House International Relations Committee - United Nations Oil-for-Food Program - Panel I - Part 1
Federal News Service April 28, 2004 Wednesday
April 28, 2004 Wednesday
HEADLINE: PANEL I OF A HEARING OF THE HOUSE INTERNATIONAL RELATIONS COMMITTEE
SUBJECT: THE UNITED NATIONS OIL-FOR-FOOD PROGRAM
CHAIRED BY: REPRESENTATIVE HENRY HYDE (R-IL)
WITNESSES: HOWARD ZIAD, U.N. REPRESENTATIVE, KURDISTAN REGIONAL GOVERNMENT; MICHAEL SOUSSAN, FORMER PROGRAM COORDINATOR, U.N. OIL-FOR-FOOD PROGRAM; DANIELLE PLETKA, VICE PRESIDENT, FOREIGN AND DEFENSE POLICY STUDIES, AMERICAN ENTERPRISE INSTITUTE; CLAUDIA ROSETT, SENIOR FELLOW, THE FOUNDATION FOR THE DEFENSE OF DEMOCRACIES; AND JOHN G. RUGGIE, PROFESSOR, HARVARD UNIVERSITY
LOCATION: 2172 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.
BODY:
REP. HYDE: The committee will come to order. (Sounds gavel.) The chair many times has announcements to make, some of which are perfunctory, some of which are enormously substantive, and I have one of the latter kind to make.
One of our members who is not here today-and you'll understand why-Dana Rohrabacher, at 6:00 p.m., April 27th, his wife Rhonda gave birth to triplets-Anika, Christian and Tristan. So I don't expect we'll be hearing from Mr. Rohrabacher today. But in absentia, we congratulate him and wish him, and especially his wife, well.
All right, the committee will come to order. Of the long list of Saddam Hussein's crimes, the most relentless were those committed against the Iraqi people. A grim catalogue of outrages range from mass killings of one extreme to the needless privation and steady, grinding away of hope that formed the context of daily life. The elimination of his regime last year revealed a population rendered destitute by two decades of dictatorship and the results of the conflicts he initiated against neighboring countries. Unfortunately, efforts by the international community to counter the threat Saddam Hussein posed to his neighbors and others unavoidably added to the burden borne by the Iraqi people.
In an effort to spare them, especially women and children, from the harshest effects of the embargo placed on the regime in the aftermath of Saddam's invasion of Kuwait, the United Nations initiated a program in 1996 to provide the Iraqi people with food, medicine, and other aid. The humanitarian relief was to be paid for by monitored sales of Iraqi oil. This undertaking came to be known as the oil-for- food program, and is credited, correctly, with saving the lives of millions.
Unfortunately, numerous allegations have been made that this humanitarian program was undermined by systematic abuse, including graft and outright theft, that is estimated in the billions of dollars. The latest and most authoritative report is that released by the General Accounting Office, and it estimates that between '97 and 2002, Saddam's regime obtained over $10 billion in illegal revenues from the oil-for-food program through illicit surcharges and commissions as well as smuggling. If these charges prove true, the most obvious victims are those Iraqis who failed to receive needed assistance.
But the damage extends much further. The massive windfall resulting from this alleged organized theft allowed Saddam to maintain his grip on the country, line his pockets, and to make companies and countries dance to his tune, with consequences we're still struggling to contain.
But there's yet a deeper threat. Those who believe that the United Nations and its many programs play a vital role around the world-and I count myself among them-must also fear for the potential impact on the reputation and credibility of the U.N. as an institution. The institution's work in other areas should not be needlessly impeded or placed in doubt by these still-emerging allegations. It is, therefore, incumbent upon those with responsibility for these programs, as well as those charged with investigating their failings, to ensure that the truth emerges, however unpleasant that task or the results may be.
Did U.N. officials responsible for administering the oil-for-food program properly undertake their oversight and management responsibilities? Were some of the administrative provisions ignored or violated by Iraq with the knowledge of U.N. officials? Did the U.N. fail to undertake their responsibilities in overseeing the contracting process? Were program accounts for the administration of the program properly audited? Have they been made public? These and other important questions are the reasons for this and succeeding hearings on this subject.
Our committee's hearing today will begin to unravel the allegations of corruption and fraud that, if true, significantly undermined the effectiveness of the oil-for-food program. Last week, U.N. Secretary General Kofi Annan named the highly-respected Paul Volcker, former chairman of the Federal Reserve, to lead an independent investigation of the program. In Iraq, the Finance Ministry has begun its own inquiry, with the help of international auditing firms, in an attempt to locate stolen assets. I have high hopes that these and other investigations will soon distill truth from allegations of wrongdoing and will lead to remedial measures and reforms wherever needed.
It is axiomatic that the success of these investigations requires that investigators have full and complete access to essential information and witnesses, wherever found.
Given the U.N.'s expanding role in the establishment of a new government in Iraq, and in assisting that country's reconstruction, it is imperative that the questions surrounding the oil-for-food program be answered as fully and as soon as possible so that its efforts in that country, as well as in the many other vital programs it is responsible for around the world, are not compromised, and yet more needless suffering emerge from the fading embers of Saddam's regime.
I now turn to my friend and colleague, Tom Lantos, the ranking Democratic member, for his opening remarks.
BREAK IN TRANSCRIPT
REP. HYDE: Thank you very much, Mr. Lantos. It is the chair's judgment that we will entertain two more statements, one from Mrs. Ileana Ros-Lehtinen, should she desire to make one-and I don't see her here-the other from Mr. Ackerman as ranking member of the appropriate subcommittee.
And then, for the other members, because we have two panels and because of the importance and complexity of the issues before us, I'm going to not entertain other opening statements, but your statements will be made a part of the record at this point in the record, or whenever you wish to have them entered. And then we can get everybody perhaps an opportunity to question the witnesses and we can get to hear the witnesses and not have the time shortened because of votes and that sort of thing.
So with your patience and understanding, the chair recognizes Mr. Ackerman.
BREAK IN TRANSCRIPT
REP. HYDE: Without objection, so ordered.
REP. ACKERMAN: Thank you. And for those who are dubious of National Public Radio, the Associated Press reported the other day --
REP. HYDE: The gentleman's time has expired.
REP. ACKERMAN: If I could just have an additional 20 seconds, Mr. Chairman.
REP. HYDE: Without objection.
REP. ACKERMAN: The Associated Press reported the other day that U.S. contractors have received billions in reconstruction contracts for Iraq, having recently paid $300 million in fines for bid-rigging, fraud, delivery of faulty military parts, and environmental damage.
Now, there's some crime, Mr. Chairman. If we're going to have hearings about corruption and mismanagement in Iraq-and I think we should-I respectfully suggest that we start with those misusing and wasting U.S. taxpayer money first.
Thank you, Mr. Chairman.
REP. HYDE: The chair will briefly respond by asserting as vigorously as it can that no one is interested in bashing the U.N. This should not be partisan. We are inquiring into allegations-and they are only allegations-of the fraudulent diversion of billions of dollars.
It is true they are not directly United States monies. But because the United States is investing billions of dollars in the reconstruction of Iraq, monies that ought to be going for that purpose that have been diverted to somebody's pocket do deny efficacy to the funds the United States has appropriated. And so, however indirectly, we are involved.
Notice of this sooner? I plead guilty. We've been pretty busy this year. And as soon as this matter came to my attention, we decided we would be derelict if we didn't take a look at it. And I want to look at it, and we will go wherever the testimony leads us, no matter who's responsible. And I hope we can do it in a bipartisan way.
REP. ACKERMAN: Mr. Chairman? Apr 28, 2004 12:40 ET .EOF
REP. HYDE: Yes.
REP. ACKERMAN: Would you please, if you would care to, tell us your view of whether or not this committee should be holding hearings on the corruption, disappearance, misuse and abuse of U.S. taxpayer dollars and to follow that trail wherever it might go as well?
REP. HYDE: Absolutely.
REP. ACKERMAN: Thank you, Mr. Chairman.
REP. HYDE: Absolutely. All right, I'd like to welcome Hawar Ziad. Mr. Ziad is a representative of the Kurdistan Regional Government in the U.N. liaison office of New York. He has extensive international business experience, including with International Computers Limited, Sloan Management Services, and Lombarda (sp) Holdings.
Mr. Ziad is a graduate of Baghdad College and completed a two- year program at Oxford College of Technology. We welcome Mr. Ziad.
Danielle Pletka is currently vice president of foreign and defense policy studies at the American Enterprise Institute for Public Policy Research, and previously she served as a senior professional staff member for the Near East and South Asia with the U.S. Senate Committee on Foreign Relations. Ms. Pletka was also a staff writer for Insight Magazine and an editorial assistant at the Los Angeles Times and Reuters in Jerusalem.
Ms. Pletka earned her BA from Smith College and her master's from Johns Hopkins University. And we welcome you, Ms. Pletka.
Claudia Rosett writes a column, "The Real World," on issues of tyranny and human rights, especially as these relate to the war on terror, for the Wall Street Journal. She's covered international affairs for the past 22 years from all over the world, contributing to such publications as the New York Times, Commentary, the American Spectator and the Weekly Standard, and makes frequent guest appearances on radio and TV.
She received her BA from Yale University, her master's in English literature from Columbia University, and her master's of business management from the University of Chicago. Welcome, Ms. Rosett.
John G. Ruggie joins us as the Evron and Jeanne Kirkpatrick professor of international affairs and director of the Center for Business and Government at Harvard University's Kennedy School of Government. Previously he served as the assistant secretary general and chief adviser for strategic planning to United Nations Secretary General Kofi Annan. Prior to that position, he was both dean and professor at Columbia University's School of International and Public Affairs.
Mr. Ruggie received his BA in politics and history from McMaster University in Canada, a Ph.D. in political sciences from the University of California-Berkeley, and a doctor of laws honoris causa from McMaster. Welcome, Mr. Ruggie.
Michael Soussan is an editor of "African Geopolitics," a bilingual quarterly journal on African affairs. He consults for universities, think tanks and private companies, with an interest in Iraq. Previously he served as program coordinator for the United Nations oil-for-food program.
Mr. Soussan earned his master's in international relations from the Institute Stie du de Politique (ph) and a BA from Brown University. Welcome, Mr. Soussan.
We're honored to have you all up here before the committee today. And Mr. Ziad, we'll start with you. Please proceed with a five-minute summary, give or take the five minutes. And your full statement will be made a part of the record. Mr. Ziad.
MR. ZIAD: I'm making this presentation on behalf of Kurdistan Regional Government, both Irbil and Sulimaniyah administrations. And I have Mr. Mujar Sandin (ph) with me supporting my presentation.
Chairman Hyde, Ranking Member Lantos, members of the committee, before I begin my statement, I wish to thank members of the committee and the United States Congress, on behalf of the people of Iraqi Kurdistan, for having protected us from Saddam's tyranny and for securing the liberation of all Iraq from his murderous rule.
The Iraqi Kurds could not have survived without the American- operated northern no-fly zone, nor could Iraq have been liberated last year without the brave efforts of the men and women of the United States Armed Forces, we will remain grateful allies of the United States forever. I am grateful for the opportunity to address the scandal that lies at the core of the United Nations Oil for Food Program. The U.S. supported program began in 1995, and was corrupted by the U.N. Secretariat, the U.N. Office of the Iraq Programs, and Saddam's regime. It is a scandal that must be exposed, because it prolonged the suffering of the Iraqi people under Saddam despite the fact that it was designed to relieve their suffering.
The Oil for Food Program was set up by the Security Council Resolution 986 with the noble aim of providing food and medicine directly to Iraqis while maintaining economic sanctions that were imposed upon Iraq in the wake of Saddam Hussein's invasion of Kuwait. Under this scheme, Iraqi oil was sold on international markets to raise revenue to purchase humanitarian goods only. Both the Clinton and Bush administrations supported the Oil for Food Program to alleviate the very real suffering of all Iraqis.
In the end, few Iraqis gained much from the program. The Kurds, whose very survival was seen as an affront to Saddam's regime, were the targets of discrimination by the Officers of the United Nations Program who preferred pleasing and appeasing Saddam over ending malnutrition and treating the sick amongst the Kurds. The Oil for Food Program was based on the twin notions of first international oversight of the oil sales, and purchase and delivery of humanitarian goods with the proceeds. Two, sharing among all Iraqis of the revenue, Iraqi-Kurdistan was to receive 13 percent of the total revenues. Unfortunately, the people of Iraq did not receive anything near the amount that was their right.
Let me also cite just a few examples of what the United Nations promised and failed to deliver while misspending Oil for Food funds. A new general hospital for the City of Sulimaniyah, which has around 750,000 inhabitants. Funds for the Sulimaniyah General Hospital were allocated in 1998, but six years on the hospital has yet to be built. The U.N. body responsible was the World Health Organization, with specific authority for this project delegated to its East Mediterranean Regional Office in Cairo. Disposable surgical gloves for the maternity hospital in Sulimaniyah, during 2002 the hospital received no more than 2000 gloves per month when it needed 10,000. A diagnostic and oncology facility for Iraq-Kurdistan, the lack of such facility prevented the proper treatment of cancer patients in Iraqi- Kurdistan. Despite these problems, Iraqi-Kurdistan demonstrably used its meager share of Oil for Food goods more efficiently than the Iraqi regime. While Saddam's regime, with the backing of UNICEF, claimed that infant mortality was rising in the 15 provinces under his control, in Iraqi-Kurdistan infant mortality actually fell.
The results of the United Nations mismanagement of Oil for Food Program were not confined to saving a few dollars that went in Saddam's pockets, or in the hands of U.N. officials. Rather the amounts were in the billions of dollars, the loss was born disproportionately by the Kurds. Here are some of the best examples of the thievery perpetrated by Saddam and officials that were related to the program. In 2002, the U.N., with the full approval of the Secretary-General, allocated $20 million to build an Olympic stadium for Uday Saddam Hussein.
REP. HYDE: Mr. Ziad, could you take two more minutes and complete your statement?
BREAK IN TRANSCRIPT
REP. HYDE: Thank you very much.
Ms. Pletka next.
BREAK IN TRANSCRIPT
REP. HYDE: Ms. Pletka, can you summarize it in two more minutes?
MS. PLETKA: I can summarize it in two more minutes, yes, sir. Sorry.
REP. HYDE: Thank you.
BREAK IN TRANSCRIPT
REP. HYDE: Thank you, Ms. Pletka.
Professor or Dr. Ruggie, please.
MR. RUGGIE: Thank you very much, Mr. Chairman. It's a great honor for me to be here. I'd just like to touch on a few of the main points of my testimony. I've left you with a larger prepared statement.
Let me begin by saying at the outset that I would be deeply saddened if even one U.N. official were found guilty of wrongdoing in the oil-for-food program. The Volcker panel will make appropriate investigations and recommendations to Kofi Annan. And I would expect, sir, that the secretary general, if it turns out that someone is implicated, would waive all diplomatic immunities and permit any such individual to be tried in a court of law. and suffer whatever punishment is meted out.
I am very troubled by the question that you're addressing, Mr. Chairman, about how this could have happened. The critics of the U.N. have made this into largely a morality tale of evil bureaucrats on the take, and we will see what the Volcker panel turns up in that connection. I would hope, sir, that we could take a broader look at the tough choices that governments-including the United States government-face and have to make throughout this process.
