Iraq oil scandal not as it seems

Fox News's Fred Barnes calls it "the biggest scandal in human history". That's some scandal

Fox News's Fred Barnes calls it "the biggest scandal in human history". That's some scandal. He was talking about the current probe into the Iraq oil-for-food programme and the indisputable fact that Saddam Hussein managed to pocket large chunks of its cash, much through bribery of officials/politicians.

Some of the bungs allegedly went to Benon Sevan, the man charged by the UN with monitoring the programme, and the issue has led to US congressional calls on the secretary general of the UN, Kofi Annan, to resign, particularly after it appeared that his son Kojo may have been an indirect beneficiary.

Needless to say, all is not quite what it appears.

In an interview last week, the respected former head of the US federal reserve, Paul Volcker, now investigating the programme at the behest of Annan, tried to put his inquiry into some sort of perspective. Volcker admitted that there certainly were reasons to believe that the UN-sponsored programme, which since 1996 allowed the Iraqis to sell oil to buy "necessities", was partially diverted corruptly by Saddam Hussein.

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But, he insisted, most of the money siphoned off illegally during that period by the Iraqi dictator was made through illegal smuggling to neighbouring countries, smuggling that was known of by the UN Security Council. And ignored by that august body and its members, not least of which, the United States.

Volcker was questioning reports that have variously put the scale of Hussein's illegal diversions at between $1.7 billion and $21 billion and which have persistently, in the US press at least, confused the two forms of diversion in order to blacken the name of the UN and of Annan himself - not so easy if member-states knew of, and turned a blind eye to, even more substantial breaches.

And Volcker did not mention another report that surfaced just before Christmas that also casts light on the oil-for-food "scandal".

According to a body established by the UN to monitor the US-led coalition's disbursement of Iraqi oil revenues, the International Advisory and Monitoring Board (IAMB), auditors at the Pentagon have concluded that Kellogg Brown & Root, a subsidiary of Halliburton Co, charged significant "unsupported" and "overstated costs" in more than $800 million in US-administered projects financed by Iraqi oil revenue. The company, whose parent was headed by vice-president Dick Cheney prior to assuming office, had been awarded $1.4 billion from Iraqi revenue to repair oil facilities and to import fuel - now, it appears, there are irregul-

arities in 60 per cent of its contracts, contracts awarded without recourse to tendering.

Yet the ire of the neo-cons in Washington has been directed almost exclusively at the UN and Kofi Annan. To date, however, no evidence has been produced that Annan used his influence to get his son Kojo's erstwhile employer, Cotecna, a $4.8 million contract in Iraq. Indeed the company recently got an apology from a US congressional committee for its suggestion Cotecna had misled them about Kojo's financial links with it. Nor has any hard evidence emerged that Kojo acted improperly.

Sevan also vehemently denies allegations of corruption or of covering it up, and points out that he personally brought some of the allegations to the Security Council which was happy at the time to turn a blind eye.

Moreover, the main charges against Sevan come via a certain Ahmed Chalabi, the corrupt exiled Iraqi politician and businessman who was a pre-invasion favourite of the neo-cons, against State Department advice, and who is notorious for having originated now-debunked intelligence claims that Hussein was working on rebuilding his weapons of mass destruction programme then used by the Bush government to justify the invasion of Iraq. Chalabi's wide-ranging list of recipients of Hussein's generosity, the only evidence against Sevan, is rightly viewed with considerable scepticism - George Galloway, the maverick British MP, has just taken £250,000 off the Telegraph in libel damages for claims based on the same list.

Chalabi's case has been made most noisily by a former Wall Street Journal reporter, Claudia Rosett, now a researcher at a well-funded neo-conservative think-tank, the Foundation for the Defence of Democracies (FDD), a clone of the Project for a New American Century. She has been supported by well-known columnists Charles Krauthammer and William Safire, both strong proponents of US-Iraq policy.

The charges against the UN and Annan are currently the subject of several reputable investigations, including Volcker's.

Yet for some, it appears, the case is already proven and they are baying for blood. The truth is, of course, that Annan's real crime has been to stand up for the UN, with all its weaknesses, and to defend its unique mandate as legitimator of the use of force internationally.

He has been prepared to criticise the US assault on Falluja and the persistent violation by the coalition of human rights in Iraq.

And that, in the eyes of the neo-cons, is truly the biggest scandal in human history.