Mr. Chairman, distinguished members, thank you for inviting me to be here today.

At first glance, the oil for food scandal at the United Nations appears a mundane story of bureaucratic shenanigans, graft and mismanagement. In fact, its implications are far wider. As the United States prepares to hand responsibility for Iraq to the United Nations, the UN's administration of the oil for food program brings into question the efficacy and integrity of the institution and its ability to function credibly in Iraq. As we rely more and more on global bodies like the UN, the ability of those bodies to enforce their members' will, to rely on their personnel and to operate transparently are matters that concern all responsible nations.

Since the publication of the alleged kickback list from the United Nations oil for food program for Iraq there has been a good deal of debate about the program. Playing out their own version of Casablanca, officials from the United Nations have declared themselves "shocked" that the oil for food program was a tangled web of, at best, incompetence, at worst, bribery, deceit and corruption.

The temptation in the face of growing evidence of official corruption is to assign blame, pledge to root out this sort of malfeasance in the future and move on. Secretary General Annan has already asserted that any problems were the fault of the members of the Security Council. Others pinpoint Benon Sevan, the director of the Office of the Iraq Program at the United Nations, and an alleged recipient of a kickback voucher from Saddam. In this political season, still others have asserted, variously, that the Clinton or Bush Administrations are to blame for the scandalous behavior at the UN.

In individual cases, payoffs can explain in part why the program had so many failings. After all, if it is true that Benon Sevan was being bribed by Saddam Hussein, then we can more easily understand why it was impossible to engage the Office of Iraq Program in any systematic effort to effectively implement sanctions. Similarly, it should come as no surprise that if companies could get contracts through bribes and without fear of punishment, they would do so.

But generally speaking, there is plenty of blame to go around, because the failings of the oil for food program can be traced directly back to the failings of international institutions in general and consensus-based multilateralism in particular.

Originally, the program was conceived to address the fact that United Nations sanctions on Iraq were inflicting suffering on the Iraqi people rather than on Saddam Hussein. The first resolution to suggest such a program, UNSCR 706 in 1991, envisioned the UN Secretary General in control of contracting and revenues; Saddam Hussein was cut out of the whole process. But Saddam correctly judged that if he held out, a better deal would come along; and in 1995 with UNSCR 986, it did.

The environment surrounding passage of 986 was typical at the UN. The crisis had passed, as had the pressure for decisive action, and the loose nature of the controls outlined in the resolution reflect that. The compromise contained in 986 gave rise to two classes of victim: first, the Iraqi people, who remained at the mercy of this dictator; and second, the rest of the world, which was relying on the effective administration of sanctions to contain the Iraqi threat.

The very nature of UNSCR 986 invited corruption. Saddam Hussein's own government was responsible for developing distribution lists, deciding needs, contracting with suppliers and delivering goods to the end users in much of Iraq. There was no requirement that Saddam find the best goods or the cheapest supplier. No surprise then that Saddam used the contracting process to reward friendly countries and punish enemies. Nor is it any surprise that many of the companies involved were willing to pay surcharges for lucrative contracts, often to ship shoddy and unneeded goods into Iraq. For example, I gather that a Department of Defense audit found that two thirds of all Egypt's contracts were deemed overpriced by an average of 23 percent, and of the 124 Russian contracts investigated, 51 were found to have illegal surcharges.

Imagine, these were not contracts in violation of sanctions, but allowed within the sanctions regime. Billions in business was also taking place outside the sanctions regime, benefiting Saddam Hussein directly. In many cases the United Nations was fully aware of those violations, but did almost nothing to stop them.

Meanwhile, throughout the course of the 1990s beginning as early as 1991, everyone from Kofi Annan to the Foreign Ministers of Russia, China and France, not to speak of Saddam's friends inside the Arab League, were all condemning the inhumanity of the sanctions regime. Each loosening of the sanctions (and they were officially loosened roughly every two years) came in response to enormous international pressure.

Denis Halliday, the UN administrator of the oil-for-food program, resigned in 1998 to protest the sanctions. Halliday said, "We are in the process of destroying an entire country" and labeled the sanctions as "nothing less than genocide."

But even the loose system under UNSCR 986 and its follow-on resolution 1153 weren't good enough for Saddam or his allies. By 1999 he was allowed to sell an unlimited amount of oil, buy an unlimited amount of non-military goods and contract for exploration in existing oil fields; he was building palaces, importing fleets of luxury cars and, best of all, there were no weapons inspectors inside Iraq.

