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. Last Updated: 07/27/2016

UN Reports on Oil-for-Food Abuses

UNITED NATIONS -- About 2,200 companies in the UN oil-for-food program, including corporations in the United States, France, Germany and Russia, paid a total of $1.8 billion in kickbacks and illicit surcharges to Saddam Hussein's government, a UN backed investigation said in a report released Thursday.

The report from the committee probing the $64 billion program said prominent politicians also made money from extensive manipulation of the UN oil-for-food program in Iraq.

The investigators reported that companies and individuals from 66 countries paid illegal kickbacks using a variety of ways, and those paying illegal oil surcharges came from, or were registered in, 40 countries.

There were two main types of manipulation: surcharges paid for humanitarian contracts for spare parts, trucks, medical equipment and other supplies; and kickbacks for oil contracts.

Among the companies that paid illegal surcharges were South Korea's Daewoo International and Siemans SAS of France. On the oil side, contractors listed included Texas-based Bayoil and Coastal Corp., and oil giants Gazprom and LUKoil.

Russian companies were contracted for approximately $19.3 billion in oil from Iraq, which amounted to about 30 percent of oil sales, by far the largest proportion among all participating countries.

Vladimir Zhirinovsky, who heads the Liberal Democratic Party, received millions of barrels of oil he could turn around and sell for a profit, the report said. Iraqi Oil Ministry records show that 4.3 million barrels were allocated to Alexander Voloshin, who at the time was chief of staff in the presidential administration. Both Voloshin and Zhirinovsky have denied any wrongdoing.

Thursday's final report of the investigation led by former Federal Reserve Chairman Paul Volcker strongly criticizes the UN Secretariat and Security Council for failing to monitor the program and allowing the emergence of front companies and international trading concerns prepared to make illegal payments.

In a letter to UN Secretary-General Kofi Annan, the committee said its task had been to find mismanagement and evidence of corruption, and "unhappily, both were found and have been documented in great detail."

It said responsibility should start with the UN Security Council, which is dominated by its five permanent members: Britain, China, France, Russia and the United States.

"The program left too much initiative with Iraq," the letter said. "It was, as one past member of the council put it, a compact with the devil, and the devil had means of manipulating the program to his ends."

The oil-for-food program was one of the world's largest humanitarian aid operations, running from 1996-2003.