An aid scheme riddled with loopholes

What was the oil-for-food scheme?

It was a humanitarian scheme offered by the UN Security Council to Saddam Hussein as a way to alleviate the impact of the economic sanctions on his people, which were imposed after the 1990 invasion of Kuwait. But it took four years for Iraq to agree the terms with the UN.

Under the agreement, which came into force in 1996 and was wound up after the 2003 invasion, Iraq was allowed to export a certain amount of oil - in dollar terms - every six months as long as the revenue was spent on food and medicines. To ensure no money was diverted into rebuilding Iraq's weapons of mass destruction, the UN was in charge of administering the programme, from the approval of contracts to the delivery of goods, and the oil money was channelled through an escrow account. The UN Security Council sanctions committee - comprising all 15 member states - scrutinised every contract.

So what went wrong?

The scheme was riddled with loopholes. One allowed Iraq to choose the goods it wanted, who would provide them and who would buy Iraqi oil. In the highly politicised atmosphere of the UN Security Council, where the five permanent members had widely divergent views on Iraq, individual governments turned a blind eye to abuse of the system which enabled Saddam to benefit by adding oil surcharges, and by oil smuggling.

The sanctions committee was used as a political tool by the permanent members to further their political agenda: the US and Britain took a hard line by blocking millions of dollars worth of contracts, while the French, Russians and Chinese adopted a position more favourable to Iraq.

The Volcker report concluded that the scheme administrator, Benan Sevan, was promoting an oil company in what was called a "grave conflict of interest". The way the scheme's pillars - Banque Nationale de Paris, Saybolt Eastern Hemisphere BV, and Lloyd's Register Inspection Limited - were chosen was also tainted as it did not conform to competitive bidding rules.

How did we find out about the corruption?

Documents were found at the Iraqi oil ministry incriminating various political officials after US forces took control of Baghdad in April 2003. In January last year, the Iraqi newspaper Al-Mada published a list of about 270 former government officials, activists, journalists and UN officials from more than 46 countries suspected of profiting from the Iraqi oil sales. That led to the independent Volcker inquiry.

Who else is in the frame?

The son of Kofi Annan, Kojo, is being investigated for his connection to a Swiss company, Cotecna, which inspected goods arriving in Iraq. Mr Annan has said he only discovered belatedly that Kojo had been paid by Cotecna for longer than his son had initially maintained. Paul Volcker will publish a separate report into the allegations against Kojo Annan, which led to calls for his father to resign as UN secretary general. Mr Annan's predecessor as secretary general, Boutros Boutros-Ghali, is also being questioned by the Volcker committee.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?