If the oil for food program was a problem, the regulation of so-called dual use goods was even worse. Under the terms of the original resolution regulating the importation of such goods, UNSCR 1051, there were meant to be weapons inspectors insuring that imports weren't diverted. There were just 150 inspectors on the ground checking up on the oil for food program; and after 1998, there was no one inspecting dual use. In theory, the UN people were doing the job, but in practice they didn't have the time, the expertise or the willingness to hire more personnel. All this while they were receiving fully three percent of the OFF revenues for their own costs.

Nor did the United Nations secretariat or the Office of the Iraq Program express particular concern. OIP officials who met with US government and congressional groups were hostile and angry, furious over any insinuations that the program could be improved in any way. Their main focus and the object of constant protest to the United Nations and to any member of the press who would listen was the more than $1 billion in holds--objections to particular contracts--the United States and Great Britain had on goods going into Iraq.

These are the facts; for the most part, those of us who paid attention to Iraq and to the sanctions were well aware of them beginning in the early 1990s. Corruption, smuggling and sanctions violations were common knowledge. For the United Nations Secretary General or his spokesmen to assert that they weren't aware of the problems is absurd. But Saddam is now gone and the sanctions regime is over. So why do we care?

There are some obvious answers to that question: Criminal behavior such as taking bribes and accepting "vouchers" should be ferreted out and prosecuted. As Claudia Rosett has ably documented, there is almost no accountability within the United Nations. OIP officials have protested they did diligent oversight and underwent up to 100 audits. But GAO has not seen the audits and has testified that "it is unclear how [OIP] performed this function."

Mr. Chairman, you must file an annual financial disclosure, as must every one of your colleagues and many of your staff. The purpose is to reveal any potential conflicts of interest or suspicious sources of income. Lying about that income (including bribes and kickbacks)--or just lying about your assets--is subject to criminal penalty. A similar accountability system within the United Nations applies only to the rank of assistant secretary general and above. Indeed, it is not entirely clear what the penalty is within the United Nations if you are actually caught taking bribes.

Benon Sevan, who is alleged to have received an oil voucher from Saddam's government, has not even been suspended from his paid position. In such a bureaucracy, only a person's innate honesty is a guarantor against corruption. That's not much of a way to run a ship.

But there is a more serious issue at hand here. Set aside for a moment the question of corruption. Even if the program had been squeaky clean, it is clear that those administering the Iraq sanctions were not committed to their success. Why should they have been? They don't work for the United States. There are five permanent members of the Security Council, and at least three of them did not support sanctions against Iraq.

The leaders of France, China and Russia had all made clear that the time had come for sanctions to end, despite the fact that Saddam Hussein had not complied with the terms of the original cease fire resolution following his ouster from Kuwait. Indeed, Syria, which sat on the Security Council during the height of the debate over Iraq, was the #1 violator of UN sanctions on Iraq. Why should UN employees enforce with any enthusiasm a system that is not supported by the majority of the members of the United Nations?

For those who contend that we must always proceed on the basis of multilateralism and that the United Nations should be the default instrument of American foreign policy, this is a real dilemma. Many of us conclude instead that the United Nations should be used when possible, but when consensus in that body is unachievable, or so dilutes our goals so as to be useless to our purpose, then we must move on alone.

It is fashionable in many quarters to reject this kind of thinking as "unilateralism" and as per se "illegitimate" absent the UN's good housekeeping seal of approval. Those who argue this, however, need to explain why the corruption and mismanagement we are finding in the OFF program will not be characteristic of other multilateral responses to similar problems in the future.

The history of the United Nations' dealings with Iraq is a story of international bickering, disagreement, and lowest common denominator solutions. In almost every instance where the Security Council was able to act, it was because of a crisis. Within weeks of the crisis passing, the unanimity of the Council disappeared.

If the Council is divided, and cannot agree to enforce the very resolutions it agrees upon, it should come as no surprise that the staff of the United Nations, from the Secretary General on down, do not feel it incumbent upon them to carry out UN resolutions to the letter of the law. And if they can take bribes without fear of punishment in order to subvert those resolutions, the problem of enforcement is graver still.

If the UN is intended to be an arm of our foreign policy, then Iraq sanctions are an object lesson. There must be drastic reform.

Danielle Pletka is the vice president for foreign and defense policy studies at AEI.