Let's recall, to begin with, that at 1991, at the end of the war, we left Saddam in place as the authoritarian leader of a society that we regarded-and still do-as-until the war-as a sovereign entity. The rest of the world, therefore, was obliged to treat Saddam Hussein as the leader of a sovereign nation. A lot of things follow from that right from the beginning, including the question of how did he get to pick the contractors that were involved? The answer is very simple: He accepted no other proposition. He was perfectly happy to see his people suffer and die and blame us for their suffering and dying. And we-the United States, the United Kingdom and other countries-would have taken the hits not only in terms of the moral cost of that, but also in terms of international public opinion. We started the problem by the way we ended the war in 1991: My first point.
My second point: In the mid-1990s it became clear that Saddam Hussein was smuggling oil out of Iraq, was building up his own coffers. Sanctions were beginning to be questioned. At the same time, we knew that they were necessary.
The humanitarian costs by that time became unbearable. Sir, they didn't become unbearable for Saddam-they became unbearable for us. And we, the outside world, were put in the position of having to persuade Saddam Hussein to allow us to feed his people. And he, as I said, determined essentially the basic conditions under which we were allowed to do that. That's my second point.
My third point has to do with the oil-for-food program and what it was and wasn't responsible for. Congressman Lantos has already said that the oil-for-food program had nothing to do with oil smuggling. The United States set up a maritime force in the Persian Gulf that was supposed to interdict the flow of oil out through the Gulf. And I remember at the time, sir, watching the evening news and seeing trucks roll into Turkey and into Jordan, laden down with oil. So I assume it wasn't a secret to the United States government, if it was on ABC News.
There is a lesson to be learned here, Mr. Chairman. I believe the United States, the United Kingdom and others ignored those oil exports for the simple reason that the sanctions, as sanctions invariably do, had the biggest impact on the neighboring countries. We weren't prepared to compensate for the economic losses that they suffered. Some of them were our close allies, including in the struggle against Saddam. And so as a matter of strategic policy choice, I would guess we decided to look the other way.
My next concern is who was doing what on the 661 committee. Mr. Chairman, there were something like 30,000 contracts approved over the life of the 661 committee. As best as I can determine-and I certainly haven't gone through all 36,000 contracts-but as best as I can determine, not a single member of the 661 committee ever held up a single contract based on pricing issues. Several thousand were held up for potential dual-use technology problems. Not a single one for pricing issues. The U.S. and the U.K. were the ones that were holding up the contracts-never one, to the best of my knowledge, on pricing issues. Why? Did we not know? Were we stupid? Were we complicitous? My sense is that again we made a policy choice. The sanctions regime was fraying, some of the contracts were going to other members of the committee. We needed to hold the sanctions together to make sure that Saddam did not get the capability to reconstitute his weapons of mass destruction-and that was the price that we were willing to pay-is my guess.
REP. HYDE: Doctor, can you summarize in two more minutes?
MR. RUGGIE: I can, no problem.
What did the U.N. staff do about these things? Congressman Lantos has already alluded to this as well. It was the U.N. overseers who first alerted the 661 committee to the oil-pricing scam, on the basis of which the U.S. and the U.K. then changed the system. The price padding was harder to detect for a variety of technical reasons. But, again, dozens of contracts were held up by the secretariat pending further analysis of pricing issues.
Congressman Hyde, the inference that I draw from this was that the United States paid a price in order to get a job done. The job was to contain Saddam Hussein and to make sure he didn't reconstitute his weapons of mass destruction, and to alleviate as much as possible the humanitarian costs of the sanctions. That may not have been the wise policy choice, but that's the policy choice the two American administrations made.
Finally, Mr. Chairman, if I may at end, a comment from the heart. I'm truly distressed, sir, by the cavalier manner in which the day-to- day contributions of humanitarian aid workers around the world are discounted, dismissed, and even vilified, by people who in some cases rarely venture beyond talk-show green rooms and Washington think tanks. Over the past 10 years, the United Nations has lost more civilian members in conflict zones than it has peacekeepers. I lost good friends in Baghdad last August when the U.N. headquarters were blown up. They didn't have to be there, sir, but they wanted to help. They are unsung humanitarian heroes, and I would like the record to show that I remembered them this morning. Thank you.
REP. HYDE: Thank you, Dr. Ruggie.
Ms. Rosett.
MS. ROSETT: Mr. Chairman, distinguished members of the committee, thank you very much for the chance to testify here this morning.
I'd like to make the basic point that this actually had a great deal to do both with U.S. tax dollars and I think with national security, and it's not simply an historical problem. And I start with a word about the allegations, which have clearly been distressing to the United Nations, especially to the secretary general who has challenged his critics to produce evidence.
One of the difficulties of this entire discussion, investigation-one I believe you yourselves will run into-is simply getting information from the United Nations. And it is disingenuous in the extreme for those in the secretariat who actually have that information and do not release it for a United Nations as an institution that controls vital records and does not release them to then challenge critics to produce evidence.
Now, I want to go on to say there is evidence. But the difficulty that one runs into is you pick up truly important threads in this tale, and you run-you follow them to the locked closets of the United Nations. Buried in the material that they kept secret, those 30-some thousand contracts over the years, are things that I think have great bearing on morality, on national security, on all the issues that this program was supposed to address, and some have great concern to us now.
