The United Nations Oil-for-Food Scandal

December 8, 2004

Unedited transcript prepared from a tape recording

3:45 p.m.	Registration
4:00	Panelists:	George A. Lopez, Notre Dame University
		Edward Mortimer, office of the United Nations Secretary General
		Danielle Pletka, AEI
		Claudia Rosett, Foundation for the Defense of Democracies
	Moderator:	Joshua Muravchik, AEI
5:30	Adjournment and Reception

Proceedings:
MR. MURAVCHIK:  Welcome to AEI.  I have the pleasure of being the moderate of this panel.  This is the sixth--I think it's the sixth, maybe seventh--in a series that we have been running and will continue to be running about different U.N. issues.  The issue for today, as you know, is the Oil-for-Food Program.  We have a very distinguished panel.

[Cell phone rings.]

MR. MURAVCHIK:  And we have musical entertainment, too.  We'll have more after the panel is done.

You each should have gotten a little folder when you signed in.  In the folder you will find the biographies of each of our distinguished panelists.  And since you are here to listen to them not to me, I'm not going to introduce them or repeat for you what you can read there.  We're going to ask each of them to speak for 15 minutes or less, and then we will open the floor to your contributions or questions.

We're going to begin with Claudia Rosett.

MS. ROSETT:  Thank you.  So I guess I have to provide some things for others to rebut.

It's really nice to be here.  Good afternoon.  Let's talk a little bit about the biggest swindle in the history of humanitarian relief.

Oil-for-food was set up according to a resolution passed at the U.N. in 1995 and became an operation at the end of 1996.  And the aim when it started was to provide--and I quote from the resolution--"equitable distribution of humanitarian relief to all segments of the Iraqi population throughout the country."  That was the idea.  It was to ease the pain on the people of Iraq of U.N. sanctions that were meant to weaken or even get rid of Saddam.  It was a "limited" and "temporary" program, and that was all it was really meant to be.

Today, despite strenuous initial resistance from the United Nations, we have some 10 investigations into this program, some of which keep coming up--each one of which has been coming up with new, horrific findings.  And we're far from done.  We have been told recently that Saddam skinned actually not $10 billion or so, as the General Accounting Office had initially said, but now we're told $17 billion during the life of the Oil-for-Food Program, $21 billion sum over the course of sanctions in Iraq.  But you'll see the inflection point there.  The big change comes with the beginning of oil-for-food in 1996.  That's the 17, not the $4 billion that came before.

We've had the Doelfer Report.  In fact, the masses of paper in recent months have been staggering, and it just gets more damning.  We have the Doelfer Report, which also pointed to this inflection point; that Saddam had basically been seriously on the ropes under sanctions by the mid-1990s, and it was doing this deal with the United Nations that let him recover, that strengthened his regime, that gave him a way to start coming out from under sanctions, to basically corrode the entire system to the point where you can wade for hundreds of pages through details of arms-smuggling networks through Syria, Yemen, Jordan; deals with terrorist links; and attempts to subvert the Security Council to support Saddam Hussein--again, operating with the cover, under the brand-name of this program.

It all looks rather serious.  I mean, this thing was absolutely huge.  And trying to get in writing about this off and on over the past two years, I had to keep reminding myself we're talking about billions, that when you're covering a relief program and you see, say, $2 million stolen, that's significant.  And if you see $20 million has disappeared, that's large.  And if you see $200 million is gone somewhere, that's getting to be really bad.   But when you start talking about $20 billion, you're talking about very serious money.

And yet, today we had the General Assembly give a standing ovation to Secretary General Kofi Annan and the U.N. Security Council members, most sort of accused of misdeeds in this program, have pronounced themselves shocked and dismayed that anyone would accuse them, and the Secretariat in particular has said "Who, us?"--you know, "Present us with evidence of wrongdoing," although they themselves sat on some of the evidence at the time they initially made this challenge to their critics back in February.

So what actually is going on here?  The thing I'd like to just put forward is what this program tells you a great deal about is the extent to which the United Nations, for all its utopian ideals, functions as a secret society.  That effectively is what we had setting up this program.  That effectively was the deal struck with Saddam Hussein.  It was a privileged deal where few have really looked at the terms, but from this, everything else fell out.

The people of Iraq were never consulted; that was never even part of the agenda.  It was assumed they were under a tyrant, they weren't going to be consulted.  That all the oil of Iraq belonged to Saddam was simply assumed; it was his to dispose of.  And the deal done, they then treated Saddam Hussein as if he were a sovereign ruler of a normal state, not a totalitarian ruler of a country specifically under U.N. sanctions.  The U.N. gave him great confidentiality.  You could not find out, when I first began trying under this program, the names of his contractors, any of the details of the contracts.

The more you look at that, the more it's quite obvious that this weighed heavily, for instance, in the debate over what to do with Iraq.  There were enormous vested business interests in the arrangements as they stood.  And we have all read, I think, a fair amount.

I won't go into all the mechanisms--we can do this in questions--but on how Saddam actually skimmed money out.  There were very standard scams which should have had standard protections--things that are most easily stopped if you have transparency in a program.  Because you will have the contractors who lose out in a competition raising hell when they see that Vietnam is overpricing baby food by 26 percent, which was the kind of thing that went on under this program.  Instead, it was all kept secret under some idea that this was required for the sensitivities of members states.  It is to this day hard to see how any sensitivities were served except those who were engaged in the graft itself.

I guess we don't have really a lot of--there are a great many dimensions of this program that one can get into.  I'll just try to give you a quick overview.  What the United Nations allowed Saddam to do was recreate a network of dirty finance he had set up for arms deals in the 1980s, but on a bigger scale.  We had entered the global era big-time, and that is exactly what you see in this program.  It was truly global graft, ranging from, you know, the interesting, perhaps, melodic trill that the son of the secretary general was employed by the company that then, on the same day his contract with them lapsed, they got the contract with the U.N. to inspect goods coming into Iraq.  And he then continued to receive payments for five years.  Interesting.  The most interesting part is that the U.N. had no mechanism in place, apparently, to detect whether its contractors were sending payments to the sons of senior U.N. officials.  You have to ask what else is going on that we can't see.

But that was really just the beginning.  You had a system where Saddam was allowed to set up illicit bank accounts in scores of countries where anyone who actually looked closely at the deal--and as soon as the Pentagon did, and I suspect they'd been looking before the program came to an end, they came out with a report that went through, again, scores of overpriced contracts, where it became very easy to see where some of this graft was actually going on.

How did the Secretariat miss this?  The only conclusions you can come to is there was either gross incompetence or they were complicit with the corruption.  I see no other possible conclusion.  And either way, you have to ask very serious questions about how this can be reformed.  My suggestion would be you need at the very least a major change in terms of transparency.  There's no reason the U.N. should operate as a secret society.

There has been quite a good deal of debate, and I expect some from some of my colleagues here, about the extent to which the Secretariat itself was to blame.  Someone years ago gave me a very good piece of advice when I went to work out in Asia.  It was that you look at who controls the budget, and you know who actually controls a program.  Well, the budget for supervising oil-for-food, the budget went to the Secretariat.  They collected it not simply as a fee, but actually as a commission.  In business, 2.2 percent of Saddam's oil revenues would be recognized instantly as a commission.  The incentives were to expand the program, the Secretary General pushed to do that.

And we have some sense that the control that Kofi Annan himself exerted over the fund, that administrative account, that commission that the U.N. received, that evidently there was enough money left in the account after the program ended so that, this past October, he decided to use $30 million of those residual funds--earmarked for, as I began this, the equitable distribution of humanitarian relief in Iraq or the administration thereof--to fund the inquiry led by Paul Volcker into graft and maladministration of the Oil-for-Food Program in Iraq.  Kofi Annan was able to do that, which tells you something about his control over the budget.

