UNITED NATIONS, Jan. 10 -- Failures in U.N. management of the Iraq oil-for-food program may have permitted excess payments of hundreds of millions of dollars to governments and companies, according to 55 internal audits of the humanitarian program. The excess payments were made even as then-President Saddam Hussein was stealing billions from the program.
Republican lawmakers and congressional staff members investigating the program said yesterday that the audits, released Sunday night by a U.N.-appointed investigative committee, reflect the need for further investigation. They said the audits underscore the need for greater accountability in an organization that is helping to oversee elections in Iraq and handling the disbursement of billions in aid to victims of the Indian Ocean tsunami.
Sen. Norm Coleman (R-Minn.), chairman of the Permanent Subcommittee on Investigations, which also is investigating allegations of corruption in the oil-for-food program, said in a statement that a review of the audits "only underscores my long-held concern about the fraud, mismanagement and lack of adequate oversight" at the program.
In an effort to address concerns about its ability to manage large assistance funds, the United Nations announced Monday that it has hired PricewaterhouseCoopers to track the spending of billions of dollars for tsunami survivors.
The committee that released the audits and other internal U.N. documents is headed by former Federal Reserve chairman Paul A. Volcker. It is investigating allegations of corruption in the $64 billion program, which oversaw the sale of Iraqi oil for the purchase of humanitarian goods while the nation was under U.N. economic sanctions.
In a 35-page briefing paper, the Volcker committee said the audits highlighted the "wholesale failure of normal management and controls" over some of the program's operations. It also faulted the United Nations' internal auditors for failing to scrutinize areas of the program that were most vulnerable to corruption: the sale and purchase of oil and humanitarian goods.
Volcker, who is to release his initial findings at the end of the month, said last week that he found no hard evidence of fraud or corruption in the audits. But he is investigating whether the selection of audit targets "was subject to inappropriate management influence" by senior officials at the U.N. oil-for-food program, according to the briefing paper.
U.S. lawmakers had pressed for copies of the audits for months.
Rep. Christopher Shays (R-Conn.), in a statement, questioned why U.N. auditors did not investigate the program's most scandal-plagued aspects. "How was the U.N. internal watchdog effectively neutered?" asked Shays, chairman of the Government Reform Committee's subcommittee on national security, emerging threats and international relations. "Why were key recommendations never implemented?"
Sen. Carl M. Levin (D-Mich.), ranking Democrat on the subcommittee on investigations, said, "The audit reports appear to add little new information about the extent to which Saddam Hussein misused the oil-for-food program or the allegations made against particular U.N. officials." He said the United Nations' "overdue" release of the audits "sets a healthy precedent."
U.N. spokesman Stephane Dujarric acknowledged "deficiencies" in the program's management but added: "Let's not forget that the oil-for-food program did fulfill its main objective by providing humanitarian relief to 27 million Iraqis, and thereby helping to maintain political support for the sanctions, which, in turn, prevented Saddam Hussein's regime from acquiring weapons of mass destruction."
One internal audit alleged that the U.N. Compensation Commission "overcompensated certain parties by approximately $557 million."
The Geneva-based agency is responsible for using Iraqi oil revenues to compensate governments and companies that suffered financial losses during the 1991 Persian Gulf War. A separate audit alleged that the commission might have saved as much as $2.2 billion by setting currency exchange rates on the date an award was paid instead of the date a claimant suffered a loss.
Joseph Sills, a spokesman for the commission, disputed the findings. He said the U.N. auditors had no authority to challenge decisions the commission's panel made on the amount of compensation awards. "They don't have any say there," he said. "We don't feel there have been overpayments."
The audits also cited $5 million in potential losses due to "inadequate control and poor judgment." A review of the U.N. Habitat resettlement program in northern Iraq describes "a situation of mismanagement" that led to the loss of more than $2 million. In one instance, the agency made $500,000 per year in cash payments to building inspectors "who do not provide any services."
The audits also documented alleged overpayments of $1.4 million to three companies that monitored imports of humanitarian goods and to Saybolt Eastern Hemisphere, a Dutch firm that monitors Iraqi oil exports.
Jan Heinsbroek, president of Saybolt, said the company addressed the issues that the audits raised when the audits were conducted. "We were successful in explaining each point brought forward," Heinsbroek said. U.N. officials "accepted all of our explanations."
Cotecna, one of the import monitors, was never given copies of the audits by the United Nations, according to company spokesman Seth Goldschlager. Evelyn Suarez, a Washington lawyer for the Geneva-based company, said: "Cotecna is confident that a full consideration of the facts in proper context will demonstrate that Cotecna performed its function with due diligence and utmost professionalism."
Blum reported from Washington.
