Ian McCaleb, Associated Press
Thursday, October 07, 2004
A new CIA report released Wednesday outlines
how Saddam Hussein illegally sponged off the seven-year
U.N. Oil-for-Food program to enrich his regime.
The report estimates the deposed Iraqi dictator
diverted up to $1 billion over the years from the relief
program to fatten his military and industrial
capabilities — all right under the U.N.'s nose. The
diverted cash, part of a series of bribes and payoffs
related to the program, was supposed to go to suffering
Iraqis in the form of humanitarian aid and food.
The report by CIA consultant and weapons inspector Charles
Duelfer is expected to reveal how Saddam turned the
humanitarian program into a cash cow for himself and his
cronies. U.S. officials said that in the report, Duelfer
asserts that Iraq readily accepted the 1996 program
because he knew it would give his government a steady
flow of cash, much of which he could toss into his
Officials said Duelfer concluded in the report that
the move was shrewd because by 1996, five years after
the Persian Gulf War, Iraq's domestic economy was
in such a sorry state that the regime could have
collapsed at that time. The program allowed for the
transfer of funds into civilian enterprises that could
later have been converted for military use.
The Duelfer report estimates that Saddam's
military-industrial budget was $8 million per year in
1996. By 2001, prior to the Sept. 11 terror attacks, the
figure had ballooned to $350 million per year. The
report credits the Oil-for-Food program for the jump,
said the U.S. officials.
The CIA's details come as the Wall Street Journal on
Wednesday exposed new details about the Oil-for-Food
program's head, Benon Sevan, who has been accused of
receiving valuable oil contracts while he ran the
program. Sevan has denied receiving bribes or payoffs,
but the Journal alleged Sevan received contracts worth
more than $1 million over five years.
"We raised issues about smuggling ... concerns about
quality of the metering and other tools that we had
available to us to conduct our duties under the
Oil-for-Food program. We reported those to the U.N. This
was outside our mandate to do these things," said John
Denson, general counsel for Saybolt, one of the
companies that was hired to monitor oil sales and the
products entering Iraq bought with the proceeds.
Representatives from Saybolt testified in the House
on Tuesday that they were threatened by Iraqi officials
— on one occasion by 20 armed guards — and stymied by
Saddam's ability to manipulate records and trade.
One European contractor hired by the United Nations
to make sure the program was legitimately operating said
he also complained that when he brought up allegations
of corruption to Sevan, the United Nations did little or
nothing to investigate.
Investigators are probing whether Saddam bought off
the U.N. Security Council by giving billions in
contracts to France, Russia and China, three of the five
permanent members on the council. At congressional
hearings on Tuesday, House Government Reform
subcommittee Chairman Chris Shays, R-Conn., charged that
the United Nations turned a blind eye to the corruption.
"It is really sad that we were so eager to end the
embargo that we were willing, basically, to set up a
program that really amounted to a fraud. Saddam got what
he wanted, and yet proclaimed there were still
sanctions," Shays said.
Meanwhile, the list of companies with whom Saddam did
not want to do business was obtained by investigators
working for House International Relations Committee
Chairman Henry Hyde, R-Ill. The top reason Saddam
apparently refused to do business with companies was
that they also sold materials to what Iraqis called "The
Zionist entity," in other words, Israel.