And what we see at this point is a program that hired inspectors who were in fact forbidden by the United Nations to actually inspect to commercial standards, were in fact, we thought--you heard that they had inspection sites at the borders.  They had inspection sites such that if a truck carrying a thing labeled "nuclear bomb" had rolled past, the only thing that the U.N. empowered its inspectors to do would have been to say, "We can't have you paid out of the BMP Paribas escrow account for that bomb; you're going to have to collect the money somewhere else."  That would seem to me a derelict sort of program.  But again, the details were so veiled by this general secrecy that it was very hard to see anything.

I think my time is about up.  But I'm happy to elaborate on any of these points.  And the situation we do have at this point is that there are billions unaccounted for, there are very good reasons to think that some of this went to terrorist groups even beyond the established corridors of money to the families of Palestinian suicide bombers.  There are very good reasons to think, although Secretary General Annan finds it "inconceivable," that this actually did do something to not only buy members of the Security Council, but put them in a position to be blackmailed if they then went against the dons [?]--since once someone bribes you, he also owns you.

And that is the situation bequeathed us from this one relief program, and a further thing to worry about is the general climate that created this at the U.N. is precisely the climate that continues to shape the rest.  There are some marvelous people who work at the U.N.  There are some very good souls there.  This is not to condemn all staff at the U.N.  As an institution, it is desperately rotten and corrupt.  And that means the entire burden of doing things well there falls on the character of the people in charge.  There is virtually no other check.  That's a very dangerous way to run an institution.

Thank you.

MR. MURAVCHIK:  Thank you, Claudia, for getting us off to a very interesting start and for staying, actually, a couple of minutes below your allotted time.  It's an example I commend to the other speakers.  The time won't go to waste.  We always have more questions than we have a chance to get to.

We're pretty full here, but I see some people coming in late.  We do have a couple of empty chairs here, so anyone who's standing on the side or in the back would like to, please feel free to come up and take one of these seats.

Next we'll turn the floor over to George Lopez.

MR. LOPEZ:  Thank you, and thank you to our friends at American Enterprise Institute for sponsoring this, because obviously many in the room are interested in the topic and you've followed many of the talk shows and op eds that have flowed over the last week, especially the prediction that this would be the moment in which we would go beyond the first round of tense dialogue about this between those of us who feel strongly that some of the charges are at least premature, if not unwarranted, and some of the programs misunderstood, and those, like Claudia and others, who have been trying to document otherwise.

I think we are in fact in Round 2.  But let me clarify where I think Round 1 came out this weekend, whether you saw this on NewsHour or saw the New York Times, Financial Times, L.A. Times op eds in support of the programs and Kofi Annan this past weekend.

The three things that stand out in my mind about the debate thus far are this:  First, we banter about charges about the United Nations and the Secretary General when in fact the locus of the inquiry ought to be the Security Council.  Let us remember, this was a Security Council set of resolutions which began not only with Resolution 661-687, which established the sanctions program, but 986, which established oil-for-food; 1284, which revamped it; and, essentially, 1409, which made it oil-for-stuff, from which a good deal of the bump of the $17 billion might be examined.

So the claims that the Secretary General is singularly responsible, or even that the Secretariat--as the house for OIP and the budget house responsible--doesn't understand both the dotted lines and the connecting lines that made it impossible to reform, revise, deal with any of the dilemmas that have been cited in the press about this oil-for-food program without the signing off on 661.  The 661 committee was dominated by the Brits and the United States.  If you want to conduct the investigation, follow it to its logical conclusion.  Don't stop half-way across the bridge.

Secondly, the data--which I'm not going to examine at this stage, because it would take too long--needs to be examined in some detail.  Take that $4.4 billion in the GAO study and look at where these things go.  Take in particular a larger set of figures as emerge from the smuggling of maybe as much as $5 or $6 million as oil-for-food began and worked its way even more through the system.  And look at the connecting companies that have been critiqued.  We have French and Russian and other companies critiqued.  Take a look at what happened in Chevron and other connectors that were begun in 1991, when we upgraded the style and structure of the trading system here.

Thirdly, we've heard--not today, but you see often in the critique in the press that "poor Mr. Volcker"--impossible for him to investigate this.  Not to mention Judge Goldstone, who of course is somewhat of an amateur in investigation, it would seem.  These people are falling under the weight of obstinacy from the Security Council.  Worse yet, they won't allow--and have become part of the cloaking mechanism of the United Nations  by not permitting congressional committees in this town full access to the data.

Well, some of you in this town may have already served on grand juries and you know the way that grand juries work.  You finish your investigation and then, when necessary, to lower courts you release the evidence.  We've indicted not only the Volcker Commission, but the style of investigation it's taken, by saying they themselves fall victim to the lack of transparency of the entire system.  In that Round 1, I think you can make your own judgments what does and doesn't hold as purposeful arguments.

I think there are three dimensions of this crisis, at least a crisis of dialogue, that need to be addressed in some detail.  The first and most dramatic may be charges that the Secretary General or/and the Security Council participated essentially in a dynamic in which, when oil-for-food came in, the program of trying to administer the sanctions was itself so corrupt that it was a system with some many leaks in the hold that the boat itself sank, even when oil-for-food got on.

The second is a concern about transparency, and Claudia has raised the issue again of secrecy in the program.  I'd like to say something about that.

Thirdly, the question of incompetence or complete mismanagement, in which criminal charges are not the issue but gross negligence and inability to serve the nations united as executive director of this organization.

Let's deal with the issue, I think firstly, of how tightly constricted were the sanctions.  It's very important to understand that those who critique the Oil-for-Food Program do so from a basis in which they suggest that at the start there was already a perversion to the system.  They look particularly at the contracts that existed to sell Iraqi oil illicitly, under the table through Jordan, and they do so without an understanding of the system that operated from the start.  That is, that Security Council Committee 661 established a tradeoff with Jordan for its support for the general sanctions system and in particular for its continued commitment to interdict military hardware and to cooperate with the multinational interdiction force based in the Gulf of Aqaba.

To be able to do that, we had to find a way to relieve the burden that Jordan was singularly carrying from the dynamic of working sanctions.  The Jordanian economy was devastated by the imposition of these sanctions.  In an ideal world in which the U.N. Charter actually works and the Security Council will be willing to make that work, you would have compensated Jordan directly for its losses in trade, as a front-line state.  But there was no way to do that under the system.  Under those conditions, then, we allowed Iraqi-Jordanian interaction to go to a certain kind of limit.

There's no question that between 1994 and 2003, the Clinton administration and the Bush administration which followed it not only submitted waivers to Congress, for Congress to sign off on this being an effective use of this program, but not a congressperson called for secondary sanctions because of this leakage.  The way the sanctions worked was partly that there would be a leakage and that this leakage would benefit neighbors around the zone so they would stay committed to the primary goal of the sanctions:  to deny the Saddam regime weapons of mass destruction and to deny it the technologies, monies, and experts that would help promote those and build those anew.

Secondly, with regard to secrecy, this is one of the most curious charges that I find.  The oil-for-food operation, it seems to me, was probably the least secret of any number of operations out of the Security Council or which involved the Secretariat administratively in the '90s.  More than any single agency, it seemed to me, the Office of the Iraq Program had tried to establish a level of transparency not only beyond what Security Council Committee 661 demanded it to do, but beyond what the Secretariat itself asked it to do.

