INDEPENDENT INQUIRY FINDS MALADMINISTRATION, EVIDENCE OF CORRUPTION IN UN ‘OIL-FOR-FOOD’ PROGRAMME, SECURITY COUNCIL TOLD

7 September 2005
SC/8492

INDEPENDENT INQUIRY FINDS MALADMINISTRATION, EVIDENCE OF CORRUPTION IN UN ‘OIL-FOR-FOOD’ PROGRAMME, SECURITY COUNCIL TOLD

07/09/2005
Security Council
SC/8492
Department of Public Information • News and Media Division • New York

Security Council

5256th Meeting (AM)

INDEPENDENT INQUIRY FINDS MALADMINISTRATION, EVIDENCE OF CORRUPTION

IN UN ‘OIL-FOR-FOOD’ PROGRAMME, SECURITY COUNCIL TOLD

But Report Also Cites Programme’s Success in Restoring Health

Standards, Helping to Prevent Iraq’s Acquisition of Mass Destruction Weapons

The Independent Inquiry Committee into the United Nations “oil-for-food” programme had found both maladministration of the programme and evidence of corruption within the Organization and by contractors, Paul A. Volcker, the Committee’s Chairman, told the Security Council this morning.

United Nations Secretary-General Kofi Annan said in response that he accepted full responsibility for his own failures and regretted his lack of diligence in pursuing investigations of alleged misdeeds.  At the same time, he was gratified that the report had found that the oil-for-food programme had succeeded in restoring and maintaining minimal standards of nutrition and health in Iraq, while also helping to maintain the international effort to prevent Saddam Hussein from acquiring weapons of mass destruction.

“In essence, the responsibility for the failures must be broadly shared, starting we believe with Member States and the Security Council itself,” Mr. Volcker said as he presented the Committee’s report.  The programme left too much initiative with Iraq -- a “compact with the Devil”.  The administrative structure and practices of the Secretariat and some agencies clearly were not up to the extraordinary challenge presented by the programme.  “Sadly, those weaknesses were aggravated by unethical and corrupt behaviour at key points [...].”  There had also been a pervasive absence of effective auditing, characterized by “weak planning, sorely inadequate funding, and too few professional staff”.  Furthermore, close cooperation among various United Nations organs “apparently goes against the grain”. 

“Yet, clearly there is another side to the story -- one of positive success”, Mr. Volcker continued.  The programme had averted the clear and present danger of malnutrition and a further collapse of medical services.  Also, it had provided support for maintaining the basic sanctions against Iraq and preventing it from obtaining weapons of mass destruction.  The conclusions emphasized the need for stronger operational capacity and authority, as well as the need for strong and independent auditing control and investigatory functions.  Those and other recommendations were common to most recent commentary and reports.

He said the problems were symptomatic of deep-seated systemic issues, arising in an Organization designed, 60 years ago, for a simpler time, an Organization then without “large and complex operational challenges alongside its political and diplomatic responsibilities”.  The credibility of and confidence in the United Nations had been challenged, and, to some degree, the Organization had been weakened.  He, therefore, urged the Council and the General Assembly to set firm benchmarks for progress in reform.  “Quite specifically, action should be taken by the time the General Assembly completes its meeting in 2006.  The opportunity for reform should not, in my view must not, be lost”, he stated.

Mr. Annan said the Inquiry Committee had ripped away the curtain and had shone a harsh light into the most unsightly corners of the Organization.  It had shown that United Nations management had a problem and was in need of reform.  Many of those reforms were being negotiated among Member States as part of a broader agenda of political and institutional change in light of next week’s summit.  One of the lessons to be learned from the report was the importance of accountability and having clear lines of responsibility and reporting.  Most important were the lessons about the need for the United Nations to maintain the highest possible standards of integrity and effective performance. 

He said the Organization had opened itself to independent scrutiny as few others would have.  The most important conclusions of the report were those concerning the management of the programme, which was characterized by weak administrative practices along with inadequate control and auditing.  The rules governing budgetary and human resources must be reviewed.  A stronger and better-resourced oversight structure must be created to ensure full independence from both the Secretary-General and from political interference by Member States.  The Secretary-General himself must be allowed to carry out his functions effectively, taking day-to-day decision on deployment of staff and resources without having to wait for prior approval from the Assembly, the Council or various committees.

