Volcker to Head Investigation of U.N.'s Iraq
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
"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
"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
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
"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: