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OIL-FOR-FOOD: THE UNITED NATIONS EXPOSED

FORECASTS & TRENDS E-LETTER
By Gary D. Halbert
May 25, 2004

IN THIS ISSUE:

1.  The United Nations’ Anti-American Ideology.

2.  The Oil-For-Food Program’s Noble Intentions.

3.  How The Oil-For-Food Program Was Looted.

4.  Many Of Our “Allies” Were “On The Take.”

5.  Did Hussein Use Kickbacks To Fund Terrorism?

6.  The US Should Withdraw From The UN.

Introduction

This week, we look into the United Nations’ (UN) “Oil-for-Food” program in Iraq, which was established after the Gulf War in 1991 and was designed to allow Iraq to sell enough oil to meet the humanitarian needs of the Iraqi people, such as food, medical supplies, essential services, etc. The program was never intended to line the pockets of Saddam or benefit his cronies around the world, which sadly is exactly what it did for many years.

As with many UN programs, Oil-For-Food was poorly structured, thus allowing for massive abuses.  The nature and scope of these abuses were so grievous and so widespread that the Oil-For-Food program may well have been the greatest financial scandal of the last 100 years. This incredibly huge scam crosses borders, religions and political ideologies, uniting those involved in plain and simple greed.

What’s most stunning are recent revelations exposing those at the UN and elsewhere who were primarily responsible for the abuses, and who participated in this massive fraud. In short, many in the UN administrative infrastructure and many of its members have been blatantly corrupt, as have some of our so-called “allies” around the world.

This scandal also brings to light the UN’s outrageous hypocrisy and duplicity as they loudly criticized our efforts in the War on Terror as inhumane, yet at the same time they were skimming millions from the Oil-for-Food program and thereby depriving the Iraqi people of needed food and medicine. Is it any wonder there was such opposition to the US invasion of Iraq? No, it was simply bad for business!

Why do you need to know about this? First, because there is a massive cover-up underway at the UN.  Second, the liberal media is cooperating as always. What have you heard from them about the Oil-For-Food scandal recently?  Third, it is also worth mentioning that John Kerry has featured the UN in many of his foreign policy proposals, including his desire to have the UN put in charge of the administration of Iraq. As more and more evidence comes to light, that would be like allowing the fox to guard the hen house. Finally, if all the facts in this scandal actually see the light of day, the UN will emerge discredited, weakened, and very possibly, broken.  Maybe that wouldn’t be such a bad thing.

The U.N. Exposed

A recent Rasmussen survey showed that only 38% of Americans have a favorable opinion of the UN, while 44% have an unfavorable opinion. Actually, these favorable/unfavorable numbers were quite surprising to the media, but probably not to most of you reading this E-Letter. The unfavorable numbers are almost certain to rise in the near future as the scathing details of the Oil-For-Food scandal are exposed.

If you are surprised by the recent revelations about Oil-For-Food, you really shouldn’t be. After all, the UN is comprised in large part of representatives of small, poor Third World nations, many of which are inherently corrupt and anti-American. The fact that their ingrained dishonesty and corruption would spill over into the UN really shouldn’t surprise anyone. Nor should it surprise us that the UN has had a history of anti-American activity.

In 2001, for example, the United States was removed from the United Nations High Commission for Human Rights (UNHCHR) for the first time since 1947 in favor of Sudan, one of the world’s absolute worst human rights violators.   (You can check out Sudan’s human rights record by clicking here.)  By the way, Sudan was recently granted another term on that commission! This is only one of many such examples, so it’s not a stretch to see how a UN organization could be so corrupt.

When it was conceived in April of 1995, the Oil-For-Food program was intended to be a humanitarian mechanism. Prior to its full implementation in 1997, Iraq was subject to extremely stiff trade sanctions resulting from Saddam’s defiance of UN weapons inspectors. The Oil-For-Food program provided basic relief in the form of limited crude sales. In the beginning, the program was well intentioned, seeking to bring relief in the form of food and medical supplies to the Iraqi people. After all, it didn’t seem fair to punish the citizens of Iraq for the crimes of Saddam Hussein and the Iraqi regime.

Unfortunately, this program rapidly turned into a complicated kickback scam that allowed Saddam to bribe political figures and institutions around the world, as well as fuel his notoriously evil rule. From information discovered to-date, it appears that the tangled web of deceit extended beyond the UN and the governing body of the Oil-For-Food program itself, but also may include several of our so-called “allies,” as you will read below.

