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Findings of the Independent Inquiry Committee’s Definitive Report of the Oil-For-Food Program, September 7, 2005

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Summary

The Independent Inquiry Committee (IIC) examining the allegations against the UN Oil-for-Food Program (OFFP) issued its final report on September 7, 2005. This report, along with the Committee’s five interim reports, paints a broad picture of the OFFP – both its successes and its failures. This particular report focuses on the management and oversight of the OFFP, within the greater context of the findings of the interim reports.

In their report, the IIC describes OFFP as “the largest, most complex, and most ambitious humanitarian relief effort in the history of the United Nations Organization.” The administration of the program required regard by the UN Secretariat of a host of political, security, financial and economic considerations. Moreover, the OFFP’s bureaucratic scope was unprecedented. In addition to the Security Council and the Secretariat, nine other UN-related agencies took part in administering the OFFP.

The IIC’s report describes its main conclusions as “unambiguous,” which were as follows:

• The OFFP achieved important successes towards its two most notable ends: depriving Saddam Hussein of WMDs and maintaining minimal standards of nutrition and health in the face of a potential crisis.

• Much of the failure of the OFFP was caused less by personal vice than by systemic inadequacies such as political differences that impeded decision-making and tolerated large-scale smuggling, which directly subverted the sanctions imposed by the Security Council.

• The Secretariat lacked adequate controls and auditing, which allowed isolated instances of corruption among senior UN staff as well as those working in the field.

• The UN requires stronger leadership from its executive, comprehensive administrative reform, and more reliable controls and auditing.

• The UN’s widely-held reputation among Member States of being competent, honest, and accountable could be tarnished, directly affecting the UN’s ability to respond effectively to problems around the world, if the management problems unveiled during OFFP are not addressed.

KEY ACTORS

The Report identifies three key groups of actors in the OFFP. They are:

• The Security Council and its 661 Committee: When sanctions were imposed on Iraq following the Gulf War, a special committee of the Security Council – the “661 Committee” – was created in order to conduct oversight of the sanctions regime. The advent of the OFFP changed the 661 Committee’s responsibilities so that it was tasked with reviewing and approving the billions of dollars of transactions that would take place. This includes setting prices and reviewing individual oil contracts.

• The Secretary-General, the Secretariat, and the Office of the Iraq Program: Even though the 661 retained the central role in the review and approval of transactions, the Secretary-General and the Secretariat had a number of administrative responsibilities for the OFFP. These duties were administered by the Office of the Iraq Program (OIP), an organizational entity created to consolidate the Secretariat’s dealings with Iraq into a single office. Benon Sevan was appointed Executive Director of the OIP.

• UN-Related Agencies: There were a total of nine UN-related Agencies that were tasked with filling in gaps, specifically in the Kurdish North of Iraq, where the Iraqi government was not properly addressing the needs of its citizens. They had a less direct role in the Program, but their presence did contribute to the confusion in the chain-of-command.

UN MEMBER STATES AND SECRETARIAT SHARE RESPONSIBILITY

The OFFP was very large and very complex – it stretched over seven years with more than $100 billion in transactions. It accomplished many goals in Iraq: reversing a serious and deteriorating food crisis, preventing widespread hunger, and probably reducing deaths due to malnutrition.

However, problems within the Program revealed systematic ills in the UN’s management and auditing, which damaged the reputation and credibility of the United Nations. The Committee’s central conclusion is that the United Nations requires the following: more authority to be given to its executive leadership, thorough administrative reform, and more reliable controls and auditing. Responsibility for the Program’s corruption does not lie solely with the UN Secretariat; Members of the Security Council and its 661 Committee allowed for abuse of the program through illegal trade protocols and were provided inadequate instruction on the Program’s administration to the Secretariat and OIP.

WHAT WENT WRONG

Management and Administration
The committee found that, even though the OFFP was well-conceived in principle, the problems began when the Security Council failed to establish and clearly define broad parameters, policies and administrative responsibilities for the Program. The Security Council retained substantial elements of administrative control, which left the OFFP in a bureaucratic limbo in which neither the Security Council nor the Secretariat leadership had clear authority and the corresponding accountability.

Even while acknowledging the difficult position in which the Secretariat found itself, the report chronicles the reluctance of both the Secretary-General and Deputy Secretary General to recognize their own responsibility for the Program’s shortcomings. It states that there was a lack of oversight considering the OIP’s administration, as well as a failure to provide oversight of the Program’s Executive Director, Benon Sevan.

The report also clearly illustrates that, as the Program grew, Saddam Hussein found various ways of turning it to his own advantage.

UN Agencies that were involved were unprepared for the scope of the work involved, which soon exceeded their core competencies of overseeing the distribution of humanitarian goods. This compounded the oversight problems, as there was virtually no precedent in coordinating such a large program among UN Agencies accustomed to inter-institutional turf battles.

Illicit Income
The IIC found that Saddam Hussein’s regime derived far more revenues from smuggling oil outside the OFFP than from its demands for surcharges and kickbacks from companies that contracted within the Program. The value of oil smuggled outside of the OFFP is estimated to be $10.99 billion, as opposed to an estimated $1.8 billion of revenues that came from Hussein’s specific manipulation of the OFFP.

Kofi and Kojo Annan
No reasonable evidence was found to conclude that the Secretary-General knew that Cotecna, S.A. had submitted a bid on the humanitarian inspection contract in 1998. The Committee also affirmed its prior findings that no evidence exists that the Secretary-General influenced the procurement process in 1998 leading to the selection of Cotecna.

REFORM PROPOSALS

The conclusions of the Committee’s investigation lead it to make six major recommendations for reforming the United Nations:

• Create the position of Chief Operating Officer (COO), to be nominated by the Security Council and approved by the General Assembly. The COO would have authority of all aspects of administration and would report directly to the Secretary General;
• Establish an Independent Oversight Board (IOB) to have functional responsibility for all independent audit, investigation, and evaluation activities, across the entirety of the UN Secretariat, as well as those agencies that either receive funds from the UN and/or those agencies for which the Secretary-General appoints the executive heads;
• Improve the coordination and oversight framework for cross-agency programs;
• Strengthen the quality of the United Nations management and management practices;
• Extend the financial disclosure requirements within the organization to well below the current Assistant Secretary-General level, and specifically include the Secretary-General and the Deputy Secretary-General as well as all UN staff who have any decision-making role in the disbursement or awarding of UN funds; and
• Expand and better define the UN conflict of interest rules so that they encompass actual, potential, and apparent conflicts of interest.