Remember, the OIP Web site contained distribution plans for every phase of the oil contract.  In addition, the Secretary General, required by the Security Council committee to continue to issue reports every 90 days on this program, posted those reports every 90 days for the full six-year duration of the program.  The reports that were on there, as well as the OIP material, covered not only the distribution of aid, but also got into a sector analysis of how much money was going to the health, water, and education sectors of the Iraqi economy.  Why?  Because the deepest concern of the Secretariat in the management of Iraqi monies was that at the end of the sanctions, which everyone thought might be any moment now throughout the early and mid-'90s, at the end of the day you could have accountability.  Because we knew this was an extraordinary program of digging deep into the export revenue of a country and turning on its head to use it to finance the international penalties which the body politic had imposed against it.  That was so unprecedented, you had to be transparent with that program.  Having tied two or three graduate students for a bulk of their life to monitor this Web site, I will tell you it was the mother of all Web sites of transparency and it was key to the transparency of the program.

Thirdly, the program is administered and inefficiently that Saddam, in his kickback mechanism, was simply not only pulling the wool over everybody's eyes, but stealing their socks when their shoes were still on without anyone in the room knowing it.  Let's remember, when we changed the dynamic of the Oil-for-Food Program and go, essentially, more to oil-for-stuff by '99, early 2000, it's OIP and the Secretariat which brings to the 661 committee a number of critical cases in which it's clear that food and goods that are coming in are being dramatically overpriced and oil being sold in large amounts to interesting places like the Ukrainian National Church--very, very warm churches in Ukraine in those days--that was being underpriced.  More than 70 particular contracts were brought by the Secretariat between the period September-December 2000 to the 661 committee, and the first two states to sign off that these were okay, we can handle these, were the United States and Great Britain.

So we have a dilemma that, to indict the Oil-for-Food Program and by extension the U.N. and by particularity the U.N. Secretary General, puts us in the embarrassing position of understanding that the corrupter may be us.  That is, the way the Security Council worked, each of the states that saw the transparency of the system, as well as were privy to the exposed corruption that was going on within the inner circle, decided that there must be an overriding reason to allow these abuses--and the limitations in which these abuses actually operated--to operate.

What were they?  Two fundamental realities.  A sanctions imposition, which we thought within three to four years would so squeeze Saddam economically that he would become politically compliant on all aspects of Resolution 687, in fact produced the economic strangulation but not the political compliance.  This was the terrible irony of the Iraqi sanctions and the terrible humanitarian impact on the Iraqi people.  Therefore, the introduction of 986 was designed to not loosen that system, to keep the pressure on Saddam, but to make sure that the people of Iraq didn't carry this on their back.

Therefore, with an effective sanctions system that was controlling the prospect for building weapons while we looked for other weapons that might be there in the inspections regime, we introduced the humanitarian aid program, which, yes, the system, as I understood it as an outside investigator, was willing to tolerate leakage, inconsistencies, and small amounts of unexplained movement of money because we were turning around the daily caloric intake of Iraqi children.  We were changing the malnutrition figures between '96 and '98 dramatically.  The Iraqi people were no longer paying the price for the burden of the international community's lack of imagination to move beyond sanctions as a way to deal with this pesky regime.

Two final points.  What's left to investigation here?  I invite people in this room intrigued by Claudia's and others' articles in trying to expose graft and corruption, go back to the period '97, '98, '99, read people like Neil King in the Wall Street Journal, Caroline Oya [ph] and other people in the Financial Times.  Most of the stuff that's been discussed over the last four or five weeks with regard to revelations were in fact part of the daily press record as these things were unfolding.  There are no new incredible revelations.  It's very nice to have the Doelfer Report string some of this together, but these things we knew, and the participants knew.  But it served a system.

Which leads us to another important concern.  What ought to be examined here?  I think what ought to be examined is less the graft and corruption of the system, but how we manage a complex, elongated, much longer than we imagined program for humanitarian relief when we have the interesting dynamic that its funds for supplying it might be relatively unlimited.  How do we manage that kind of effort?  If we made a decision to deal with Darfur tomorrow, we have no financial mechanism to do that.  If in fact, however, we decided to sanction Sudan and tap its oil revenues as a way to do this, we'd need to replicate 986, we'd better get a good look at how this operated in an efficient way and worry less about criminal charges.

Last point.  This is why I stay in the Midwest as a quiet little academic.  I come to this town and I'm stunned by the fact that people can't believe that politics entered the Oil-for-Food Program, that people are dismayed that Saddam's every working moment was designed to evade, undercut, and deal with the sanctions.  Politics was part of this from the get-go.  Our revisionist history ought to be careful here, and we'd better be careful if we're going to engage in revisionist history.  Let's go all the way back to the way that oil trading began and started under the sanctions regime, and you'll come up with some interesting names.  It's not just the French companies that have been revealed in '99, 2000, and 2001 that made the money.  There are some very household names which you've used to fill up your gas tank in this country which were part of that dynamic, which we're happy to explore in the question-and-answer.

Thank you.

MR. MURAVCHIK:  Thank you very much, George.  And now we will hear from Danielle Pletka.

MS. PLETKA:  I don't know whether Claudia or I--we're going to have to take turns jumping on Mr. Lopez.

MS. ROSETT:  We'll have to do it together.

MS. PLETKA:  Well, it may require the two of us, he's such an articulate opponent, although I have to say that I myself have never thought of the Saddam Hussein regime as "pesky."  But then again, we all have different perspectives.

I should give a word of explanation about why I am sitting on this panel of distinguished people who actually know a lot, obviously, about the United Nations and the Oil-for-Food Program.  The main reason is because I told Josh I would like to be on the panel.  When I had my previous job and worked at the Senate Foreign Relations Committee up till about two years ago, the Oil-for-Food Program was my issue.  And for many years, I spent a great deal of time looking at the program, trying to understand the very complex--Mr. Lopez is correct--disparate parts of that program.  So complex, in fact, that I think that there was probably no one person in the U.S. government who actually understood how the whole program worked.  Everybody understood a piece of it, but they never got together into a room.  That may well have been part of the problem.

But I'm going to diverge from my sort-of-prepared comments to just take on one thing that I can't resist.  Congress was desperately, profoundly concerned about diversions from the Oil-for-Food Program.  Congress did not appreciate the 661 committee's wink and a nod to Jordan.  Congress certainly did not give its imprimatur to the blatant violations by Syria nor to the smuggling by Iran that the Revolutionary Guard was involved in.  Nor, frankly, were we that pleased about the smuggling that went on through Turkey and through the United Arab Emirates.  And there were any number of hearings held on this topic, as well as private briefings between staff and members and the administration and the United Nations.  So to suggest that this was something that went on without anybody expressing some worry about it, I don't think that's right.

I also took the opportunity on the occasion of a hearing that we held a few years ago to actually sit down with the distribution lists.  Unfortunately, I didn't have any helpful graduate students.  But I just hit "print" one day and made a really big mistake, because it printed out two full inches of documents on one of the distribution lists.  Well, one of the things that people ought to understand when they go back to look at that really helpful program in the Office of the Iraq Program that tells you everything about anything that went to Saddam Hussein is that those distributions lists were written by Saddam Hussein.  That was the way the program worked.  And it's true that that program was put in place by the U.N. Security Council, with the United States as a permanent member, and that was a problem.  But to suggest that somehow these were instruments of huge transparency is another issue.  I remember seeing things like China: motors; Ukraine: cars; Vietnam: food.  Now that's not the kind of transparency that I think we look for, at least not in our corporation.

Now, I want to come back to the original things I wanted to talk about today.  Because we face two separate issues when we talk about the Oil-for-Food Program.  And the larger one is the one that really frames our debate, and that is the question of whether the United Nations itself is functioning as we had originally intended.  This is really always the subtext of what we're talking about when we talk about the problems of the Secretariat or the problems of the Security Council or the problems of the Oil-for-Food Program specifically.