How This Information Came to Light

The corruption in the Oil-For-Food program had long been suspected.  A June 20, 2003 article by Marc Perelman on The Forward Internet website discussed doubts about the Oil-For-Food program and suggested that some of the money was being used to fund terrorism (more about this later).  In part, Perelman said:

“The now-defunct program allowed Iraq to buy food and medicine with its oil proceeds under U.N. supervision. Although the oil sales in question were legal and approved by the U.N., several observers say the system involved kickbacks and was used by Saddam to buy political support and to finance intelligence activities and even terrorist groups.”

Concrete evidence came to light in December of 2003. While advising the Iraqi Governing Council, Claude Hankes-Drielsma, the UK Chairman of Roland Berger Strategy Consultants, sent an urgent fax to UN Secretary-General Kofi Annan.

“As a result of my findings here, combined with earlier information I most strongly urge the UN to consider appointing an independent commission to review and investigate the Oil-For-Food Programme. Failure to do so might bring into question the UN’s credibility and the public’s perception of it…My belief is that serious transgressions have taken place and may still be taking place.”

Mr. Hankes-Drielsma was shown various documents at the Iraqi Oil Ministry that strongly indicated major abuses in the Oil-For-Food program. These documents reflected both individuals and institutions that Saddam rewarded with allocations of Iraqi oil. The names were compiled into a spreadsheet at the request of the Iraqi Governing Council. Some of the names have been published in Al Mada, an Iraqi daily paper, and will likely appear soon in more mainstream sources.

How The Scam Worked

From its inception, the Oil-for-Food program was riddled with flaws and loopholes, opening the door for the grievous abuses that followed.  One of the major flaws was that Saddam Hussein was given the right to 1) select the parties who would buy the Iraqi oil, and 2) select the suppliers of the humanitarian aid.  Hussein was also allowed to set the price at which Iraqi oil would be sold.

All the seeds for a giant scandal were put into place. Hussein had the ability to determine with whom to deal and set the official price of Iraqi oil. Furthermore, the rules did not force Hussein to deal directly with the end-users; instead, he was allowed to sell oil through middlemen. For political purposes, Hussein would sell the oil at a discount to the middlemen and they, in turn, sold it to the end-users at market prices. Nice work if you can get it! 

Another flaw in the program was that all deals were confidential between Hussein and the UN.  Under this arrangement, the UN was not to examine the contracts for Iraqi oil except between the Iraqi Oil Ministry and the first purchaser. The story is that the UN had no idea the middlemen were adding surcharges to the contracts awarded them by Saddam, and therefore they went totally unnoticed by the UN. Yeah, right!

In one alleged example, UN Oil-For-Food administrator Benon Sevan was granted an allocation of 7.3 million barrels of Iraqi oil, on which he could expect to make a $3.5 million profit.  Not a bad take for an international bureaucrat!  For a graphic representation of how the scam worked, click here.

The US General Accounting Office estimates Hussein skimmed as much as $10 billion from a total of $67 billion that flowed through the program. It all went either directly to Hussein personally, or to supporters of the regime.  By bribing UN officials and foreign dignitaries, Hussein also guaranteed their silence as he used money for purposes other than the humanitarian aid for which it was designed.  The UN also looked the other way when Hussein sold oil to other countries in excess of the amounts allowed by the Oil-For-Food program.

Who’s On The List?

The names and institutions on this list – that benefited greatly from the Oil-For-Food program - are so numerous and shocking that when they are all confirmed, this could be the greatest financial scandal in history – if in fact it is fully reported.  The documents are still being translated from Arabic, a slow and difficult process.  What we know now is that the list spans at least 50 countries.

When the list is taken in total, three obvious favorites emerge. At the top of the list is RUSSIA, which is not really a surprise. The Russians have had a vested interest in Iraqi oil production for nearly 15 years. There are four pages of entries detailing voucher recipients in Russia that total over one BILLION barrels of crude. On the Russian side, the notable recipients include the 'Director' of the Russian President’s office, other prominent Russian politicians and even the Russian Orthodox Church (why, how?).

Admittedly, Hussein owed the Russians tens of billions of dollars in loans, so it is not hard to see why the Russians would try to get some of their money back, even if through questionable or illegal means.  Yet as the scandal is sorted out, it looks like much of the Oil-For-Food money may have simply lined the pockets of key Russian politicos to a great degree. This, of course, explains why the Russians opposed the war in Iraq from the very beginning.