The evidence I think some of the witnesses here have already reviewed. But what you basically need to know is there as the estimated $10 billion in graft and smuggling. I believe that to be a highly conservative figure. I also would suggest that smuggling was very much the responsibility of the U.N.. Iraq was under sanctions. The fact that a policy decision is made does not then excuse criminal doings. I believe they should still be called attention to.
And the basic problem there is that the U.N. was not configured for taking responsibility for enforcing its resolutions. That might suggest a deep need either for restructuring in some way at the United Nations or a very important need not to allow them to assume responsibility for something as important as controlling a hostile, aggressive and extremely wealthy tyrant like Saddam Hussein.
And this is where I'd like to say two of the things that have received great focus here are only part of the picture. The abuses were not limited just to waste, theft, fraud, graft, the now infamous Mercedes Benzes and sports stadiums and so on. Part of the problem was that oil-for-food-and I have a piece in the Wall Street Journal this morning that will lay out for you some of the further details-but it became basically, because of the secrecy and because Saddam was allowed to choose his buyers and suppliers, a global network for Saddam Hussein's regime of dirty money, of secret deals, of the ability to send huge amounts of funds, dwarfing say the funds we believe were available to Osama bin Laden, anywhere he wanted to-not only under cover, but with the approving seal of the United Nations. And the Al Mada list, which has received so much attention, the alleged bribes, those are allegations-that is yet to be proven. To make that the chief focus here-it's important, but it has dwarfed again by the mother ship here, which was the $111 billion worth of business that flowed through the secret account, to which only really those who had the most direct access were the U.N. secretariat which kept the records, which finally-which controlled the escrow accounts in (BNT parity law ?), and which also had the presence on the ground, was the interlocutor with Saddam's regime, hired the inspections firm-that was not done by the sanctions committee-that was the secretariat. That was Mr. Annan's son, who worked for the better part of three years for the company that got the contract during that same period, and was not disclosed by the U.N.
And the problem that you run into, if you start looking, investigating this is difficult for anyone outside the U.N., because the lists were kept so secret. You have to rely on leaked lists. Some have leaked. And I can tell you at this point that if you look at some of the companies that were authorized by the U.N. for Saddam to do business, I count up at least 75 registered in the-well, let me-sorry, 65 registered in Switzerland. Under terms of the U.N. deal, these were supposed to be end users buying at fair-market price-the point being to minimize graft opportunities and maximize the funding for the Iraqi people. Switzerland, 65 firms. What was anyone thinking? Someone needs to go and look at exactly how much money then flowed and where it went. Forty-five in Cyprus, several in Panama, four in Liechtenstein, one of which is tied to a firm that is on the U.N.'s own designated terror watch list at this point, with connections to Bank Al Taqwa, a terrorist-an al Qaeda-financing bank in the Bahamas.
And then finally we get to-and I'd like to give you one specific example, and try and wrap this up quickly. Seventy-five firms were authorized-this is approved by the U.N., on the list kept by the contract, to buy oil from Saddam that were based in the United Arab Emirates-a place soaked in oil. They don't need to import oil-they export. So what were these doing there? Well, Treasury recently designated one, and this will give you an idea of just how dirty this could get-and I do believe dangerous, since there were ties running through some of these places to al Qaeda, to terrorist groups. There has been no systematic investigation of these contracts with an eye to that-none. In fact, it's not even obvious where the contract at this point has placed all the documents or to whom it has sent them.
The case I pointed to was designated on April 15th by Treasury as a front for Saddam's own regime, a company called Al Wasl and Babel (ph), which set up business in Dubai, the United Arab Emirates, in 1999, advertising on its website that it was there specifically to cater to the needs of the oil-for-food program. It turned out to have been a front set up by senior officials of Saddam's own regime to sell relief goods to Saddam's own regime.
From another leaked list-I'm almost to the end of this-we can see-and I don't have the full information-it's confidential-okay? I only have a piece of it that's leaked. From the year 2000 and 2001, Al Wasl and Babel (ph) -- Saddam ordered up from them $190 million worth of goods. The U.S. and U.K. --
REP. HYDE: Could the gentle lady summarize in one minute?
MS. ROSETT: Absolutely. Okay, basically you had the chance on kickbacks coming and going for enormous amounts of funds to flow to places like this. There was on the evidence no supervision whatsoever. And I do believe it was incumbent upon the secretary general of the United Nations, who was present at the beginning, supervised the whole program, and hired the man who ran it, to have stood up at some point and said, This is getting way out of control. This is dangerous, this is dirty. And my recommendation to you would be this is far too big and complex a system, a scam, a scandal, and I think still a threat to the nation. There are parts of Saddam's regime still out there that are aware of what happened. The people who took bribes or made kickbacks, or were involved in some way in the graft are also, please remember, liable to blackmail by anyone who knows what they did. That would be leverage that may still be out there and must be taken into account.
My recommendation would be that you need a full congressional investigation into this. You are in fact the only body that has real leverage to do anything here. You control with 22 percent of the budget-our tax money that you control or you appropriate goes to fund this. It is terribly important, and I thank you very, very much for your attention this morning.
