Workers unload cans of cooking oil, part of a food ration that the UN WFP (World Food Program) is distributing to Iraqis, Tuesday June 3, 2003 in Baghdad, Iraq. (AP Photo/Samir Mezban)
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INDEPTH: IRAQ
Oil-for-food program
CBC News Online | Updated October 24, 2005
It took 20 months for UN Security Council Resolution 986 to become the oil-for-food program that eased sanctions on Iraq enough to allow Saddam Hussein to sell some oil for food and medicine.
The resolution passed in April 1995. The program got underway after the proper paperwork was signed by the government of Iraq and the UN in May of 1996.
In the beginning, Iraq was allowed to sell $2 billion worth of oil every six months. In 1998, the limit was raised to $5.26 billion every six months. In December 1999, the Security Council removed the ceiling on Iraqi oil exports under the program.
Impoverished Iraqi children line up at the mosque of Shekh Abdulqader al-Keilani in Baghdad, Dec.10, 1999, waiting for free food to take home for their families. (AP Photo/Jassim Mohammed)
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But fluctuating oil prices – especially in the early stages – meant Iraq had trouble producing as much oil as it was allowed to sell. Baghdad complained that years of sanctions after the 1991 Gulf War had devastated its ability to pump and ship oil.
Originally, two-thirds of the money raised from the program went to humanitarian programs in Iraq and 30 per cent went to the Compensation Commission in Geneva, which oversees payment for losses and damage as a result of the 1990 Iraqi invasion of Kuwait. The rest went to covering the costs of the program and of the weapons inspection program.
In 2000, the distribution was changed slightly: 72 per cent of revenue going to humanitarian programs, 25 per cent to the Compensation Commission and the rest to administration.
Before the U.S.-led invasion of Iraq in 2003, an estimated 60 per cent of Iraq's population depended on the food, medicine and humanitarian supplies bought with money from Iraqi oil sales.
The program was suspended during the Iraq war. On Nov. 21, 2003, the program officially came to an end when the Security Council handed over authority for it to the Coalition Provisional Authority that ran Iraq until it handed over power to an interim government seven months later.
In January 2004, accusations of corruption in the $67-billion program surfaced. An Iraqi newspaper published a list of hundreds of global companies, politicians, writers and UN officials alleging they profited from the illicit sale of Iraqi oil. In response to these allegations, the UN, the U.S. Congress and the new Iraqi government all set up
inquiries.
Saddam Hussein's government skimmed billions of dollars from the program by collecting kickbacks and illegal surcharges from oil buyers.
A U.S. Senate investigation has implicated politicians including British MP George Galloway and the former French interior minister Charles Pasqua. Both men are accused of kicking back lump sums to Saddam Hussein's government from the profits they made selling vouchers for discounted Iraqi oil to trading and refinery companies.
Both men deny these allegations. Galloway, an outspoken opponent of the war in Iraq, has accused the Republican-led Senate investigation of bias against the UN and of attempting to divert attention from the illegal invasion of Iraq. Pasqua said the Americans are punishing him for France's opposition to the war in Iraq.
At the UN, the scandal reached all the way to the top, to Secretary General Kofi Annan. His son, Kojo, was paid hundreds of thousands of dollars by a key contractor for the program, a Swiss company called Cotecna Inspection SA.
On March 29, 2005, investigators concluded there was not enough evidence to suggest that Kofi Annan knew of the contract bid by his son's employer. But it suggested that the secretary general did not do enough to determine the nature of his son's relationship with Cotecna.
In a subsequent report on Aug. 8, 2005, investigators mentioned the discovery of new e-mails that suggest Kofi Annan knew more about his son's role in the oil-for-food program than he had divulged earlier. The independent panel's final report blamed Annan for mismanagement but found no evidence of wrongdoing on his part. The report, released Sept. 7, 2005, does condemn "illicit, unethical and corrupt" behaviour during the oil-for-food program. Annan has called the findings "deeply embarrassing" for the UN.
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