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NILE GARDINER

Nile Gardiner is a fellow in Anglo-American Security Policy at Kathryn and Shelby Cullom Davis Institute for International Studies of The Heritage Foundation. He has been a vocal critic of the United Nations and the Oil-For-Food Program (OFFP) in various media outlets.

1. Prepared Testimony to the House International Relations Subcommittee on Oversight and Investigations
February 9, 2005

  • Gardiner asserts in his testimony that "For a 219-page report into U.N. management of the Oil-for-Food Program, it seems rather odd that the man with overall responsibility for its operations barely merits a footnote. Secretary General Kofi Annan is as elusive as the Scarlet Pimpernel at the height of the French Revolution amidst the weighty pages of Mr. Volcker's report. The IIC has promised further details relating to the role of Kofi Annan's son Kojo in the hiring of the Swiss Oil-for-Food contractor Cotecna, but the Secretary-General's glaring omission from the pages of the Interim Report defies explanation and smacks of political interference."

The work of the IIC is far from over. In his remarks at the release of the interim report, Mr. Volcker stated that the next interim report will reflect findings related to Kojo Annan's employment with the firm Cotecna. Furthermore, a final report from the IIC is expected to be issued in the summer of 2005.

  • Gardiner further notes in his testimony "Notably absent from the U.N.'s response was any sign of humility, contriteness or accountability on the part of the U.N. Secretary-General and his senior aides."

The UN Secretary-General Kofi Annan has repeatedly expressed concern over the allegations and has said that any UN official that is found to have been involved in any wrongdoing will be held accountable. Most recently, on Feburary 3rd, in reaction to the IIC interim report, the Secretary-General said, "As chief administrative officer of the United Nations Organization, I am responsible and accountable to the member states for its management… I made clear when I set up the inquiry that appropriate action, with full regard for due process, would be taken against individuals or entities found to have violated the rules or procedures of the UN… I made clear from the outset that no one found to have broken any laws would be shielded from prosecution. I stand by that pledge. Should any findings of the Inquiry give rise to criminal charges, the United Nations will cooperate with national law enforcement authorities pursuing those charges, and in the interests of justice I will waive the diplomatic immunity of the staff member concerned."

  • Gardiner goes on to say in his testimony referring to the Chief of Staff of the UN Secretary General, Mark Malloch Brown, "In Malloch Brown's view, the real culprit in the Oil-for-Food scandal is not the U.N., but members of the Security Council such as the United States, who it is alleged turned a blind eye to illicit oil smuggling. Completely ignoring the findings of the U.S. Senate Permanent Subcommittee on Investigations, and the General Accountability Office (GAO), that the Saddam Hussein regime illicitly gained billions of dollars through the Oil for Food Program."

Mark Malloch Brown and the UN leadership are not turning a blind eye to the problems identified in the report. Since becoming the Secretary-General's Chief of Staff, Malloch Brown has been very clear that the UN will implement the reforms and recommendations suggested by the IIC. He recently visited Washington to meet with congressional officials to talk about this very issue.

Malloch Brown is not alone in drawing the distinction between income that Saddam Hussein was able to skim from the Oil-for-Food Program and the far larger amount that he was able to obtain through smuggling. In his report, Paul Volcker emphasized that "the major source of external financial resources" resulted from smuggling. He also pointed out the U.S. was aware that smuggling was going on and continued to provide aid to Jordan and Turkey, even though these countries were in violation of UN sanctions. Copies of national security waivers issued by both the current Bush Administration and Clinton Administrations confirm that the U.S. was aware of oil smuggling (View waivers).

  • Gardiner claims in his testimony that the IIC's report is soft on the UN. He writes, "While acknowledging that this is an interim report, published mid-way through the IIC's investigation, it has to be said, however, that it goes to considerable lengths to avoid making broad-based hard hitting criticisms of the U.N. as an institution and the organization's senior management. To say that the Volcker Interim Report has been soft on the United Nations as a world body as well as its leadership is an understatement."

Volcker called the report "harsh" because it highlights management problems in the operations of the program, faults the UN for violating the procurement process for contractors and chastises the organization for failing to provide adequate resources that would have allowed better internal audits of the program. Perhaps the harshest finding the report is that the UN official who managed the operation of the program, Benon Sevan, was in a grave conflict of interest in his relationship with an oil trading company. However, the report also shows that the UN properly managed the funds targeted at administering the program.

