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Negroponte Says U.N., Iraq to Probe Oil-for-Food Program

U.S. Ambassador to the United Nations John Negroponte has pledged his "fullest support" to Congress' investigation of the U.N. Oil-for-Food
(OFF) Program.

That program allowed Iraq to import humanitarian goods by using the proceeds from authorized oil sales while remaining under U.N. sanctions on imports other than for food and medicine, he said.

Testifying April 7 to the Senate Foreign Relations Committee in Washington, Negroponte said the Bush administration shares Congress' concern and is "committed to ensuring that all allegations are investigated and addressed" concerning possible mismanagement and abuse of the OFF program.

The allegations, Negroponte said, can be placed in four categories:

-- oil smuggling by Saddam Hussein's regime;
-- manipulating prices on Iraq's oil exports;
-- kickbacks on OFF Program contracts; and
-- possible abuse by U.N. personnel.

Negroponte noted that U.N. Secretary-General Kofi Annan has ordered an investigation of the charges. The inquiry "will investigate allegations of fraud and corruption in the administration and management of the Oil-for-Food Program, including those against United Nations personnel, contractors and entities that entered into contracts with the U.N. or with Iraq under the program," he said.

In addition, Negroponte said that Coalition Provisional Authority (CPA) Administrator Paul Bremer has directed CPA officials to cooperate with Iraqi officials in investigating the allegations of corruption regarding the OFF Program.

"We hope that the inquiries now being launched will identify those who conspired with the Hussein regime and perhaps assist in recouping lost funds for the Iraqi people," he said.

Following is the transcript of Negroponte's remarks:

April 7, 2004

Statement of Ambassador John D. Negroponte
U.S. Representative to the United Nations
on the Oil-for-Food Program
before the Senate Foreign Relations Committee
April 7, 2004

Thank you very much Mr. Chairman, Senator Biden, distinguished members of the Committee. I welcome the opportunity to appear before you today to discuss the U.N. Oil-for-Food (OFF) program and recent allegations of possible mismanagement and abuse involving that program.

At the outset, I want to make perfectly clear that we share your concerns. We are committed to ensuring that all allegations are investigated and addressed. Following the recent specific allegations of corruption by U.N. officials, I was immediately instructed by Secretary Powell to convey our concerns to United Nations Secretary-General Annan. I have discussed this on several occasions with the Secretary-General, who has on his own initiative launched an investigation that is intended to be independent, transparent and comprehensive. As you know, we joined our fellow Security Council members on March 31 in welcoming this expanded investigation and pledging our full cooperation. We must not forget that, allegations aside, it is the Iraqi people who would have been most hurt by any wrongdoing. It is for them most of all that we must take this responsibility very seriously, and we will urge all U.N. member states to do the same.

The Oil-for-Food program, as you indicated, was created to alleviate the hardships faced by the Iraqi people, hardships caused by Saddam Hussein's regime's refusal to comply with its obligations and the resulting comprehensive, multilateral sanctions regime imposed by the Security Council on Iraq following the invasion of Kuwait in August of 1990. The Oil-for-Food Program allowed for the import of humanitarian goods using the proceeds from authorized Iraqi oil sales while maintaining sanctions on imports other than food and medicine. It represented the largest humanitarian relief operation ever launched by the international community.

The United States supported the program's general objective of creating a system to address the humanitarian needs of the Iraqi civilian population while maintaining strict sanctions enforcement on items that Saddam Hussein could use to re-arm or reconstitute his weapons of mass destruction [WMD] programs. We believe the system the Council devised largely met those objectives. However, the rules and procedures governing implementation of the program were the product of negotiation among the 15 members of the Security Council and between the United Nations and the former Iraqi regime. The United States was able to set basic parameters and monitor the functioning of the program through our participation in Security Council discussions and as a member of the Iraq Sanctions Committee, also known as the "661 Committee," named for the Security Council resolution that created it. However, we were not in a position to exercise exclusive control over the process, as the Committee made decisions through consensus.

Although the flow of humanitarian and civilian goods to Iraq was a matter of strong interest to the United States government, an even greater goal throughout the period of sanctions was to ensure that no items were imported which could in any way contribute to Iraq's WMD programs or capabilities. At the United States Mission to the United Nations we concentrated our efforts on this aspect of the sanctions.

It is important to note that no U.S. government funds, including those that might have been drawn from U.N. assessments, were involved in the establishment and functioning of the program. With the exception of voluntary funds provided by the United States for the U.N. Guards Contingency in Northern Iraq, whose task was to protect humanitarian personnel working there, all expenses associated with management of the program were drawn from Iraqi oil revenue that was deposited into a U.N. escrow account established in 1995 under Resolution 986.

Recent press reports allege there was corruption and abuse in the implementation of the program. These allegations fall into four general
-- first, direct oil smuggling by the former Iraqi regime;
-- second, the manipulation of pricing on Iraqi oil exports;
-- third, kickbacks on Oil-for-Food Program humanitarian contracts; and
-- lastly, possible abuse by United Nations personnel.

At the heart of this were the determined efforts by Saddam Hussein to obtain funds illicitly and hide his sanctions-busting activities.

In the written statement that I submitted for the record, I have provided greater detail about what we know about the allegations in each category. Where we could identify abuse and fraud in the implementation of the Oil-for-Food Program, we and the United Kingdom endeavored to stop them, including through bilateral diplomacy and special briefings to the Security Council and the 661 Committee, of the ways in which we observed the Hussein regime diverting funds from the program, smuggling and generally violating Council resolutions. What we did not have before the fall of Saddam's regime was documentation and witnesses who were willing to step forward to provide evidence of corruption. Documentation is now becoming available in the wake of the Saddam Hussein regime's demise. Witnesses are now coming forward who may be able to shed more light on how Saddam Hussein and his supporters evaded sanctions, and on instances of corruption that may have existed in implementing the Oil-for-Food Program.

The independent, high-level inquiry initiated by the Secretary-General will shortly get underway. The Terms of Reference have been written and provided to Security Council members. The inquiry will investigate allegations of fraud and corruption in the administration and management of the Oil-for-Food Program, including those against United Nations personnel, contractors and entities that entered into contracts with the U.N. or with Iraq under the program.

We and other Security Council members have welcomed the Secretary-General's initiative and called for international cooperation. Both the summary and the final report on the findings of this panel will be made public. We expect announcements soon on the membership of the inquiry panel, and have strongly urged the Secretary-General to ensure that members are of unimpeachable standing. We believe that this inquiry can serve as an important vehicle in addressing various allegations.

Mr. Chairman, in Baghdad, the CPA [Coalition Provisional Authority] is also assisting the Iraqi Board of Supreme Audit to launch an investigation into the allegations of corruption regarding the Oil-for-Food Program. CPA Administrator Bremer issued a directive to the CPA and all Iraqi Ministries in early March, instructing all Ministry officials to identify and secure relevant Oil-for-Food Program documents. Representatives of the Iraqi Board of Supreme Audit have met with CPA and Iraqi Ministry officials to ensure cooperation and transparency in this process. We hope that the inquiries now being launched will identify those who conspired with the Hussein regime and perhaps assist in recouping lost funds for the Iraqi people.

Mr. Chairman, again I thank you for the opportunity to provide this information on the Oil-for-Food program. You have my fullest support and that of my staff in your efforts to determine the extent and involvement of wrongdoing associated with the program.

Thank you very much.

(end transcript)


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