UN Sets Probe Of Iraq Aid Program

The Security Council on Wednesday unanimously approved an independent investigation of the U.N. oil-for-food program that U.S. lawmakers have said allowed billions of dollars in illegal oil revenue to flow to Saddam Hussein.

Ahead of the vote, Secretary-General Kofi Annan said he took allegations of corruption seriously and he expected the investigation to uncover the truth about the organization's humanitarian program in Iraq.

Former U.S. Federal Reserve chairman Paul Volcker, who will chair the three-man investigative panel, insisted on the resolution setting out the inquiry's aims before he would agree to head the probe.

"A full, fair investigation, as conclusive as we can make it, is in the long-term interest of the U.N. — that's the only reason I'm here," Volcker said at a news conference. "Whatever it shows, if it shows something bad in the U.N., (then they'll) clean it up."

Yugoslav war crimes prosecutor Richard Goldstone of South Africa, and Swiss criminal law professor Mark Pieth, will work with Volcker.

"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," Volcker said. "The U.N. is an important institution and these questions, once raised, I think have to have a deliberate and full investigation and an answer."

Annan wouldn't comment directly on reports that several unnamed U.N. officials could be implicated for taking kickbacks from the program. Instead, he noted "these are serious allegations, which we take seriously and this is why we put together a very serious group to investigate it."

The secretary-general praised the investigative team, calling its members "respected and competent men."

"I want to get to the truth and I want to get to the bottom of this so I am happy they are taking on this assignment," Annan said.

Annan said he hoped the outcome of the investigation, expected to get underway immediately, wouldn't taint the U.N.'s reputation in Iraq.

However, there were no indications Annan would send U.N. humanitarian workers back into the volatile country any time soon.

"We are monitoring the security situation. We hope attempts to reduce the violence will succeed (but) until that is done, security is a constraint for us," he said.

Under the oil-for-food program, which began in December 1996 and ended in November, the former Iraqi regime could sell unlimited quantities of oil provided the money went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War.

Saddam's government decided on the goods it wanted, who should provide them, and who could buy Iraqi oil — but a U.N. committee monitored the contracts.

The U.S. General Accounting Office, Congress' investigative arm, estimated in March that the Iraqi government pocketed $5.7 billion by smuggling oil to its neighbors and $4.4 billion by extracting illicit surcharges and kickbacks on otherwise legitimate contracts.

The allegations of corruption first surfaced last January in the Iraqi newspaper Al-Mada. The newspaper had a list of about 270 former government officials, activists and journalists from more than 46 countries suspected of profiting from Iraqi oil sales that were part of the U.N. program.

The resolution supporting Volcker's investigation calls on the U.S.-led coalition now running Iraq, the Iraqis themselves, and all 191 U.N. member states and their regulatory authorities "to cooperate fully by all appropriate means with the inquiry."

Annan launched an internal inquiry in February but canceled it in March to allow a broader, independent examination.

Several U.S. lawmakers conducting their own investigation have expressed skepticism about the U.N.'s ability to create an independent panel that could implicate some of its own high-ranking officials.

U.S. diplomats pressed for an American to lead the panel, and backed Volcker, who has a reputation for integrity and fairness.

The draft resolution expresses the council's desire for "a full and fair investigation" of efforts by the former Iraqi government to evade U.N. sanctions and provisions of the oil-for-food program "through bribery, kickbacks, surcharges on oil sales and illicit payments."

It states "that any illicit activity by United Nations officials, personnel and agents, as well as contractors, including entities that have entered into contracts under the program, is unacceptable."

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