The IIC's interim report received praise for its thoroughness and objectivity. Various senior U.S. Members of Congress that are examining OFFP praised the report for its thoroughness and objectivity. Senator Richard Lugar, Chairman of the Senate Foreign Relations Committee said that: "Chairman Paul Volcker's interim report into the Oil-for-Food scandal demonstrates his thoroughness in investigating the issues surrounding the matter." His sentiments were echoed by Congressman Chris Shays who said: "These interim findings and recommendations reflect the toughness and integrity for which Mr. Volcker is deservedly known. We respect the work he and his fellow commissioners have begun and look forward to completion of their investigation." Also expressing satisfaction with the IIC's work was Senator Norm Coleman, who is heading a Senate investigation into OFFP, Senator Coleman said:"I'm pleased with the preliminary report presented by Mr. Volcker. It confirms many of the findings of our investigation at the Permanent Subcommittee on Investigations…"

  • In his testimony, Gardiner resorts to shooting the messenger as he brings into question the independence and credibility of Paul Volcker to lead the investigation. He testifies that "However, in the case of Volcker and the IIC, there is an apparent conflict of interest that brings into question whether or not the committee can be relied upon to investigate the United Nations objectively. When Volcker was appointed to head the Oil-for-Food investigation in April 2004, it was not widely known by the public, the world's media, and the U.S. Congress that he was a direc¬tor of the United Nations Association of the United States of America (UNA-USA) and the Business Council for the United Nations (BCUN). Volcker is listed as a director in the 2003-2004 UNA-USA annual report, as well as in the annual reports for 2001-2002 and 2000-2001."

Mr. Volcker has been direct and forthcoming in his membership on the board of the United Nations Association and has stated this publicly numerous times. At the February 3rd press conference, Mr. Volcker addressed this issue directly:

"Now, permit me one final point. Questions have been raised for a few years about my membership, for a few years, on the board of something called the UNAUSA. I have to say that's no secret. It's always been disclosed in the public record, as you would expect, in publications of the UNAUSA. It's also never been a part of my standard bio for a simple reason: It was not a particularly active relationship, to say the least. I am embarrassed to be able to say -- or to say, upon inquiry, that I have not attended a meeting of the organization for the last two years.

But let me say also: the fact of my membership, the fact that I lent my name to this organization, does reflect something. It reflects the importance I attach to the U.N. as an international institution. Now, let me say it also reflects my concern that the U.N. be reformed, and that unless it maintains high standards of integrity, it will not be able to command the support of member states and the world's public.

It may also be relevant that, 12 or 13 years ago, I co-chaired a Ford Foundation study of U.N. finances. So I went back and looked at it. My conclusion at that time was, and I quote, 'The future credibility of the U.N. will depend on the effectiveness of its management, on the quality of its staff, and on improvements in its structure and administration.'"

2. In a December 10 column from Human Events, he refers to the program as the "$21 billion oil-for-food scandal."

He repeated this in a December 13 Washington Times op-ed writing: "Recent Senate hearings on the scandal doubled the previous estimate, to $21.3 billion, of the scope of Saddam's plunder."

Gardiner's assertion that Saddam Hussein acquired $21.3 billion in illicit revenue through the OFFP is incorrect. Public information from several sources shows the majority of the illicit revenue obtained by the former Iraqi regime, which may total $21 billion according to the highest estimate, was a result of illegal oil smuggling, which was outside the purview of the UN and is distinct from any problems directly associated with OFFP.

  • The Iraq Survey Group led by Charles Duelfer concluded that only $1.7 billion of the illicit revenue secured by Hussein during the sanctions period was from OFFP. The report indicates that the largest source of revenue, three quarters or $8 billion came from oil smuggling between Iraq and its neighbors.
  • The Government Accountability Office (GAO) also reported that the revenue from oil smuggling far surpassed the illicit revenue from OFFP. The report assigns $5.7 billion to oil smuggling compared to a $4.4 billion credit to OFFP.
  • Even the figures provided by the Permanent Subcommittee on Investigations, which originally released the $21.3 billion figure, show that only $6.5 billion can be credited to abuse of OFFP compared to the $13.6 billion reaped from oil smuggling.
  • Lastly, in the interim report issued on February 3, 2005 by the Independent Inquiry Committee (IIC) led by Former U.S. Federal Reserve Chair Paul Volcker, concluded that (1) oil smuggling was the largest source of illicit revenue for the Hussein regime during the UN sanctions period; (2) smuggling was outside the purview and oversight of the UN administrators of the Oil-for-Food Program; and (3) smuggling began years before the Oil-for Food Program was created. The report states:
    "What does appear clear is that the major source of external financial resources to the Iraqi Regime resulted from sanctions violations outside the Programme's framework. These illicit sales, usually referred to as 'smuggling,' began years before the Program started. Exports of Iraqi oil to both Jordan and Turkey and imports form those countries generally took place within the terms of trade agreements ('protocols') negotiated with Iraq. The existence, but not necessarily the amounts, of sales and purchases under these protocols was brought to the attention of the 661 Committee and at least in the case of Jordan, it was 'noted.' United States law requires that assistance programs to countries in violation of United Nations sanctions be ended unless continuation is determined to be in the national interest. Such determinations were provided by successive United States administrations for both Jordan and Turkey. In the later stages of the Programme, substantial Iraqi sales of oil were made to Syria and small sales to Egypt under similar 'protocols.'"

The distinction between OFFP and oil smuggling is significant because the task of monitoring the latter was not assigned to the UN. In 1991, the member states surrounding Iraq and the Multinational Interception Force (MIF) were designated to guard against oil smuggling.

Moreover, Hussein's oil smuggling was well known. Copies of national security waivers issued by both the current Bush Administration and the Clinton Administration, mentioned in the IIC's February 3, 2005 report, show the U.S. was aware that Iraq was trading oil in violation of the UN sanctions with its neighbors as far back as 1991.