REP. HYDE: Thank you.
Mr. Soussan.
MR. SOUSSAN: Thank you, Mr. Chairman, distinguished members of the committee. I welcome and thank you for the opportunity to appear before you today to discuss issues of accountability and transparency in the oil-for-food program.
First off I want to touch on the allegations of corruption against individual U.N. staff. I think, as Dr. Ruggie said, that these are people who did risk their life to help the Iraqi people, and I sincerely hope all of these allegations are baseless, and I think we ought to consider the people involved absolutely innocent unless proven otherwise.
I do regret that it took a scandal of this proportion to-before the U.N. agreed to set up an independent investigation into the matter. But at this early stage, when all the facts are not known, I would also caution against focusing too much attention on individual allegations, because even if these are substantiated, they would not suffice to explain the system-wide failures that seem to have occurred.
The oil-for-food deal was first offered to Saddam Hussein in 1991 -- Security Council Resolutions 706 and 712. The Iraqi dictator refused to sign onto the deal for over five years. Far more Iraqi civilians died during that period than during the Persian Gulf War, or during the subsequent years when the oil-for-food.
If Saddam Hussein could be trusted to put the needs of the Iraq population first, it would never have been necessary to impose U.N. oversight over the program. Yet for reasons I have yet to fully understand, several U.N. leaders approached the implementation of the oil-for-food program with more distrust toward the United Kingdom, which had initiated the program, and the United States, than toward the regime of Saddam Hussein. In the hierarchy of hurdles we faced as we tried to make the program work, this, in my view, was problem number one.
It is very difficult to run an operation when senior leaders, including two assistant secretary general staff, do not believe in the mission. These two people resigned in protest against Security Council policy.
Nonetheless, thanks to the hard work of many dedicated U.N. employees, the program was implemented. Some aspects of its implementation were successful. Others were not.
The onset of the oil-for-food program provided enormous relief to the civilian population of Iraq. The program succeeded in cutting malnutrition rates in half, in improving Iraq's agricultural output, and providing the population with improved access to health care, safe drinking water and electricity. It is difficult to imagine what Iraq would like today if not for the oil-for-food. Certainly the cost of rebuilding the country would be much higher for U.S. taxpayers.
Nonetheless, if estimates by the General Accounting Office are correct, and Saddam Hussein was indeed able to use the oil-for-food program to extort $4.4 billion in cash kickbacks from Iraq's trading partners, then the United Nations clearly failed to live up to an important aspect of its mission, which was to keep money from flowing into Saddam's bank account.
It may indeed be true that several members of the international community simply did not care that Saddam Hussein misused the humanitarian program. This was particularly evident in some of the proceedings of the Security Council sanctions committee. But we in the U.N. secretariat had a mandate to oversee the humanitarian program and report to the Security Council about its adequacy, its equitability and effectiveness. That is what we were paid for. And it is undeniable that Saddam's kickbacks contributed to making the program less adequate, less equitable and less effective.
Therefore, I believe it fell squarely within our mandate to report any information that would indicate possible wrongdoing by the government of Iraq. We should have spoken out when we came across indications that the Iraqi government was demanding kickbacks as the cost doing business. We should have spoken out when members of the Iraqi governments made intimidating threats against our staff. We should have spoken out when the Iraqi government delayed or sabotaged our humanitarian program in Iraqi Kurdistan. We should have spoken out on a range of issues, but in most cases we did not.
Ironically, I believe the United Nations became embroiled in this scandal precisely because it sought to avoid controversy at all costs. Compounding this lack of transparency was a prevailing sense of moral relativism promoted by those within the system who were unable to draw a distinction between the interests of the Iraqi people and the interests of the Iraqi state, led by Saddam Hussein.
Before judging them, we must remember that the United Nations charter itself fails to draw such a distinction. In its current form, the U.N. charter is legally blind to the distinction between two definitions of state sovereignty.
We have the democratic definition, which holds that sovereignty stems from the consent of the people, and we have the totalitarian definition, which holds that the people and the state are one and the same thing, regardless of the behavior of that state.
REP. HYDE: Would the gentleman summarize in about two minutes?
MR. SOUSSAN: Yes.
REP. HYDE: Thank you.
MR. SOUSSAN: Two definitions. And for the U.N. charter today, as it currently stands, these definitions are equal. Today the U.N. faces questions from the media, including from a free Iraqi press, as to why it failed to hold the Iraqi government accountable for misusing the humanitarian program.
Then as now, some people believed that it was not the U.N.'s job; that it was the job of the member states to enforce the sanctions. The member states, in turn, point out that the U.N. never informed them anything was wrong, or rarely informed them anything was wrong. The finger-pointing cannot go on forever.
I believe that the independent investigation now led by Paul Volcker will reveal important lessons that can help the institution operate with a higher degree of coordination, accountability and transparency. I also hope it will yield some clues as to what happened to the money that was siphoned off by Saddam Hussein and which may still be used in support of terror today.
For the Volcker panel to succeed, it will need the full cooperation of U.N. member states. But finding out what happened is only half the job. The other half will be to agree on what to do about it.
