Oil-for-food scandal shocks Annan

UN Secretary-General Kofi Annan has said he is shocked by findings of the independent enquiry into the oil-for-food programme run by the world body.

    The UN programme for Iraq has been found to be 'tainted'

    Officials said on Thursday that Annan pledged to waive diplomatic immunity if any criminal charges are to be launched against UN staff connected to the scandal.

    "The secretary-general is shocked by what the report has to say," Annan's chief of staff Mark Malloch Brown said shortly after the first damning set of findings by the independent commission was presented to the UN chief.

    Led by former US Federal Reserve chairman Paul Volcker, the independent commission 

    blamed officials in the world body for ignoring regulations and safeguards.

    Investigators found "convincing and uncontested evidence that the selection process was tainted by irregularities for each of the first three contractors selected".

    The first contract awarded in connection with the operation was with Banque Nationale de Paris, a French bank now known as BNP-Paribas, chosen to handle the money passing through the programme.

    Tainted operation

    The next two were with Saybolt Eastern Hemisphere BV, a Dutch firm picked to conduct on-site inspection of oil exports, and Britain's Lloyd Register Inspection Ltd, chosen to inspect goods bought with programme funds as they entered Iraq.

    The UN scheme originally aimed
    to reduce sanction toll on civilians

    The oil-for-food programme was set up in late 1996 to allow civilian goods into Iraq in an effort to ease the impact on ordinary Iraqis of UN sanctions dating back to 1990.

    Some $69 billion in proceeds from Iraqi oil sales passed through the programme before it was shut down in 2003, a few months after the US-led invasion of Iraq.

    According to investigators, then Secretary-General Boutros-Boutros-Ghali ignored staff recommendations and chose the French bank to hold the multibillion-dollar oil-for-food escrow account because it was the Iraqi government's choice.

    Playing favourite

    UN officials chose Saybolt, overriding the procurement department's preference for a competitor, after UN aide Joseph Stephanides, helping set up the programme, repeatedly intervened in the selection process.

    The choice of Lloyd's was the result of "politics", the investigators found. While the lowest bidder was French firm Bureau Veritas, officials decided they could not select a French company because they had recently given a French national a key job.

    "The regular competitive bidding process was tainted" in the case of Lloyd's as well, by Stephanides, who contacted the British UN mission to press it to lower its bid to match its competitor's, the investigators said.

    In all three cases, "formal financial regulations and rules set out by procurement officials were repeatedly and knowingly short-circuited and violated, without a clear and consistent written rationale", the report concluded.

    SOURCE: Agencies


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