Shays Leading Hearing Into U.N.'s Oil-For-Food Program

By DESMOND BUTLER
Associated Press Writer

October 3, 2004, 4:07 PM EDT

NEW YORK -- U.S. investigators working in parallel to a U.N.-commissioned probe into allegations of corruption in its oil-for-food program said they hope to use public hearings to lift a curtain of secrecy obscuring the United Nations' finances and management.

While congressional investigators have demanded for months that the head of the independent U.N. inquiry, former Fed chairman Paul Volcker, release records from internal U.N audits, they now say they will use the probe to push for more openness and broader U.N. reform.

"Democratic institutions only work when their work is done in front of the public eye. I'm a huge supporter of the U.N., but they must become more transparent," Rep. Christopher Shays, R-Conn., who is conducting one of the hearings, said in a statement to The Associated Press.

Shays has scheduled a hearing Tuesday in Washington, partly to answer questions about whether European companies hired by the United Nations to audit and certify business deals carried out under the oil-for-food program may have overlooked corruption. Shays chairs the House Committee on Government Reform's Subcommittee on National Security, Emerging Threats and International Relations, one of four congressional panels investigating oil-for-food.

The oil-for-food program, which ran from 1996 to 2003, was created to permit the former Iraqi government under Saddam Hussein to sell limited amounts of oil in exchange for humanitarian goods as an exemption from sanctions in place since the Gulf War ended in 1991.

The hearings also will examine questions of whether profiteering at the oil-for-food program influenced members of the U.N. Security Council _ including France, Russia and China _ on votes concerning Iraq, Shays' office said.

"As the program developed, it became increasingly apparent the French, Russian, and Chinese had much to gain from maintaining the status quo," the committee staff said in a briefing memo on the hearing released Friday. "Their businesses made billions of dollars through their involvement with the Hussein regime and the OFFP," referring to the oil-for-food program.

Shays said the program should have received closer oversight so it would have been "a successful humanitarian program and not a multibillion-dollar sanctions-busting scheme."

"There has to be a full accounting of all oil-for-food transactions, even if that unaccustomed degree of transparency embarrasses some members of the Security Council," he said.

A U.N. spokesman declined to respond to calls for broader reform of internal U.N. policies and referred questions about oil-for-food-related documents to Volcker's staff.

"There is an independent inquiry chaired by Paul Volcker and we believe they are the ones who should receive all of the relevant information," spokesman Farhan Haq said. "It is up to Mr. Volcker and his inquiry to decide how the information should be disseminated."

A message left with the independent inquiry's staff was not returned.

U.N. Secretary-General Kofi Annan appointed Volcker in April to head a three-member panel looking into allegations of corruption at the world body. Volcker said in August that his investigation would maintain exclusive access over U.N. documents for now.

Congressional investigators have expressed particular interest in 55 internal audit reports produced by the Office of Internal Oversight Services, the U.N. watchdog agency responsible for monitoring the oil-for-food program.

Rep. Henry Hyde, R-Ill., who chairs one of the other investigating panels at the House International Relations Committee, wrote to Annan in May asking for the reports but was rebuffed. He also met with Volcker in June and reiterated the request.

After Annan began his first term in 1997, he put through a series of reforms partially in response to demands from Congress, which had been withholding U.S. funding to the United Nations. Prior to that, the Office of Internal Oversight Services was created in 1994.

Now, lawmakers say they ought to have greater access to U.N. internal reports.

"The U.N. has become a Bermuda Triangle for the truth about corruption allegations surrounding the oil-for-food program," Hyde told AP in a statement. "The failure to publicly release audit reports _ even to member nations _ reveals an absence of the most elementary principle of accountability so essential in a functioning democracy."

A spokesman for Annan said the U.N. chief had repeatedly called for transparency.

"Transparency is the only way to deal with such allegations, and by far the best way to prevent corruption from happening in the first place," Annan said in April.

An April report by the General Accounting Office, now called the Government Accountability Office, estimated that the Iraqi government skimmed $4.4 billion through oil-for-food program kickbacks and another $5.7 billion through oil smuggling.

Investigators are probing allegations that several hundred companies and individuals from more than 50 countries may have profited through illicit oil-for-food deals, including prominent politicians from France, Russia, Britain, Indonesia and Gulf states and the program's executive director, Benon Sevan, who has denied wrongdoing.

Critics also have alleged that the Iraqi government, which had the authority under the program to approve deals to sell oil and to import humanitarian goods with the proceeds, manipulated prices to afford kickbacks from those awarded contracts.