In this regard, it is unfortunate that the United Nations did not use its own initiative to undertake a lessons-learned exercise immediately after closing down the oil-for-food program. I still hope such an exercise can be launched with the support of legislative committees such as this one and international academic institutions so as to complement the current investigations with reform-minded proposals.
At the end of the period that took a severe toll on the United Nations, and at a time when the U.N. headquarters in New York are set to be physically revamped and brought up to standard, there is a historical opportunity to take stock of the United Nations' shortcomings, based in part on the experience of the oil-for-food program, and initiate a real debate about the organization's future role and the principles that should guide its actions.
Mr. Chairman, thank you very much.
REP. HYDE: Thank you very much.
Now, ladies and gentlemen, we have one more panel following this panel, which consists of the General Accounting Office, who will be, as were these witnesses, a very important witness. The chair would very much like to get to the second panel before we have to adjourn or recess. So I'm going to plead with you to be brief, succinct in your questioning.
And if someone were-we have about two hours' worth of questions here if everybody got five minutes. So I would like to move this along as best we can. We'll have votes sometime soon as well. So if someone wants to waive their questioning of this panel, the chair would not be too distressed at all. But the chair is also not that visionary to expect that's ever going to happen in this lifetime. However, do try to be brief. It's for the benefit of all of us and the witnesses.
With that attempt at mild intimidation, the chair recognizes Mr. Lantos.
REP. LANTOS: Thank you very much, Mr. Chairman. I (plead?) to be unintimidated by your observation.
REP. HYDE: I knew that.
REP. LANTOS: It's a staggeringly complex issue that we are considering. And I would like to spend a moment to try to keep our eye on the ball.
The Saddam Hussein regime was a regime of mass murder. Saddam Hussein was responsible for the deaths of well over a million people, as the evidence now clearly indicates. And I think to be surprised that, in addition to being a mass murderer, he was also corrupt, would be nave in the extreme. So I don't think there is any dispute as to the venality and corruption and baseness and vileness of the Saddam Hussein regime.
What I find disturbing in some of the testimony, Mr. Chairman, is either a naivete or a pretension at expecting a tidy (world?) in this incredibly complex, evil, vicious mess. I believe the attempt to malign a man of utmost integrity, the secretary general of the United Nations, is absolutely outrageous. I find the title of an article by one of our witnesses, "What Did Kofi Annan Know and When Did He Know It?", reckless, irresponsible and repugnant.
Kofi Annan-and I have had plenty of disagreements with Kofi Annan-deserves our utmost respect as an international civil servant of the highest integrity. And this innuendo, this suggestion that somehow Kofi Annan has been corrupt in the food-for-oil program, is absolutely sickening, and I personally reject it with all the emphasis at my command.
I do find Professor Ruggie's testimony enormously persuasive. And since he didn't have a chance to read all of it, I'd like to use some of my time, Mr. Chairman, to read a portion of a paragraph of his testimony which to me is very much on point.
"The Security Council had oversight for the oil-for-food program. A committee of the whole called the 661 Committee, after the number of the resolution that authorized the sanctions in the first place, it approved roughly 36,000 contracts over the life span of the program. Every member had the right to hold up contracts if they detected irregularities. And the U.S. and Britain were by far the most vigilant among them. Yet, as best as I can determine, of the 36,000 contracts, not one, not a single, solitary one, was ever held up by any member on the grounds of pricing. Several thousand were held up because of dual-use technology concerns. What does this suggest about U.S. and British motives, as permanent members of that committee? Stupidity, complicity, or competing priorities? I strongly suspect it was the last.
Support for the sanctions was eroding fast. Saddam's allocation of contracts significantly favored companies in some of the countries that were also represented on the committee. So it seems reasonable to infer that the U.S. and Britain held their noses and overlooked pricing irregularities in order to keep the sanctions regime in place and to put all their efforts into preventing dangerous technologies from getting into Saddam's hands. Besides, we need to bear in mind today that the magnitude of the skimming problem was not known to anyone at the time. It has become clear only as files have opened up in Baghdad."
Mr. Chairman, it seems to me that this supercilious, holier-than- thou notion that we are dealing with a neat organizational structure and somebody, presumably Kofi Annan, was asleep at the switch is just outrageous. We will find enormous corruption in this program. I would bet my last dollar on it. We will find corruption involving large numbers of countries, corporations and individuals. There is not the slightest doubt in my mind of that.
But I think, at this stage, at a time when we are moving towards placing enormous responsibilities following the handover on June 30th upon the United Nations and the secretary general, to imply dishonesty on his part is so contrary to our national interest that it simply boggles the mind.
Thank you, Mr. Chairman.
REP. HYDE: The chair would say, in brief response, that I agree that there should be no personal charges until there's testimonies in support of them, where conclusions can be drawn, which may never-that may never exist. This is a search for truth, not an assertion of a point of view.
REP. LANTOS: I fully agree with you, Mr. Chairman.
REP. HYDE: We have two votes pending, and then I would ask the committee to forgo their luncheon and come on back. Pain builds character, and so holding off on lunch will help us finish the questioning with this panel and get to the next one. So we will adjourn-recess-for a half-hour, and then come right back.
(Recess.)
REP. HYDE: The committee will come to order. Mr. Delahunt.
REP. : (Off mike.)