If we look at the institution and we say it is there to ensure international peace and security, we do have to ask ourselves if our experiences over the last few years indicate that it is indeed up to completing its mission, whether it's the Security Council not taking up the problem of violations of the nonproliferation treaty in North Korea or in Iran, or it's the incapacity of the institution to deal with challenges from Darfur to Kosovo to the Ivory Coast to the problems of the weakening of sanctions against Saddam Hussein and the general ineffectual nature of the attempt to get him to ante up what we supposed to be his collection of weapons of mass destruction.

Now, staying with the problem of Iraq, I think that the Oil-for-Food Program and the problems therein are emblematic of a real, systemic problem inside the United Nations.  And a lot does have to do--I think we have to honestly admit--with the dysfunctionality of the Security Council with the unwillingness of permanent members and others to actually put their money where their mouths are, to actually have the necessary fights, to actually call their colleagues onto the mat about things that aren't working.  And we have to recognize that that's an issue, but it does stop the institution from functioning effectively.

So when you confront something as dirty, as the way the Oil-for-Food Program turned out, and you see the corruption that was a problem, you see the way that the Iraqi people were badly served--and I think they were actually very badly served by the Oil-for-Food Program, and particularly the Kurds, for whom the program was actually directly administered by the United Nations--you really do see that there are deep-rooted problems, the solutions to which are not clear to any of us.  And the unwillingness of the people who actually make up the bureaucracy of the institution and the functioning senior officials of the institution to accept that this is a genuine problem that we have a right to be concerned about is very troubling.

You know, Claudia gives texture to all of these problems when she describes the way in which the deals with BMP Paribas were administered or the questions about kickbacks to Benon Sevan, the questions about the role of Cotecna and the way it got its contract.  But what, really, does the reaction to all of these accusations say about the institution itself?

Well, let's step back a second.  There were, over the years, 55 separate internal investigations into the Oil-for-Food Program by the United Nations' own Office of Internal Oversight Services.  I have that number from the General Account Office.  I've never seen any of these investigations.  But none of these investigations have been shared outside the United Nations, including, for the most part, not with member states who finance the United Nations.  Now, we can say that there were 55 into the Oil-for-Food Program; what else is going on?  What else are they investigating?  We have a list of some of their investigations, but we don't actually know what they find.

Now, these investigations didn't serve to remedy the problem, the didn't serve to answer the mail, so we now have the Volcker Commission.  And the Volcker Commission is intended to remedy the problem by being "independent."  But the sense of many people who have spent more time looking at how they are operating is that this is a commission that is intended not to be so much independent as to bolster the United Nations itself.

I have to confess, although I only have an association having worked in Congress, that most members of Congress would not appreciate being referred to as a "lower court"--lower, at least, than a commission set up by the United Nations.

The Security General's own response to these problems has also been troubling.  He has been implicated in some of the issues.  He has been implicated in some of the corruption.  And I don't want to say directly because I don't think there's any evidence that he has been on the take or that he somehow winked at people who were necessarily on the take, or that he necessarily benefitted personally.  But his response has been to attempt to shift responsibility.  And this was the tenor of the earlier remarks as well.  "I didn't do anything, don't talk to me, talk to my board of directors.  They're the ones who are responsible.  I just work here.  And as a person who just works here, I really don't have any responsibility for anything that actually goes on here.  If you don't like it, you should go to them because they're the ones who should have fixed it in the first place."

Now, the truth is, as Claudia detailed, I think, and can detail more, that the members of the Security Council and the so-called 661 committee, which was meant to be screening all of the things that went into Iraq through the Oil-for-Food Program, actually had a smaller and smaller role over the years.  And after 2001, in fact, the 661 committees were always ex post facto.  In other words, everything went into Iraq and the committee was only notified after 48 hours.  So everything was going through, and it was the role of the Office of the Iraq Program and the Secretariat to be responsible for this, not the role of the members of the Security Council.

The thing that the members of the 661 committee remained responsible for, for the most part, was dual-use goods, the so-called goods review list or what was previously referred to as the 1051 list.  There were big problems with that, too.  And there is just no question that the member countries shirked a great deal of their responsibility in that regard, and questions can be asked about them as well.  The ambient atmosphere at the United Nations has been one of lack of concern about the allegations, any allegations of wrongdoing.

One of the things that I asked about when I started to talk with some of the investigating committees in Congress was how do you follow up, for example, if there's an allegation that someone like Benon Sevan, the former head of the Office of the Iraq Program, actually received payoffs.  Well, we found some paperwork that suggests he received payoffs.  One way to do that would be to look into his bank accounts.  Okay?  Now, he filed a financial disclosure document with the Secretariat of the United Nations.  Because he was of the rank of assistant secretary general or higher, he had to give a financial disclosure document.  Where is that document?  Well, when I had to file a document like that for the United States government, it was filed in the Office of Government Ethics and also in the United States Senate.  I still have to do it and my husband's is publicly filed, and you can see just what bank accounts I have.  Don't go look at them; I don't have very much.

We can't do that with Benon Sevan because we don't have any idea.  But what if he actually did put some of these things down?  We have no way of actually looking further into this because these documents remain with the Secretariat and can be used at the discretion of the Secretary General.  In addition, there is no penalty contemplated for lying on your disclosure documents inside the United Nations.  Now, imagine to yourself that in this giant bureaucracy, in which there is ample opportunity for graft, you have lied about the kind of bank accounts you have or the kind of conflicts of interest you have.  In fact, there is no contemplated penalty.  It is said that it will be viewed very seriously by the institution, but when we sign them here in the United States, we sign them under penalty of perjury.  Now, I don't know whether something like that would work as ably at the United Nations, but it's certainly something worth looking into.

I talked a little bit about context and the broader question of the effectiveness of the institution, went into the more detailed questions of the Oil-for-Food Program.  Let's step back out again and talk about accountability, about the problems of transparency.  It's not just the Oil-for-Food Program, it's not just the jokes about being resigned to your fate, it's not just not taking seriously questions of graft.  It's questions of sexual harassment, which are rampant--rampant--at the United Nations.  It is the kind of disgusting behavior that goes on inside peacekeeping operations, that has been documented by the United Nations itself.  The operations in Congo have 150 cases of documented sexual harassment, of prostitution, of extortion.  Something should be done about these things.  The Inspector General of the U.N. himself has been accused of sexual harassment, and these charges have been dismissed.  The Commissioner of the High Commission of Refugees has been charged, and the charges credited against him, for sexual harassment, and those charges were dismissed by the Secretary General.

It is enormously important not just on the Oil-for-Food Program, not just on the sexual harassment issues, but from top to bottom, that this become a transparent institution with accountability for everybody who works there, or the mistrust that many of us feel for the institution on political grounds will become one that we feel spreads a lot wider.

Thank you.

MR. MURAVCHIK:  Thank you, Danielle.  And for the last word, Edward Mortimer.

MR. MORTIMER:  It won't be the last word, but thank you very much.

I actually felt, listening to Professor Lopez, that maybe I needn't have come at all, because he did, I thought, an extremely good job of explaining the political context in which all these things happened.  Now, you notice a discrepancy between what he said and what the last speaker said about transparency.  I was sort of thinking, well, how can we reconcile these two pictures--on the one hand, a very transparent program with a very transparent Web site, and on the other, the difficulties that she had as a staffer for Congress trying to find out.

I think that probably they're both right; I mean, that this was an exceptional program and an exceptional amount of detail was made available about it.  But it is also true that the U.N. doesn't have exactly the same culture and the same forms of accountability as the United States government.  The U.N. is, of course, by its nature, a multicultural institution in which the standards of many different member states and their ways of doing business have to be kind of somehow brought together and reconciled.  And I think that there is certainly room for improvement there.  Oddly enough, this is a point on which the Secretary General agrees with Claudia and with Danielle, because he said back in April, at the time when the Volcker inquiry was being set up, that he thought that one of the lessons of this inquiry would be the need for greater transparency.