As he had told the Assembly last week, he said, no one wanted a Secretariat that could blame failings on Member States, or Member States blaming failings on the Secretariat.  What all wanted was a Secretariat being given clear instructions by Member States so as to bear responsibility for successes or failures in carrying them out.

In the ensuing debate, Council members, while emphasizing that remarks were preliminary as the report had been presented only today, praised the Secretary-General’s courage for having instigated the inquiry and underscored that the oil-for-food programme, the most complex humanitarian programme ever carried out by the United Nations, had succeeded in alleviating the suffering of the Iraqi people under the sanctions regime and helping prevent Iraq’s acquisition of weapons of mass destruction.  They underlined that lessons learned from the Committee’s report needed to lead to reforms that could be taken up by heads of State and Government during next week’s summit.

The representative of the United States said his country had been pushing for the reforms called for in the report, particularly those concerning the need for greater auditing and management controls, including by an independent audit board.  The United States also wanted reforms to ensure stronger organizational ethics and more active management of the United Nations system by the Secretariat.  Those calls for reform had been met with resistance by dozens of countries who were in a state of denial, who maintained that “business as usual” was fine for the United Nations.  The report unambiguously rejected that notion. 

The representative of the Russian Federation noted that, according to the report, the oil-for-food programme had been designed correctly, but undermined by administrative inadequacies.  He said that despite the errors, miscalculations and corruption, the programme had, in general, demonstrated that actions of that type were possible.  Only the United Nations was capable of implementing humanitarian operations of such a global and comprehensive nature. 

The representative of the United Republic of Tanzania said it had been disconcerting to witness a concerted campaign to paint the Organization with a broad brush as being inherently corrupt, incompetent and out of tune with the demands of the time.  The lofty goals of the United Nations remained above reproach, and there was an obligation to protect them.  The challenge today was to improve the United Nations and the Secretariat to serve those goals better.

Iraq’s representative said the Security Council had appointed itself a guardian of Iraq’s wealth when it imposed its sanctions, and it, therefore, bore equal responsibility with others for failures in the oil-food-for programme.  Furthermore, the Iraqi people had not received full value for their money with the programme and, in essence, had been robbed.  The Council should compensate Iraq for some of its losses.  For that purpose, a committee should be formed, perhaps with some members of the Volcker Commission included.

The representatives of United Kingdom, Algeria, Japan, France, Argentina, Brazil, Denmark, Greece, Romania, China, Benin and the Philippines also spoke.

The meeting started at 10:25 a.m. and was adjourned at 11:55 a.m.

Briefing by Paul A. Volcker

PAUL A. VOLCKER, Chairman of the Independent Inquiry Committee into the United Nations “oil-for-food” programme, said 18 months had passed since, with the full support of a Council resolution, the inquiry had been launched.  The Committee’s assignment had been to look for mis- or maladministration in the oil-for-food programme and for evidence of corruption within the United Nations and by contractors.  “Unhappily, we found both”, he said, adding that it was not the details, but the broad conclusions and recommendations the Committee had reached that he wished to emphasize today.

“In essence, the responsibility for the failures must be broadly shared, starting we believe with Member States and the Security Council itself”, he said.  The programme left too much initiative with Iraq -- a “compact with the Devil”.  That basic difficulty had been compounded by a failure to clearly define the complex administrative responsibilities, shared between the Council’s “661 Committee” and the Secretariat, and by continuing political difficulties, with the result that “no one seemed clearly in command”. 

He said the administrative structure and practices of the Secretariat and some agencies clearly were not up to the extraordinary challenge presented by the programme.  “Sadly, those weaknesses were aggravated by unethical and corrupt behaviour at key points -- at the top of the Office of the Iraq Programme and in the purchasing department.”  There had also been a pervasive absence of effective auditing, characterized by “weak planning, sorely inadequate funding, and too few professional staff”.  The absence of truly independent status for the auditing and control functions had been a critical deficiency.  Furthermore, close cooperation among various United Nations organs “apparently goes against the grain”. 

