The London Telegraph
May 2, 2004
Iraq oil-for-food kickbacks 'higher than suspected'
By Philip Sherwell
Kickbacks paid to Saddam Hussein's regime on contracts signed under
the United Nations' oil-for-food programme were far higher than the 10
per cent rake-off previously assumed to be the norm.
In one of the many deals funded by UN-supervised oil exports from
Iraq, a delivery of cameras and audiovisual equipment for the culture
ministry -- sent as "humanitarian" items, under a loophole -- was
valued at 100 percent above its true cost.
According to new documents recovered in Baghdad, multi-million pound
deals with the public works ministry for sanitation and water
filtration equipment were often marked up by as much as 30 percent.
The discrepancy represents the kickbacks for leaders and regime
officials who skimmed off billions of pounds from the scheme that was
supposed to provide food, medicine and essential supplies for the
Iraqi people.
Some went straight into the bank accounts of Saddam, his family and
supporters, in addition to officials who negotiated the deals. The
Iraqi dictator, however, is also alleged to have paid millions of
pounds in cash and oil trading vouchers to foreign companies and
individuals from the kickbacks.
According to a Western official with access to the contracts, staff
from the Coalition Provisional Authority who have been poring over
more than 2,500 outstanding contracts worth almost £5.9 billion since
the UN left Iraq last year, are shocked by the rake-offs.
Former Iraqi oil ministry staff had said that suppliers or middlemen
were routinely required to add 10 percent to the value of contracts to
win a tender. As a result, when the CPA took over the administration
of existing contracts, it assumed that the 10 percent mark-up was
correct.
Now, its latest discovery means that the total lost to kickbacks and
surcharges could far exceed the American Congressional estimate of
£2.6 billion [$4.62 billion US]. Oil smuggling is believed to have
lined the coffers of Saddam's regime with a further £3.4 billion
[$6.04 billion US].
CPA staff believe that some UN border inspectors working for the Swiss
company Cotecna at Iraqi frontier posts were bribed to turn a blind
eye to discrepancies between goods that were contracted and what was
delivered.
The inflated contracts were apparently not noticed or ignored at the
UN in New York, even though strict checks were supposed to ensure that
Iraq did not receive goods banned under economic sanctions.
Last week, a US Congressional investigator testified that UN auditors
had refused to release 55 internal audits covering seven years of the
oil-for-food programme to the General Accounting Office, the federal
body carrying out one of the investigations into the scandal.
Joseph Christoff, a GAO official, said that the audits were shown
routinely only to Benon Sevan, the UN Under Secretary General who ran
the programme whose name was on a list of 270 companies and
individuals who allegedly received vouchers [for millions of barrels
of Iraqi oil].
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