I have the perhaps misfortune to be director of communications in his office.  Before that, I was a journalist and actually I took rather a lot of interest in Iraq, and in particular some people in this room probably knew me as an opponent of Saddam Hussein long before I joined the U.N.  So I hope I'm not suspect of sympathizing with him.  But of course that doesn't mean that I think that it was an easy problem to deal with.  Personally, I felt very upset that he was allowed to get away, in 1991, with suppressing the rebellion of the Shiites in the south, and that when there was a very large army and it seemed to me to be in pretty clear breach of a cease-fire agreement, he was allowed to use helicopter gunships to do that.

But the decision of the governments that controlled that army and who had conducted the operation to kick him out of Kuwait was, no, it would be imprudent for us to get involved in internal Iraqi politics, we'd better treat this not as, like Hitler, a regime which has committed such crimes that we would insist on unconditional surrender and dismantle it forcibly, but as maybe a rogue state, but still a state, and we're going to set special rules and we're going to try and enforce those rules.  And one of them is we're going to insist on not only disarmament but that he clearly show and prove to our inspectors that he's disarmed.

What we now know is that he did disarm, but he didn't go through the second bit.  And I think we're all still trying to work out why.  You know, if you were going to disarm, why not get the advantage of it?  If we was so keen to have sanctions lifted, why not just say, look, there's nothing here, come look at whatever you like.  There are various hypotheses about that, and one is that, you know, he wanted his neighbors to think that he had these weapons even though he no longer actually did.  But what Mr. Doelfer's report shows very clearly is that he got rid of these weapons in '91, largely, Mr. Doelfer thinks, as a result of the aggressive U.N. inspections at that time, and that he, by 2003, had not even begun to reconstitute his arsenal of weapons of mass destruction.  So the sanctions worked.

But nobody imagined, when they were instituted in 1990, that they would remain in force for 13 years.  The general assumption was that one way or another the problems which had created the sanctions would be corrected and Iraq would return to a normal--being part of the international economy.  The longer it went on, the more difficult this was.  And everybody knew that people in Iraq were suffering.  And there was, of course--food and medicine were never covered by the sanctions.  Anybody could have sent food and medicine to Iraq at any time they felt like it, at their own expense.  But there was a feeling that, you know, Iraq is a rich country.  It has all this oil.  Couldn't we get him to use his money to pay, but we'll have to make sure that the money is spent on things that we think the people need, rather than the things he wants.

Surprise, surprise, he wasn't interested in that.  And it took until 1995 for the Security Council to pass a resolution that he was willing to discuss, and then another year of negotiations to produce a memorandum of understanding which would enable the program to actually start.

Now, of course, he didn't--if may be any country at that point had been prepared to start Operation Iraqi Freedom and go in and change the regime, he might have had to accept something different.  But let's not read history backwards.  Let's remember what the priorities and the possibilities of the time were.  Nobody was thinking of doing that at that time.  So you had to find a deal which he was willing to accept to allow this to happen.

In the end, he agreed to let the money be put into an escrow account and be spent under the supervision of the U.N., but he would choose the suppliers of the goods that were going to be bought with this money and he would choose the companies that were allowed to buy the oil.  And obviously, that gave him a bit of leverage.  It appears that he made use of this basically in two ways, to extract kickbacks from the importers and to levy illicit surcharges on the exporters, the people who were buying his oil.

Did the U.N.--how could the U.N. miss this, we're asked.  Well, the U.N. didn't miss it.  In the case of the oil surcharges, the U.N. overseers drew them to the attention of the Security Council.  How did they know this was happening?  Because they saw that the price was being fixed at the low end of the range of possibilities at the beginning of each month.  It was pretty clear people were expected to buy Iraqi oil without knowing for sure what price they would have to pay at the end of the month, and the revenues actually took a dip for a time.  This is why I think Claudia and others have said, oh, but Benon Sevan complained about this.  Well, Benon Sevan, in his reports he recorded there was a shortfall in revenue for the program and what the reasons for this were, and one was a shortfall in Iraqi oil revenue.  But for better or worse, that worked.  And Doelfer says it looks like the oil surcharges came to an end.

Now look at the kickbacks.  This is a much more difficult problem, because oil, everybody knows what the price is and you can tell whether it's being overpriced or underpriced.  The range of imports was very wide.  And as Professor Lopez said, it got larger.  As time went on and people were not expecting the sanctions to come to an end quickly, they were concerned that this potentially dynamic economy was being sort of pushed back into the Stone Age.  Well, rather than just give these people food and medicine, let's enable them to have a normal civilian economy and of course enable their oil industry to work, because that is their main resource.  So spare parts for the oil industry were included and a whole range of goods intended to enable Iraqis to lead a normal civilian life.  So the word "humanitarian" was stretched a long way beyond its normal meaning to cover.  And I think your description of "oil-for-stuff" was a good way of putting it.

Well, this meant that, you know, you had a contract in a wide variety of things.  And it's not easy to know if the price is right.  If you think about it in your private life, you go out into the shops and you see goods that are very differently priced.  That doesn't mean that the prices are wrong, it means that some people are prepared to pay a bit more for one thing rather for another because they like the brand or it has some characteristic.  When the officials of the program were seriously suspicious of the price, they would ask the company concerned why is this price so high?  And they would give reasons, oh, it's because of the insurance premium, you know, it's a conflict zone; oh, it's because we have to include the price of the transport when the goods arrive in Iraq--a variety of reasons were given.  Sometimes they seemed convincing, sometimes less so.  And I think, as Professor Lopez said, we've identified at least 70 cases where the contract went forward to the committee with a note from the officials of the program saying the price appears to us to be high.

Now, this is the point where the members of the committee could have done something.  But correctly, I think you said, Danielle, that their main preoccupation at the time was with dual-capable goods.  But now we're all concerned that, oh, the poor Iraqi people.  The only people that were actually making a fuss, or at least ostensibly, about the Iraqi people at the time was the Iraqi government.  They were the ones who sometimes complained about the quality of the goods.  Only we thought that their reasons for doing that were a big suspect, because they were looking for a way to withhold some of the payment until the quality of the goods could be certified.  And that, of course, would give them a bit more leverage.  So the committee never actually got around to approving any mechanism for doing that, although, of course, in any other kind of commerce it would have been absolutely normal by the time that 2003 and the war came along.

So afterwards--I mean, the congressional accounts sort of make out that 5 percent of the goods were of low quality.  WHO took a sample of the medicines after the war, when they arrived in Iraq, to see what quality they were, of the ones that were being imported under this scheme.  I think they found 0.4 percent were below quality.  And WFP, something similar in the case of food.

So I'm not sure that this is right.  I think this figure of $21 billion is for the birds, frankly.  I think Professor Lopez mentioned that it included what went on under trade protocols with Jordan, with Syria, with Turkey, and with Egypt.  In the case of Jordan, the Security Council took note of the protocol without either approving or condemning it.  Doelfer records that very honestly in his report.  But yet that's included in illicit revenue.  It was sanctions-busting, but it was sanctions-busting to which a blind eye was very deliberately turned.

So was everything all right about this program?  No.  Was it all the fault of the member states?  Probably not.  Is the Secretariat going to come out looking pure and perfect when Doelfer presents his report?  Almost certainly not.  And I think indeed anybody who thinks that Paul Volcker and Richard Goldstone are patsies who are going to provide the U.N. with a nice soothing report doesn't know those gentlemen.  I can assure you that almost everybody in the Secretariat who's had to deal with them has come away shaken by the rigor, their determination, their insistence on seeing documents, hard drives of computers, you know, things which you might think had nothing to do with the program, but they're not taking anything for granted.

