The Quiet Oil-for-Food Scandal

Last week, the Independent Committee investigating the Oil-for-Food program (OFF) released its final report detailing how Saddam Hussein's regime skimmed just under two percent from the otherwise successful relief effort by charging kickbacks and "inland transportation" fees to companies doing business with Iraq.

The small group of conservative writers who I've dubbed the "Scandal Pimps" have been less enthusiastic about the release of this report than they've been about those that preceded it. The day after the release, the Wall Street Journal editorialized that the report didn't really add anything new, it just filled in some details.

What they characterized as "details" were actually the names of over 2,000 companies that paid bribes to the Hussein regime for a shot at buying Iraq's oil, selling spare parts for its oil infrastructure or providing humanitarian goods for a population starving under the U.S./ U.K.-led sanctions regime.

The Scandal Pimps have been low-key because the final report of the Committee -- known as the Volcker Committee for its chair, former Fed Chairman Paul Volcker -- offers further evidence that what they've worked so hard -- and so successfully -- to portray as a massive UN scandal has always been a relatively modest corporate scandal, interesting more for the players involved than because of its scale.

The details the Journal editors referred to include the process by which Saddam and his cronies squeezed what were effectively bribes out of multinational corporations, great and small. Contracts were submitted to the United Nations where they were reviewed by the Security Council states (the U.S. and Britain were the only ones that reviewed every contract). Revenues from approved sales were deposited into UN-administered trusts from which goods could be purchased. But before companies could "lift," or load, oil, they had to come up with some cash for the Iraqi government. Those fees and surcharges were paid directly by the companies either into Iraqi-controlled accounts (mostly in Jordan) or as bags full of cash dropped off at Iraqi embassies around the world. The illicit funds -- widely reported by the media at the time -- never touched UN hands.

More to the point, the Scandal Pimps are unlikely to delve too deeply into the final report because it reveals that some of our leading corporations, and the vaunted "entrepenuers" that outlets like the Washington Times always crow about, weren't in the least bit reticent to pay off a brutal dictator accused of mass murder in order to pump up their bottom lines.

Even more damning to the conservative worldview is that the United States' "strategic class" was deeply involved. In fact, profits from sales under OFF program that were lubricated with illicit payments to Saddam Hussein found their way into both the Bush and Kerry presidential campaigns of 2004.

You wouldn't know that from the modest coverage of this most interesting report. Most of the reporting has focused on the fact that many of the contracts went to French and Russian companies. The Washington Post's take was typical: "most of those allegedly receiving rewards were not Americans. The preponderance of lucrative contracts went to French and Russian companies, on the grounds that their governments opposed the sanctions regime and favored Iraq in the U.N. Security Council."

That's technically accurate but substantially false. In a global economy, distinctions between "American" or "French" companies are essentially a joke. The Volcker report paints a picture of layer upon layer of front companies and cut-outs, off-shore subsidiaries and hastily slapped together strategic partnerships: "Iraq's preference for French companies and the limited number of recipients in France for Iraqi crude oil led certain companies to pass themselves off ... as being French-based." The report cites a 1998 letter from a French official to an Iraqi official based in Paris, in which he expressed "his concerns and his government's concerns ... regarding the increase in British and American companies as well as others who exploit the decision of the Iraqi leadership in providing priority to conducting business with French companies by signing contracts with Iraq through their offices in France."