“Clearly, there is another side to the story – one of positive success”, Mr. Volcker continued.  The programme had averted the clear and present danger of malnutrition and a further collapse of medical services.  That was no small achievement, especially when combined with the support the programme provided for maintaining the basic sanctions against Iraq and its inability to obtain weapons of mass destruction.  The conclusions emphasized the need for stronger operational capacity and authority, as well as the need for strong and independent auditing control and investigatory functions.  Those and other recommendations were common to most recent commentary and reports, and he called for an independent oversight body.

However, the conclusions could not be dismissed as “simply reporting aberrations in one programme, or something that can be smoothed over with patchwork changes”, he said.  Instead, the problems were symptomatic of deep-seated systemic issues, arising in an Organization designed, 60 years ago, for a simpler time, an Organization then without “large and complex operational challenges alongside its political and diplomatic responsibilities”.  As the United Nations was being called upon today to deal with complex operational problems crossing national and disciplinary boundaries, the administrative ability and the technical capacity of the Secretariat and its agencies would be tested again and again.

He said, “A United Nations programme carries with it -- should carry with it -- a strong sense of international legitimacy.  “No single nation or group of nations can match that potential quality.”  But more than legitimacy was essential to success.  Support was, in the end, dependent upon credibility and confidence.  That credibility and confidence had been challenged by the travails of the oil-for-food programme and, to some degree, the Organization had been weakened.  That was why reform was so urgent.  He, therefore, urged the Council and the General Assembly to set firm benchmarks for progress.  “Quite specifically, action should be taken by the time the General Assembly completes its meeting in 2006.  The opportunity for reform should not, in my view must not, be lost”, he said.

Secretary-General’s Statement

KOFI ANNAN, the United Nations Secretary-General, said the Inquiry Committee had ripped away the curtain and had shone a harsh light into the most unsightly corners of the Organization.  It had shown that United Nations management had a problem and was in need of reform.  Many of those reforms were being negotiated among Member States at the very moment in the General Assembly with a view to adoption as part of a broader agenda of political and institutional change by next week’s summit, where world leaders would have a golden opportunity to enact reforms.

There were lessons to be learned from the report, he continued.  One concerned the importance of accountability and particularly of having clear lines of responsibility and reporting so that all officials and parts of the Organization knew where their responsibilities lay.  Lessons of oversight included the need for mechanisms to ensure that prompt action was taken when oversight revealed deficiencies.  Most important were the lessons about the need for the United Nations to maintain the highest possible standards of integrity and effective performance.  A study of the Committee’s recommendations could lead to specific new reform measures for implementation.

Citing specific conclusions of the report, he reaffirmed that the Organization had opened itself to independent scrutiny as few others would have.  He said he accepted full responsibility for his own failures and regretted his lack of diligence in pursuing investigations of alleged misdeeds.  At the same time, he was gratified that the report had found that the oil-for-food programme had succeeded in restoring and maintaining minimal standards of nutrition and health in Iraq while also helping to maintain the international effort to prevent Saddam Hussein from acquiring weapons of mass destruction.  The report also had found wholesale corruption in the programme to have taken place among private companies, manipulated by Saddam Hussein’s Government.

He said the most important conclusions were those concerning the management of the programme, which was characterized by weak administrative practices along with inadequate control and auditing.  Many of those practices were rooted in an unclear demarcation of roles and responsibilities between the Council, the 661 Committee and the Secretariat.  That situation called for reflection by Member States.  The reforms within his own discretion such as improvements in the performance of senior management and the creation of a new Ethics Office were one avenue forward.  Other key decisions required action by the Assembly.

The rules governing budgetary and human resources must be reviewed, he said.  A stronger and better-resourced oversight structure must be created to ensure full independence from both the Secretary-General and from political interference by Member States.  The Secretary-General himself must be allowed to carry out his functions effectively, taking day-to-day decision on deployment of staff and resources without having to wait for prior approval from the Assembly, the Council or various committees.