We're all very worried about what their first report in January will show.  And, you know, probably Claudia and Danielle are going to have great fun with a not of new revelations about bad things that the U.N. got up to.  But I would have thought they would have even more fun if they hadn't done such a comprehensive job of rubbishing Mr. Volcker in advance and trying to make out that he's some complete geek, you know, over whose eyes the wool could be pulled.  I think anybody who knows Mr. Volcker will find that that is a very big mistake.

It looks like I'm at the end of my time.  And anyway, as I say, Professor Lopez put it all so well that I'm very happy to leave the rest of the time for discussion and questions.

MR. MURAVCHIK:  Thank you, all four of you.  Since I'm a trained researcher, my keen ear detected some divergence of views on the panel.

[Laughter.]

MR. MURAVCHIK:  Therefore I want to reserve our time mostly for questions, but why don't I allow each of the panelists about one minute to rebut any other panelist on any point that's particularly dear to your heart.

MS. PLETKA:  I think we'll entertain ourselves amply with the questions and answers and have lots of opportunity to rebut our colleagues.  But I do want to, on behalf of, I think, Claudia and myself, say that neither of us have rubbished Mr. Volcker, nor can I, working in an institution which is made up mostly of economists, actually have professed to have called him a geek.

[Laughter.]

MS. PLETKA:  And I think that we will all be very, very pleasantly surprised when he comes out with his report, no matter what that report says.  So don't mischaracterize how we described him.  I think that's unfair.

MS. ROSETT:  Thank you.  I would second that.  In fact, the kind of things I have been saying are--and this I do believe--that it's inappropriate to pay Mr. Volcker out of one of the accounts he's supposed to be investigating.  That has surprised me.  And while he may deliver a terrific report--I don't know--it would be inappropriate under any circumstances.  It would seem to me that Kofi Annan should have found another source of the money instead of using that as a slush fund.

Other things--where to begin?  The "mother of all transparent Web sites"--Danielle gave a pretty good idea of the sorts of things that you saw.  But honestly, part of what drew me into this program was looking at that Web site simply try to understand what was Iraq buying?  Because I would look and see on these same--you could print out stacks of the stuff; it did not lack for tonnage--but you couldn't find the basic information.  In any business contract there are certain details that are vital to understanding anything about the integrity of these contracts.  They include the price, the quantity, the quality of goods--a little bit about what you're actually getting.  And all the U.N. made available was country and then generic type.

When you saw "car out of Dubai"--we now know from contracts that finally leaked and then finally, after many, many calls for these to be put out, Mr. Volcker did release them.  The U.N. should have published them at the time.  It would have spared us a lot of trouble.  But you see "car out of Dubai," and then you look and you discover--double-check the precise example, but if I remember, that was actually $5 million worth of cars.  I assume it was plural out of Dubai.  And these things were coming from what was in fact a front company, since named by Treasury--check this example precisely I'm giving you, but basically this was the kind of problem you'd run into.  Al Wasel & Babel certainly did ship vehicles in.  They were a front company set up by one of the Saddam's own ministers out of UAE to sell to the Oil-for-Food Program.

If we had had details on that company in this contract, the hundreds of millions of dollars worth of business that it did as the U.N. was milling through these things, it might have been easier to spot the problem.  But all you saw was "Dubai: car" approved.

MR. MURAVCHIK:  Claudia, that's--I'm going to give each of--we have four panelists who really have a lot to say and we have a big audience that also wants to get in on it. I'm going to give the panelists each a minute at the end as well, but that's all I can give you now.  George?

MR. LOPEZ:  I'm happy to yield my time to the audience because I want to hear the audience questions.

MR. MORTIMER:  Since Claudia mentioned Al Wasel & Babel, I mean, that was actually one of the companies where the officials of the program signaled a query about the price.  And it went through the committee like all the others.  In fact, it was after the war that the U.S. government discovered that this company was a front for the Saddam regime.  Now, it's true the U.N. didn't discover it, but maybe U.S. intelligence was at least as well-placed as the U.N. to have discovered it, but they didn't know and they allowed the contract to go through.

MR. LOPEZ:  There's two issues we haven't gotten to that I hope we can get to at some point.  There has to be an admission at some point that there were people in the Iraqi government who were very good at this.  They were very good at this.  Not all bad things were discoverable.  And you're much able to discover them now.  It doesn't necessarily hark back to the condemnation of the U.N. system.  But there were a lot of bad things going on that weren't discoverable.  That's why we have lawyers and a period of discovery and a commission.

The second issue, I think, has to do with what level of transparency and what level of accountability do we want in these kinds of documents.  Given the relatively unprecedented nature of the style of the program, and given calls from experts about what level of accountability should go on the site, this was the best available advice the United Nations Secretariat and OIP got from the experts at the time.  I invite you to check the same kinds of ledgers that are operating now, either earlier under the Coalition Authority or the current system with the new government, and ask whether or not you have any more detail.  The reason you don't have any more detail is that, rather than it being 2 inches, it would be 84 inches.  And not until there's an investigation do people produce that detail.

MS. PLETKA:  I'm taking my last 30 second back.  We're going to continue talking and run the time out, I feel quite sure.

I think it's actually important to take the example that Claudia just gave because, actually, what everybody said is right.  In the case of a contract like this, in fact, while the information for the public was "cars" and not in any way transparent, in fact, prior to the new smart sanctions--and I'll leave that to your judgment--system, many contracts were seen by the member governments of the Security Council.  And many were also recognized to be overpriced.

Now, there are two issues here.  One is that it was fully within the discretion of the Office of the Iraq Program to actually stop a contract.  They didn't have to go running with a note to the 661 committee and say I'm a little worried.  And they didn't do it.  Not only that, but when I myself brought this up with Benon Sevan, he was furious to the point of being inarticulate.  Quite unusual, but I can assure you that that was the case.

The second issue is that, remember what we were fighting about.  When we have an issue where there was overpricing, you had to make a calculation:  Do I stop overpriced rice, cars, whatever it is, or do I, as a member government, stop something that I think is going to be used in a missile or a nuclear weapon or to attack other people or to harm people?  And this was the calculation that needed to be made.  Why did that calculation need to be made?  Because the Secretary General and the Secretariat made the lives of the Foreign Office in Britain and the State Department in the United States a living hell for every single hold they put on any single thing.

And so, yes, there is some fault by the member governments for being gutless.  But that gutlessness was 100 percent incentivized by the Secretary General of the U.N.

MR. MURAVCHIK:  Okay, I'm sure you agree with me that we've had a really interesting engagement of views here.  Thanks to all four.

I want to let as many people in on this as possible.  Simple rules:  Wait for the microphone, introduce yourself, and if you want to make a comment rather than ask a question, you may, but I will be more strict with you than with the speakers.  You'll have to make a very brief comment if that's what you take the floor to do.

QUESTION:  Eli Lake from the New York Sun.  This is for Mr. Mortimer.

Can you tell us the status of the 55 inspector general reports that the Office of the Iraq Program had done of some of these contracts?  Did they ever go to the 661 committee?  Are you intending to make the public?  And how will they end up going to the congressional committees that are looking into this, and why have they not been made public so far?

MR. MORTIMER:  Thank you.  In fact, the 55 include 18 which were not about the Oil-for-Food Program as such but about the Compensation Committee, the committee in Geneva which uses some of the Iraqi oil money for compensation of people who had claims against Iraq resulting from the previous Gulf war.  So we're actually talking about, I think, 37 that relate to the program itself.

