distribution system and ensure that supplies did go in and, I think, that positive aspect of it should not be overlooked either," Annan said.

Under the Oil-for-Food Program, which was mandated by the Security Council in April 1995 but didn't become operational until December 1996, Iraq was allowed to sell oil to buy humanitarian goods under U.N. supervision in order to ease the impact of the sanctions imposed in 1990 after the invasion of Kuwait.

Volcker and Annan asked the council for a resolution in order to give the investigation political authority with governments, some of which will have officials and companies investigated.

"I wanted the resolution to make sure that member governments knew what they were getting into," Volcker said.

He added that the U.N. Security Council resolution gives the investigation the foundation it needs. "I said if we are going to do this . . . we needed formal support of the U.N. and its member governments -- which would include their agencies and regulatory bodies -- to assist in any way appropriate."

"We are ... not the official agency of any government. I don't have the police powers that come naturally to a government. You've got to conduct the investigation with the people who have that authority," the chairman said about the difficulty the panel and its staff will have.

Volcker said that his "most urgent, but not the easiest" task will be to investigate the specific allegations of corruption within the United Nations. That may include investigating the individual contractors who provided the humanitarian supplies for the program. "I interpret [the mandate] to mean following the money as well as one can," he said.

The panel's first status report to the secretary-general is due in three months, but Volcker said that the investigation will not be completed by that time.

"I have no interest in prolonging this. We'll go as fast as we can consistent in doing a thorough job," he said. "But it won't be three months, I am convinced of that."

In its resolution, the Security Council expressed its desire "to see a full and fair investigation of efforts by the former Government of Iraq, including through bribery, kickbacks, surcharges on oil sales, and illicit payments in regards to purchases of humanitarian goods to evade the provisions" of Security Council resolutions.

"Affirming that any illicit activity by United Nations officials, personnel and agents, as well as contractors . . . is unacceptable," the resolution said, the council "calls upon the Coalition Provisional Authority, Iraq, and all other member states, including their national regulatory authorities, to cooperate fully by all appropriate means with the inquiry."

By Judy Aita
Washington File United Nations Correspondent

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site:


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