Finishing strong in second place behind the Russians in the Oil-For-Food scandal is none other than our long-time “ally” FRANCE! France’s oil vouchers account for 150.8 million barrels of crude and notable recipients include French Interior Minister Charles Pasqua, Patrick Maughien, who is a close friend of Jacques Chirac and head of Soco International oil company, and former French Ambassador to the UN, Jean-Bernard Merimee.

Surprised? This clearly played heavily into French opposition to the War. For all their moral and diplomatic objections, this exposes the French as the smarmy and back-biting erstwhile allies they really are.

SYRIA comes in third in the voucher sweepstakes, again not a surprise, as they have long been allied with the Hussein regime. There are 14 names in the Syrian column accounting for 116.9 million barrels of crude. Syria’s motivations are plain, having been a hotbed of terror and anti-Americanism for years.

Outraged yet? Wait, it gets better. As noted above, Benon Sevan, the director of the Oil-for-Food program, is on the list.  Yet even more notable is Kojo Annan, the son of UN Secretary-General Kofi Annan. The internal audit conducted by the UN revealed that millions of dollars are unaccounted for. It devotes nearly 20 pages to the UN’s dealings with Cotecna, a Swiss firm awarded a $4.8 million contract for the Oil-for-Food program. Cotecna employed Kojo Annan as a consultant prior to making its bid for the contract. Sevan has so far denied all wrongdoing. He has refused to be interviewed and will not comment. Ditto for Kofi Annan and his son.

The names go on and on: the President of Indonesia, the PLO, a member of the British Parliament, and even rogue American ex-patriot financier Marc Rich. Needless to say this is a powder keg with global ramifications.

Oil For Food For Terrorism?

There has been, thus far, modest media attention on this scandal, with the exception of Fox News and the Wall Street Journal. That’s not unusual at all considering that the media in general adore the UN and will be hesitant to report any negative news until the evidence becomes overwhelming.

Claudia Rosett of the Wall Street Journal quotes financial investigators as saying there are possible “terrorist connections” in the list of companies that did business under the Oil-for-Food program.  She writes:

Included are a remnant of the defunct global criminal bank, BCCI, while another was close to the Taliban while bin Laden was on the rise in Afghanistan, and a third was linked to a bank in the Bahamas involved in Al Qaeda’s financial network; a fourth had a close connection to one of Saddam’s would-be nuclear bomb makers.

Fred Gedrich, a Senior UN and Foreign Policy Analyst at Freedom Alliance, believes that “the UN created an environment where Saddam could funnel large sums of money to terrorists and terrorist organizations to the detriment of humanity and civilization…”

Could this be the clinching connection between al Qaeda and Saddam Hussein?  Quite possibly.  Many conservatives already believe that there is sufficient evidence of a tie between the two.  However, I’m sure that the liberals and mainstream press won’t believe there is a tie until they see a picture of Hussein handing a Publisher’s Clearinghouse-sized check to bin Laden.

Conclusion

Think about this for a minute. There was very little UN opposition to US military action in Afghanistan. But as we set our sights on Iraq, the protests began in earnest, even though Iraq had been openly defying UN resolutions for over a decade. Afghanistan was not bad for business, but Iraq was. Not only that, but US action in Iraq also carried the threat that the Oil-For-Food program would be discovered to be a sham.

I find it scarcely comprehensible that a world organization whose chief mandate is one of peace and humanitarian assistance has, through the actions of many of its membership and key administrators propped up a tyrant, oppressed an already poor people, defrauded the world and in the process, lined their pockets while either directly or indirectly suborning anti-Americanism and terrorism across the globe.

The UN has had anti-American tendencies for decades, but this blatant display is alarming. The UN has become a misguided echo chamber of bitter and corrupt Third World countries whose only chance at global influence is through the UN. It will hopefully be discovered that the UN is largely a criminal entity whose petty agendas are at odds on a global basis with freedom and democracy, and certainly anti-American.

We can only hope that as this scandal grows in intensity and visibility, the US can use this as an impetus to finally remove itself from the UN, and maybe even insist the UN relocate to somewhere else beyond our shores. But maybe that is just wishful thinking on my part and that of other conservatives. In lieu of that, it would be nice to see a suspension of US payments to the UN and at least an indefinite US ‘abstention’ from UN sponsored programs and activities.  Maybe that, too, is just wishful thinking.

At the very least, there should be a massive shake-up at the UN with indictments, arrests, convictions, increased scrutiny and a great deal of public shame.

Very best regards,

Gary D. Halbert

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Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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