These are internal audits, the normal kind of thing, I guess, that any company would audit its operations.  It wasn't normal U.N. practice, and it isn't as of now, to publish those kinds of documents.  Their purpose is they're a management tool, essentially, to help you find out if things are being done properly and, if they're not, to put it right.  They have been turned over to the Volcker inquiry.

And Mr. Volcker, in a letter to senators Coleman and Levin last month, made it clear that he intends to present his first set of findings in January, which will cover the relations of U.N. contractors, in other words, not people who had contracts to buy Iraqi oil or sell goods to Iraq, but the companies that actually were contracted with the U.N. to do inspections and banking and so on.  There are only, I think, four of them.  And also, the management of this famous 2.2 percent account, from the residue of which, indeed as Claudia said, the inquiry itself is being funded.  And he said that it would be consistent for those audits to be made public at the same time as the findings that he will deliver then, next month.

QUESTION:  My name is [inaudible].  I'm with Middle East Media Research Institute.  I am the first one to put out the [inaudible] list of 270 recipients.

I have two questions to Mr. Mortimer.  One, about the 55 audit reports.  In a letter to the Wall Street Journal, Mr. Shashi, who is under-secretary general for public information, mentioned 100 reports, not 55.  I'm glad that the number has been reduced, but how does he explain the 100 reports?

The second, the Oil-for-Food Program earmarked [inaudible] percent of the revenues for the Kurdish region, yet only 6 percent of that money was spent.  The Kurds complained repeatedly that the products they received from FAO, WHO were of poor quality.  Why did the United Nations use its specialized agency to provide the goods and services to the Kurdish region rather than seek competitive bidding?

Thank you.

MR. MORTIMER:  I'm not sure what the 100 figure that Shashi was referring to in that letter was.  I guess it may have included external audits as well as internal ones, and I think the external ones are already public.  As I said, it's not 55, it's 37, and I just explained why.

On the second issue, in the north the U.N. was mandated to administer the program itself, whereas in the south and center of the country it was the Iraqi government that administered and distributed the goods once they arrived.  I don't think it's true that private contractors were excluded from the north, but the various agencies were there, you know, to make sure it was done, in their view, properly.  There were a number of disagreements with the Kurdish administration, who basically would have preferred to have the cash and do it all themselves.  But the Security Council resolutions would not have permitted that.

However, it is true that the program on the whole worked better in the north, where the U.N. was administering it, than in the south and center, where the Iraqi government was administering it.  And this was something which the British and Americans frequently quoted in negotiations in the Security Council and in the 661 committee to prove that any damage being done by sanctions was not the fault of the sanctions themselves but of the government's behavior.  So they actually, certainly at that time, gave the U.N. some credit for doing a better job in the north.

I think, you know, we will not agree 100 percent with our Kurdish friends, and I know they were upset that the balance was handed over at the end to Mr. Bremer and his administration, and I think Congress has some questions about what happened to it after that.  But that was what the Security Council told us to do, and we did it.

QUESTION:  Cliff Kincaid with Accuracy in Media.  My question is mainly directed to Ms. Pletka and Ms. Rosett.

I'm concerned about what the U.S. knew and when the U.S. knew it--the U.S. mission to the U.N. and the U.S. Congress.  Now, I remember covering the firing of Linda Shenwick at the U.S. mission to the U.N. back in, I think, '99.  She was isolated, her phone lines were cut, her computers taken down.  Finally she was fired, kicked out of the U.S. mission.  She sued the State Department.  Then under the Bush administration, the State Department hires a Clinton lawyer, Gregory Craig, to defend itself.  There's finally a settlement in the case.  She's prohibited from going back to work at the U.S. mission to the U.N.  This takes four or five years in total.

She's somebody who was on the trail of so many U.N. scandals way back when, financial scandals.  Why don't we get to the bottom of what happened to her and whether the U.S. mission under Clinton and Bush knew that she could get to the bottom of some of this, and this is why she was kicked out?  Is there anybody willing to look at that aspect of this?

MS. PLETKA:  Cliff, I don't know a lot about the case of Linda Shenwick.  I know that there were a number of members of Congress and senators--Senator Grassley and Senator Helms, who was then chairman of the Foreign Relations Committee, took up her case.  I think there were a lot of injustices done, as there often are in cases of whistleblowers who bring unpalatable facts to light about missions, including one's own.  I remember that she was actually punished and brought back to the State Department and handed the portfolio for routing packages for moving Foreign Service officers.  So they do have their own purgatory there.

I don't know what's happened since then.  There's no question that, for many people, the Oil-for-Food Program is a window into an institution that has wider problems.  And it actually entertains me a little bit when we have these kinds of debates to see that there's a very strong defense of keeping the structure as-is by some, because I think that that is what will most harm the institution, is "don't talk to us, don't push at us, don't look at us, don't criticize us, we want to stay the way we are because that way we won't have to change."  Well, yes, but your constituency will diminish.

MR. MORTIMER:  But I think I've been misrepresented.  I mean, I'm sorry if I misrepresented what you said about Mr. Volcker, but I certainly don't think I said any of the things that you just repeated, or purported to repeat.

MS. ROSETT:  Could I just make a comment?  This kind of--what you're talking about, that kind of thing comes up over and over again.  Somewhere in here there is a great inconsistency.  I'm not even sure this is what you're driving at, but it bears on this.  It's that the U.S. is presumed to be to blame for not getting to the bottom of U.N. scandals.  Fine.  But in that case, so are the other members of the Security Council.  And especially in oil-for-food, it has somehow been assumed that because France, Russia, and China were corrupt, they were therefore not responsible for calling attention to the corruption.  That's inconsistent.

Now let's go one step further. I believe--correct me if I'm wrong here--the member states represent their own countries.  The Secretariat serves the United Nations.  There is an important distinction there. And where there may be no incentive for any one country--and it is a committee that the Security Council consists of, and this is where all responsibility just dissipates in the sand--the Secretariat serves the United Nations.  And when there is corruption going on, I believe that is the body that is most required to speak up.

And I just want to slip this in here--Joshua, forgive me.  Benon Sevan and Kofi Annan spoke up quite freely, vehemently, passionately, often, chronicled in fact by the people who wanted to get rid of sanctions, and leaked a most useful list of contracts back in 2001 which has been a prime resource tool for reporters researching the program for some time, but was not intended as that.  It was intended to nail the U.S. and U.K. for putting contracts on hold--and it included a list of Kofi's and Benon Sevan's protests over the contracts on hold.  Nowhere at any point did Kofi Annan or Benon Sevan step before the public and, along with the protests they made that the U.S. and U.K. should speed up the program, along with their imprecations that it should be expanded because there were dire funding shortfalls--although they did not look at the graft to stop the dire funding shortfalls--they at no time alerted the public that there was tremendous graft going on in these programs.

If indeed they went in and presented the Security Council with their grievances and the Security Council said we don't want to hear it, they didn't do what they did with holds--take it to the public stage.  They kept quiet.  And somewhere in there, there has to be a very serious look at the question of what does the Secretariat do, what does it represent, if it doesn't actually serve the United Nations?

COMMENT:  Mike [inaudible], a former Japanese businessman.  I have a short comment to make.

Business people can always out-maneuver the best and brightest of the bureaucrats in this whole world unless the best and brightest of the bureaucrats have deep, extended, and comprehensive business experience in the real business world.

Thank you.

MR. MORTIMER:  As I work for the Secretariat, I sort of felt [inaudible] by that.  Indeed, we do work for the United Nations and I think it's good, actually, to hear that said.  Because some of the remarks that U.S. congressmen make, you would think that we worked only--or were supposed to work only for one member state.  It's tricky, and it's tricky particularly when there are strong disagreements among member states.  And as I said before, I think there's a tendency to read this period of history backwards.  I mean, we still don't know the extent of the corruption there was in this program.  We have a better idea of it now, and we will have a better idea soon.