As he’d told the Assembly last week, he said, no one wanted a Secretariat that could blame failings on Member States, or Member States blaming failings on the Secretariat.  What all wanted was a Secretariat being given clear instructions by Member States so as to bear responsibility for successes or failures in carrying them out.

Statements

EMYR JONES PARRY ( United Kingdom) said it was Saddam Hussein who remained the key culprit in the oil-for-food programme.  Because of the humanitarian imperative, the United Nations was obliged to reach less than satisfactory agreements with the regime.  Although none of that could excuse the corruption, criminality and mismanagement that had taken place, he emphasized that the greater wrong had been done by Hussein.

He said that many concerned in the circumstances at the time had been too focused on other aspects of the Iraqi problem.  The report rightly highlighted the shortcomings in the Secretariat and the Council and those of the Member States in enforcing the sanctions.  He agreed with the Secretary-General that lessons for the future had been drawn particularly in management reform.  All of that highlighted the need for a successful summit next week.  He fully supported the Secretary-General in his efforts to ensure that lessons were drawn from the report.

JOHN BOLTON ( United States) said the report’s preface indicated there was plenty of blame to go around for the failings of the oil-for-food programme, in spite of the programme’s success in achieving its humanitarian objective.  The United States might or might not agree with the Committee’s findings in that regard, but all could agree that Saddam Hussein had exploited the international community’s goodwill towards the people of Iraq to obtain billions of dollars for his personal use for the purpose of strengthening his authoritarian grip on his own people.  It was also clear that corruption both within and outside the United Nations system allowed Hussein to achieve many of his illicit goals.  There were bribes, kickbacks and lax oversight from the Secretariat with some Member States turning a blind eye to the corruption.  His country would review the report’s findings to see how they could be used to reform and improve the United Nations.

He said his country had been pushing for the reforms called for in the report, particularly those concerning the need for greater auditing and management controls, including by an independent audit board.  The United States also wanted reforms to ensure stronger organizational ethics and more active management of the United Nations system by the Secretariat.  Those calls for reform had been met with resistance by dozens of countries who were in a state of denial, who maintained that “business as usual” was fine for the United Nations.  The report unambiguously rejected that notion.  The United Nations must be reformed in a way to prevent another oil-for-food scandal.  The Organization’s credibility depended on it.

ANDREY DENISOV ( Russian Federation) said time was needed to peruse the detailed report.  He shared, however, many of its conclusions.  The humanitarian programme of the United Nations had been authorized by the Council nine years ago to counter the humanitarian consequences of sanctions imposed.  The report set forth a true understanding of the programme, noting that it had been designed correctly, but undermined by administrative inadequacies.  The Secretary-General had proposed measures for improvement of the Secretariat, which he endorsed.

He said that, despite the errors, miscalculations and corruption, the programme had, in general, demonstrated that actions of that type were possible.  Only the United Nations was capable of implementing assignments of such a global and comprehensive nature.  As humanitarian operations would still be called for, it was now important to adopt measures on improving the implementation of such programmes.

ABDALLAH BAALI ( Algeria) said the oil-for-food programme had been the largest undertaking ever by the United Nations and had saved the lives of millions who would have died because of sanctions against the country.  The programme had also prevented Saddam Hussein from acquiring weapons of mass destruction.  It was not surprising that the greatness of the task had overwhelmed the powers of the Organization.  Many required tasks needed to be learned on the spot, with the main task being to ensure that supplies given to Iraq were not used for military purposes.

The Council had a real share in the responsibility for shortcomings in the programme, he said, since differences in view among members often impeded the Council’s effectiveness and also allowed for corruption to enter relations between private companies and the Council.  Sanctions contributed to opportunities for corruption of both leaders and private parties.

The United Nations had to live up to its duties in such a way that it met the highest standards of ethics and performance, he continued.  The Volcker report highlighted the areas that needed reform, including the need to give the Secretary-General the tools and resources with which to carry out his management functions.  Also, the Council must re-examine its use of sanctions and ensure it did not contribute adversely to the situations they addressed.  Reforms must be undertaken on an urgent but also thoughtful manner.