3. Gardiner asserts in the above mentioned Human Events article that "...Annan is facing a growing rebellion among sections of his own staff at UN headquarters in New York..."

The staff of the United Nations has rallied behind the Secretary General. Staff issued a statement of support in November 2004. Additionally, 3,170 staff members in both New York and Geneva signed a petition further demonstrating their confidence in the Secretary General.

4. In his December 13 Washington Times article, Gardiner falsely states that, "An investigation of the House International Relations Committee concluded Saddam used some of that money to fund Palestinian terrorism."

A June 30, 2004 Heritage Foundation document authored by Gardiner asserts, "...some oil-for-food revenues may have been diverted to funding terrorism."

There is no definitive evidence to show that money skimmed from the Oil-For-Food Program was used to fund terrorism. The Volcker investigation will consider this and other factors relevant to the OFFP and the UN's role, and determine the validity of these allegations in its final report.

5. The aforementioned Heritage piece states, "A lack of UN cooperation has compounded congressional anger." In the December 10 Human Events article, Gardiner declares, "...congressional efforts to establish the truth with regard to the oil-for-food scandal have been greatly hampered by a lack of cooperation from the UN secretary-general."

In his Washington Times piece from December 13th, Gardiner says "Congress's anger has been compounded by a lack of cooperation from the United Nations."

These criticisms suggest that the UN is not serious about uncovering the problems with OFFP, and that it is also hampering the congressional investigations at the same time. But, the fact is that Kofi Annan led the effort to form the Independent Inquiry Committee (IIC) which is charged with conducting an inquiry into allegations of impropriety in the operation and management of OFFP. The IIC is chaired by the respected former U.S. Federal Reserve Chairman, Paul Volcker. To ensure the IIC can conduct a full and thorough investigation, the following steps have been implemented:

  • Unrestricted access to all relevant documents. The IIC has immediate and unrestricted access to all relevant documents under the UN's control. Because many of the documents and contracts contain confidential information about private companies and to assure the credibility of the investigation, all UN agencies, funds and programs which were involved in OFFP contracts have been advised not to disclose information to any parties outside of the IIC.
  • Agreement on access to records. The IIC has reached an agreement with U.S. and Iraqi authorities with regard to access to OFFP records in Baghdad. The Committee will access the records through the international accounting firm of Ernst and Young LLP, which was retained by the Iraqi and U.S. authorities to organize Iraqi records related to OFFP.
  • UN member states pledge cooperation. Security Council Resolution 1538 was approved on April 21st, 2004 with unanimous support pledging the full cooperation of Member States in the investigation.
  • UN personnel instructed to cooperate. The Secretary-General instructed all UN staff to cooperate fully with the IIC's investigation as a condition of employment. The Secretary-General has stated that UN personnel who do not fully cooperate with the independent investigation will face disciplinary action and possible dismissal.
  • Protection for whistleblowers. Whistleblower protection is available to protect officials and personnel, as appropriate, from improper repercussions resulting from their cooperation with the inquiry.
  • Provision of funds. The UN has provided the IIC with the funding it has so far requested for its inquiry. This includes $4 million in start-up costs and $30 million requested for the investigation itself.
  • Interim report and findings. So far, the IIC has issued various interim reports detailing the progress of the investigation:
    • August 9, 2004. The Committee issued a three-month update report detailing the progress it has made on the inquiry.
    • October 21, 2004. An update on the status of the inquiry.
    • January 9, 2005. A briefing paper with observations on the UN internal audits of OFFP. All the audits were released by the IIC.
    • February 3, 2005. An interim report detailing findings of the inquiry into the UN's procurement process and management of the program, including findings regarding allegations of wrongdoing by the UN officials in charge of the program.
    • March 29, 2005. An interim report on the award of the humanitarian goods inspection contract to Cotecna Inspection S.A. focusing on any violation of established UN financial and procurement regulations, any conflict of interest on the part of the Secretary-General, and/or any improper intervention by persons other than the Secretary-General that might have taken place.

In fact, Mr. Volcker praised the UN for its openness and cooperation with the investigation, saying:

"...few institutions have freely subjected themselves to the intensity of scrutiny entailed in the Committee's work…I don't know of any other institution that has been scrubbed quite as hard as this one …"

On the second concern about the UN's cooperation with congressional investigators, the UN has turned over all relevant materials to the IIC. In a November 16, 2004 letter to Senators Norm Coleman and Carl Levin, Volcker said that the audits and other evidence in possession of the IIC will be made public once the Committee has finished its work with them, probably in January. Volcker's letter goes on to explain "the policies of our Committee are designed to reconcile essential and desirable transparency and disclosure in our work with the need to conduct our investigation with the degree of confidentiality and simple fairness necessary... The stated policy of the Committee, consistent with these understandings, is that our reports and findings will be accompanied by disclosure of all evidence bearing on those findings… We anticipate these disclosures will include the documentary evidence explicitly mentioned in the Senate letter, certainly including the internal (and external) audit reports." Furthermore, on January 9, 2005, the IIC released all UN internal audits on the OFFP to the relevant congressional committees and the public.