At that time, it was a matter of guesswork and supposition and nobody was really sure what was going on.  But the consequences of sanctions were very well known.  Britain and the U.S. were particularly concerned about that because they were the ones who were anxious to keep the sanctions in place.  And I think the point that my colleagues and masters in the Secretariat might have been making at that time was, you know, let's not--you know, you're stopping pencils from getting into Iraqi schools because they've got lead in which might theoretically, you know, have a military application.  Are you sure you're not overdoing this?  You know, are you sure you aren't undermining your own policy by applying these holds in such a comprehensive and rigorous way?

And my point, which I agree is also a retrospective point, is that since they were so rigorous about that, if they had been deeply worried about corruption at the time, they might have been more rigorous about the issues of pricing.

I don't say that to apportion blame.  I simply say it to try and set the record straight as a matter of what the preoccupations and priorities of the time were and what people knew or thought they knew then, as opposed to what they know or think they know now.

MS. ROSETT:  May I just very quickly correct something?  I have greatly misled you when I said what does the Secretariat represent if not the United Nations.  The problem is I don't mean itself.  I don't mean that the Secretariat is there to serve the Secretariat, which is the current arrangement.  I mean, if there is an institution, if there is a part of the U.N. that should be able to rise above the particular venal interests, which will come up, one would think it has to fall to the Secretariat.  In other words, where do you need a body that will blow the whistle?  That's where it has to reside, and especially if we're talking about what can be done here.  This country cannot reform France, but we can address how the U.N. itself works.

QUESTION:  My name is [inaudible].  I am a TV writer.  And I have to say that I'm originally from Iraq.

The Iraqis know from the kind of scandal that happened and they wrote about it in the newspapers, about the United Nations role and some of the United Nations staff, but they don't know who is responsible in the Secretariat and in the United Nations headquarters.  But they know the staff of the United Nations in Iraq, most of them were corrupt, they were involved in smuggling things.  Some of them, they collaborated with the Saddam regime.  They were from Arab and Muslim countries and so on.

But my question is how long this investigation will continue and how the people who are responsible will be brought to justice or something.

Thank you.

MR. MORTIMER:  Well, Mr. Volcker said, as I said, that he will present these first findings in January and a second set of findings, which will be about the internal administration of the program, in the middle of next year.  And I think that would address the issue that you raise--I mean, where U.N. officials, whether at headquarters or in Iraq, are corrupt.

How will they be dealt with?  Obviously, it depends on the degree and nature of corruption that is unveiled, if it is.  If they have committed crimes, the Secretary General has said that diplomatic immunity will be lifted, and they could then be taken to court, I guess in whatever country the crimes were committed in or whatever country's courts have jurisdiction over them.  Some of it might be in Iraq.

This, incidentally, Mr. Vocker has pointed out why it's not--although I know the Iraqi government is upset that the residual money from the administrative account of the program is being used to cover the expenses of the inquiry, but this inquiry potentially is of great benefit to the Iraqi people and they may actually, on the basis of it, be able to reclaim money that has been wrongly taken from them.  So if that's the case, it might prove to be a good investment to have spent a bit of what's left in the program on that.

But of course, if it is simply a question that people didn't do their job properly, but without committing crimes, then it will be up to the Secretary General to take disciplinary action against them, and he has undertaken to do that.

MR. MURAVCHIK:  I apologize.  We're at the end of the time for the question period.  We invite everyone to have a glass of wine, and I'm hoping that the speakers will do so as well and you can button-hole them one-on-one.  We have just enough time left to give each of our panelists one minute for some point that you didn't get to make in the course of the discussion.  But we're constrained by the television cameras to end on time, so you've got to just stick to one minute.

Claudia?

MS. ROSETT:  Yeah.  I guess the fundamental argument we keep hearing about the U.N. is that if you're going to deal with a, I think it was called "pesky" regime, you will have some corruption and we just have to live with this kind of thing.  That's what I keep hearing over and over again--what can you do with the U.N.?  It's complicated, it's difficult.

If that is in fact the only way that this institution can function, then it should be labeled that way.  We should refer to the U.N. as a corrupt institution and a place that condones corruption.  And we should understand what we're dealing with in the debate.

In the end, this program was complicated.  The bottom line is simple.  You need honest institutions.  When you stop pressing for that, you have a real problem.

Thank you.

MR. LOPEZ:  Let me begin where Claudia ended.  I agree with that assertion at the end.  What does it mean in practical form?  Because I don't consider myself or other people here an apologist for corruption.

Under what conditions should a Secretary General of the United Nations be a whistleblower?  Show me the historical times where a Secretary General has tried to speak askance of any of the major five powers and it's come out for the benefit of either peacekeeping, the future of the organization, or that organization's relationship with that power in question.  Witness the Secretary General's statements before the Battle of Fallujah as a case in point.

Secondly, Danielle's point I thought was excellent, about peacekeeping.  Now, if we can't have it both ways, if we're going to condemn as we should the work of the organization's states in the field in their name, what's the next step?  Are we willing to increase the U.N. budget and create a permanent expeditionary force in which professionalized soldiers, rather than recently deputized people from a member state, go out and wreak havoc, as opposed to having a professionalized peacekeeping force?  If we're going to condemn the corruption, condemn the efficiency, empower the organization.

MR. MURAVCHIK:  Danielle?

MS. PLETKA:  [Off microphone, inaudible.]

MR. MORTIMER:  I would be a little bit humble.  I think it's nice to hear George saying that and that he has that confidence.  I certainly think there are areas where we do need more resources.  We certainly need more resources of staff security, I think we need more resources for peace-building.  And in fact, there's a very good report that came out last week, and you may have heard about it.  It's called--and maybe you should have a debate at the American Enterprise Institute about that--called "A More Secure World."  It has a number of, I think, very creative and important suggestions of how we can improve our defenses against terrorism, against disease, against nuclear proliferation, and against poverty--and this is a panel of which General Skowcroft was a member--and also how we can improve the United Nations.

No one is saying the United Nations is perfect.  No one, I hope, is saying it ain't broke, don't fix it.  I don't think it is useless.  Obviously, I wouldn't be working there if I thought that.  But I do think that it depends on the effort and the interest and determination of the member states and their peoples to make the United Nations an instrument that conserves their interests and their aspirations.

And therefore, even if I disagree with some of the things that have been said from this panel and from the floor, I very much thank you all for coming, for your interest, and I thank the institute for hosting this discussion.

MS. PLETKA:  Long years of marriage have prepared me to always get the last word.

First of all, I have to say that if I have said anything that should bolster the idea that the United Nations should have a standing army, I apologize.  And if the United Nations were at some eventuality to have a standing army, and it were run like the Office of the Iraq Program, woe be to all people everywhere.  The Office of the Iraq Program with guns.  I can only imagine.

I think that we need to do one thing, which is important.  And that is that we need to stop looking at the United Nations as if it is something special.  If the United Nations were a corporation and the things that have come out came out about it, the CEO would be gone.  Eliot Spitzer would be roasting him on his barbecue.  These are things that are not permissible in places that do real business, which have real stakeholders, which actually are meant to achieve the ends for which they were established.  And I do think that as we get back into the debate and we clarify everything that we say, we step back and remember that, in fact, were these things happening in a privately run institution, it would be on the front page of the paper and we would be outraged.

MR. MURAVCHIK:  So we end, as we've gone throughout, on a note of harmony.

I want to especially thank Suzanne Gershowitz and Kara Nichols, who handled all the arranging of this meeting.  I very warmly thank the four speakers, who I thought were all outstanding and very generous to give their time to this.

Thank you all for coming.  Please have a glass of wine, and we'll see you at our next panel.

[END OF TAPED RECORDING.]