KENZO OSHIMA ( Japan) said the central factor to be kept in sight was that the oil-for-food programme had succeeded and had prevented a humanitarian catastrophe.  The report demonstrated the need to bridge the gap between the application of sanctions and the proper management of situations.  The report also highlighted the unfortunate lapses that must be fixed in making the Organization effective in its role.  The business of ethics at the United Nations had never before been so directly addressed.  Without the report, the needed reforms might never have come to light.  With a serious examination of the findings and recommendations, the world’s confidence in the United Nations could be restored.  A detailed study should be undertaken so as to ensure the ability to take them up at the summit next week.

TUVAKO NATHANIEL MANONGI (United Republic of Tanzania) said that some had stated that the oil-for-food programme never should have been implemented by the United Nations and had given rise to questionable practices that had undermined the confidence in the United Nations.  Those statements were unfair.  The oil-for-food programme could not have been run without the oversight of Member States.  It was not a case of the Secretariat “run amok” without Member States’ supervision.  What had happened had happened under the collective watch of the Council. 

He emphasized that there was a need for balance in assessing the report and that there were lessons to be learned for all.  Corruption must be fought wherever it occurred, including in the United Nations.  Any allegations of corruption must be investigated, as had been done, and perpetrators must be brought to justice.  It had been disconcerting to witness a concerted campaign to paint the Organization with a broad brush as being inherently corrupt, incompetent and out of tune with the demands of the time.  The lofty goals of the United Nations remained above reproach, and there was an obligation to protect them.  The challenge today was to improve the United Nations and the Secretariat to serve those goals better.

JEAN-MARC DE LA SABLIERE ( France) said the Secretary-General had undertaken a courageous approach to ensure transparency and truth in establishing the Committee, and his country had fully cooperated the independent body.  He welcomed the thorough work done, often within difficult conditions in within a short period of time.  His Government was going to study the conclusions and recommendations before making a final statement on its substance. 

Sharing some preliminary conclusions, he underscored that the oil-for-food programme had been the largest and most complex humanitarian effort undertaken by the United Nations.  Assistance to the Iraqi people suffering under the sanctions regime had been provided, and the international effort to prevent Iraq to acquire prohibited weapons had been preserved.  The responsibility for a number of inadequacies was a collective one, from which all needed to draw lessons.  He expressed confidence in the ability of the United Nations to address the malfunctions highlighted by the inquiry.

CESAR MAYORAL ( Argentina) said the conclusions in the report were important and required thorough study.  They showed that the oil-for-food programme had been successful regardless of its shortcomings and its manipulation by Saddam Hussein, as well as by private companies.  The report also showed up the many gaps in planning, supervising and auditing within the Secretariat.  The Council also bore responsibility in that regard, particularly in the way the most powerful countries had influenced oversight of the complex programme.  The focus now should be on preventing the recurrence of the situation through a reform of the United Nations that was the responsibility for all countries and also for the Council.  No task before the Organization was greater than to make the necessary reforms to be prepared for future complex operations.

RONALDO MOTA SARDENBERG ( Brazil) said the complexities of executing a billion dollar programme such the oil-for-food programme for the extended period of a decade shed much light on how to do it better.  Adequate oversight mechanisms would ensure that the mistakes made did not recur.  It should also be kept in mind that the sanctions against the country to begin with had been imposed by the Council.  Above all, every effort should be made to ensure that the issuance of the report at this particular time did not distract attention from the aims of next week’s summit.  The Committee’s forthcoming report on the private companies that had been involved in the oil-for-food programme would be of interest.

ELLEN MARGRETHE LØJ ( Denmark) said that, as expected, the report pointed to serious deficiencies in management and accountability on the part of the United Nations, which had led to serious incidents in the oil-for-food programme.  The report noted that the responsibility for the programme’s shortcomings must be shared among Member States, companies and United Nations employees. 