REP. HYDE: Oh, all right. We usually call by order in which people appear. But that's all right.
REP. WILLIAM DELAHUNT (D-MA): Okay, thank you, Mr. Chairman.
Dr. Ruggie, in terms of the United Nations-the term is used frequently in prepared statements, et cetera, that the United Nations itself, as I think you pointed out in your testimony, is the secretariat and is the Security Council, and obviously the General Assembly. And you raised the point, and I thought it was a very valid one, that in terms of overpricing, the members of the sanctions committee, which, my understanding, consists of the permanent members of the Security Council, never raised an issue.
I guess my question is, where were we? And whose responsibility? And I know the program obviously spanned two administrations, both the Clinton and the Bush administration. Whose responsibility would it be on the part of the U.S. representative to the United Nations to raise those issues?
You indicated that it became widely known, and yet there was never an issue raised. Who should we be looking to to inform us, not through you, but as to whether, in fact, your testimony is accurate that it was a policy decision? I would like to see some representatives of the current administration and the Clinton administration to come forward and describe to us their knowledge rather than read about it or hear about it second-, third- or fourth- hand.
REP. HYDE: Would the gentleman yield?
REP. DELAHUNT: Of course.
REP. HYDE: I have two dispatches, one March 2nd, 2000, and one February 29, 2000, that indicate that we were aware and we did complain. And I'll give them both to you for your perusal. But my own guess is, as Dr. Ruggie said, that we were focusing on Saddam Hussein and trying to keep him bottled up, and we felt these other things, however expensive, were distractions, I guess. And that judgment was made by somebody high in the policy ranks of both administrations, Mr. Clinton and Mr. Bush. But those two articles indicate we knew of it, and we did complain.
Thank you for yielding.
REP. DELAHUNT: Well, I appreciate it. And my instinct tells me that the chair is correct, and most likely these reports-one is from the French press and the other is from a publication out of Australia-are accurate.
But I would hope at some point in the future that we would call to this particular committee for direct questions those representatives of both administrations, because here we are now faced with allegations, assertions, credibility of individuals as being attacked. I'd like to hear directly myself. If you have anything to add, Dr. Ruggie --
MR. RUGGIE: Thank you for that question. Congressman, my statement wasn't intended as an exercise in finger-pointing. I'm sure you understand that.
REP. DELAHUNT: I understand that.
MR. RUGGIE: I would say a number of things. First, if you put yourself back in time, the magnitude of the scamming couldn't have been known fully at the time. It only has become fully known as we've gained access to documents in Baghdad. So certainly there were suspicions about the overall problem, and you are right that the U.S. and the UK, in fact, once did, in the 661 committee, raise questions of a general nature about overpricing, not about any specific contract.
However, I think the GAO may be a good witness on the question of how did the various branches of the U.S. government fit into this. But I would like to say that the precise dimensions of the problem couldn't have been known fully at the time.
With regard to individual reviews of contracts, I believe it was Mr. Lantos who said earlier, and I believe he's correct, that the U.S. government, through the mission and then reaching into various branches of the government, had about 60 people, 60 government technical experts, review every single contract.
My understanding is --
REP. DELAHUNT: Well, what were they doing?
MR. RUGGIE: They were looking for potential dual-use technology.
REP. DELAHUNT: Just simply dual-use.
MR. RUGGIE: If they stumbled across an individual pricing issue, they might have mentioned it, but I'm not aware of that. And from the best that I've been able to determine, as I say, no contract was ever held up on pricing issues.
REP. DELAHUNT: Let me express a concern I have now, because I have confidence in Paul Volcker, and I think it's absolutely essential that there be a thorough and transparent investigation.
But the program now, I understand, is managed by the CPA. And the oil revenues go into the Development Fund for Iraq. And now one picks up the paper on occasion to see or note similar accusations and assertions about mismanagement, fraud and corruption.
MR. RUGGIE: You mean currently.
REP. DELAHUNT: Currently. And would you agree that there seems to be some reluctance on the part of the CPA to allow a serious audit on the Development Fund for Iraq?
MR. RUGGIE: Congressman, I'm not qualified to answer that question. I haven't looked at the role of the CPA in this connection.
I would like, if I could take 30 seconds, to clarify one point that was raised earlier; I believe it was by Ms. Rosett, who was worried-expressed concern about where the U.N. records were, and she expressed some doubts about where they were going.
To the best of my knowledge, they are all in the U.N. archives. Those archives are in two facilities, one in Manhattan and one on Long Island. And Paul Volcker has access to every single document that was ever produced in connection with this program, including to internal management audits, which are generally, like in the U.S. government, not made public.
REP. DELAHUNT: Well, again, I would hope-and I direct this to the chair-that we request some testimony or at least a panel to deal with where we are now in terms of the CPA, its management of the DFI. It's my understanding, and it was earlier-I think Mr. Ackerman made reference to Mr. Chalabi, who is a convicted felon, is now the finance minister, if you will, for the CPA, is in charge of administering that program.
You know, let's not find ourselves two, three, four years from now having a similar panel when I think our oversight responsibility should be exercised now. And I'm not making any allegations or any assertions. I'm just saying it's what I read in the paper. And I think much of what I heard today is people's opinion. But thank you very much, and I yield back.