Oil-for-food investigation leaders say U.S., others not fully cooperating

UNITED NATIONS -- The United States and other U.N. member states have refused to fully cooperate with investigators looking into corruption in the oil-for-food program in Iraq, blocking access to information about politically sensitive actions of Security Council nations, say leaders of the probe.

Findings of the independent investigation -- expected in midsummer -- will likely lead to dozens of criminal prosecutions by legal authorities in various countries for bribery, sanctions busting, money laundering and fraud, the officials told The Associated Press.

After two interim reports focusing on key U.N. figures, the investigation is tackling broader issues, including the Security Council's oversight of the $64 billion oil-for-food program and Saddam Hussein's attempts to use it to enrich himself and win political influence.

Management of programs

The final report will address the capability of the United Nations to manage large humanitarian programs "and who ought to do it," said former U.S. Federal Reserve chairman Paul Volcker, who heads the Independent Inquiry Committee investigation.

It will also look into whether Iraqi oil contracts were awarded to Security Council countries in an attempt to influence council decisions on Iraq, and whether banks inside and outside Iraq may have helped facilitate corruption, investigators said.

The probe into oil-for-food dealings by dozens of governments and more than 4,000 companies that had lucrative contracts is well underway, Volcker said.

Asked whether investigators had confronted any walls, Volcker laughed and replied: "Yes. Walls is maybe too strong -- obstacles, yes."

Asked who was putting up obstacles, he said: "Frankly, they wax and wane. I think we've had some waxing and waning with almost all the countries, particularly on the Security Council, particularly the permanent members" -- the United States, Russia, China, Britain and France.

"We've gotten pretty good cooperation from some of them, certainly. What do you expect to get from China and Russia?" he asked. "Russia, we'll certainly try.

"But there's no question there gets to be some sensitivity, and the sensitivity is among civil servants as much as the politicians," Volcker said.

The oil-for-food program, which ran from 1996 to 2003, was created to help Iraqis cope with U.N. sanctions imposed after Saddam's 1990 invasion of Kuwait. It let the Iraqi government sell limited -- and eventually unlimited -- amounts of oil primarily to buy humanitarian goods.

In a bid to curry favor and end sanctions, Saddam allegedly gave former government officials, activists, journalists and U.N. officials vouchers for oil to be resold at a profit.

Mark Pieth, one of three members on Volcker's committee, complained that while the investigators have had substantial cooperation from European countries, they have been surprised by the level of recalcitrance from some U.S. government departments and agencies.

"We were simply astonished that we have not gotten more help from the U.S., because why would we have an issue with the U.S.?" Pieth said.

Volcker said one U.S. agency -- which he said he may identify if it doesn't respond -- "has just flatly ignored requests for help."

Pieth singled out the U.S. Attorney's office for not providing access to Samir Vincent, an Iraqi American who pleaded guilty in January in federal court to being an illegal agent of Saddam's government and helping skim money from the program.

"We are still waiting to get significant help from the U.S. authorities, but we are confident that this will happen," he said.

A spokesman for the U.S. Attorney for the Southern District of New York wouldn't comment for the record on why investigators haven't been given access to Vincent.

Pieth also noted that the committee has been cautioned by the State Department about its intention to look at decisions by Security Council members in setting up the program and in enforcing sanctions imposed on Iraq.

"They are saying, 'You aren't to look at what member states have been doing. Your role is to look at the U.N. officials.' And we are saying, 'Well, we are looking at the program and it's obviously interesting to look at how it was set up'," Pieth said.

The State Department also has shown "touchiness" about the monitoring of oil smuggling and allegations the United States -- which had ships in the Persian Gulf to intercept smugglers -- looked the other way while some neighboring countries such as Turkey and Jordan made substantial profits from oil smuggled out of Iraq, Pieth said.

"We, of course, are cooperating with the investigation," said Richard Grenell, spokesman for the U.S. Mission to the United Nations. "This is a very important investigation."

Any resistance from the United States would be troublesome because President Bush's administration and members of Congress have been among the most ardent in demanding a full probe into oil-for-food. Congress has at least five separate probes underway, and several congressmen have demanded Secretary-General Kofi Annan's resign over the allegations.

The committee, according to Pieth, will refer many leads on individual companies, business executives and foreign officials to the relevant member countries.

"Our investigation will spark off a lot of domestic investigations-- not only for bribery," he said. "The first wave will be sanctions busting, money laundering or fraud."

Pieth said the committee expects some U.N. officials will ultimately be prosecuted.

The committee's first report accused the program's chief, Benon Sevan, of a "grave conflict of interest," and another U.N. official, Joseph Stephanides, of interfering in the competitive bidding process for an oil-for-food contract.

Its second report Tuesday faulted Annan for not properly investigating possible conflicts of interest surrounding a U.N. contract awarded to the Swiss employer of his son Kojo. The report accused Kojo Annan and Cotecna Inspections S.A. of concealing the extent of their relationship.

Volcker said he hopes his final report will bring closure to allegations of massive corruption in the program by estimating how much money Saddam illegally pocketed.

He said there's no evidence it reached $21 billion as a U.S. Senate subcommittee estimated. Volcker said he expects it will be more like the $11 billion in a CIA report, or the $10 billion a U.S. General Accounting Office report -- most from oil smuggling, he said.

"We will try to do the best estimate we can of the amount but don't blame everything on oil-for-food," Volcker said. "The smuggling started before oil-for-food existed. Having said that, I think enough went wrong with this program that we better draw some lessons about the administration of the U.N."