However, the report underlined that the programme had contributed to alleviating the suffering of the Iraqi people as a result of the sanctions regime, she said.  It also underlined the importance of United Nations reform.  The United Nations must have a transparent and accountable system of managing its resources.  There was also a need for reliable control of auditing and strong administrative leadership.  The responsibility to ensure that rested with the Member States of the Organization.  Time had come for bold decisions which the summit next week must take.

ADAMANTIOS VASSILAKIS ( Greece) said the last two years must have been difficult for the Secretary-General.  However, he had presented courageous suggestions and had instigated the inquiry.  The contents of the report, reflecting more than a year’s work, had only been distributed this morning.  It would take some time to study it scrupulously.

It was, however, clear that something needed to be done, in a coherent and level-headed manner, he said.  It was important not to come to conclusions too quickly.  The programme had provided health and food to the Iraqi people and had prevented Iraqi acquisition of weapons of mass destruction.  The United Nations was a unique organization with 191 Member States and countless bodies.  The inquiry had provided information on how the work of the Organization could be improved, especially in the field of management and accountability.

MIHNEA IOAN MOTOC ( Romania) said a number of key factors had contributed to the failings of the oil-for-food programme, including Saddam Hussein’s manipulation and gaps in the United Nations system, which, in turn, included the Council-imposed sanctions and Member State exploitation of the mechanism.  The bottom line was that the Organization had simply not been up to the task, and that was all the more serious since the United Nations must keep to the highest standards of integrity.  The findings in the report underscored the urgent need for reform and for ensuring the Organization’s ethical standards.  The recommendations and findings must be studied and addressed at the system-wide level.

ZHANG YISHAN ( China) said the lengthy report would take much time to absorb, and his country would study it in depth.  However, a preliminary overview indicated that the Committee’s conclusions and recommendations would point the way to the required reforms.

OUSSOU EDOUARD AHO-GLELE ( Benin) the Committee had been established to clarify allegations of fraud associated with the oil-for-food programme.  Now that its report had been issued, the Member States needed to study it in order to take the necessary United Nations reform.  As the report was currently only available in English, he hoped it would be made available in the other official languages as soon as possible.

Although he was not in a position to express his country’s views, he paid tribute to the Secretary-General for his foresight in commissioning the inquiry and in having ensured transparency throughout the process.  He welcomed the Secretary-General’s initiative to promote ethics in the Secretariat.  The failings highlighted were lessons that justified the reform currently under discussion.  He also commended the contribution the programme provided in alleviating the suffering of the Iraqi people under sanctions.  That key aim had been achieved, he said.

Speaking in his national capacity, Council President LAURO L. BAJA, JR. ( Philippines) said the oil-for-food programme had been the most comprehensive programme of humanitarian relief in the United Nations.  Given the complexity of the programme, more time was needed to study the report further. 

It was, however, timely that the report had come at a time when the United Nations was discussing reform, he said.  Such reform had been advocated by the Secretary-General in his report “In Larger Freedom”.  The time for reform was now, and it was, therefore, also important that reform measures be put in place in the draft outcome document for the summit.

SAMIR SHAKIR MAHMOOD SUMAIDA’IE ( Iraq) said the Security Council had appointed itself a guardian of Iraq’s wealth when it imposed its sanctions, and it, therefore, bore equal responsibility with others for failures in the oil-for-food programme.  Furthermore, the Iraqi people had not received full value for their money with the programme and, in essence, had been robbed.  They were the real losers in the oil-for-food failures and they were the victims of the programme’s shortcomings.

He said the report pointed up the organizational shortcomings the Secretary- General had stated were his first priorities to reform.  But the report had been paid for by the Iraqi people because of actions that had taken place with the tacit agreement of the Security Council, and that the Secretary-General had been unable to prevent.  Now, the only path forward was for the United Nations to play its proper role in the world according to the reforms suggested in the report, which identified many ways in which assets had been taken away from Iraq.  Some of those assets were retrievable with systematic cooperation.  The Council could undertake that task to compensate Iraq for some of its losses.  A committee should be formed for the purpose, perhaps with some members of the Volcker Commission included.

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For information media • not an official record
For information media. Not an official record.