Abstraction vs. Reality 3

The continuing saga of United Nations inefficiency, unmanageability, and outright criminality proceeds today with a brief examination of the Oil for Food program. In a nutshell, the program was initiated after the Gulf War to provide an opportunity for Saddam Hussein to convert oil resources, otherwise under sanction by direction of the UN Security Council, in exchange for food and other domestic necessities for the people of Iraq. In 2004 it had become apparent that the program had been corrupted sufficiently to gain the attention of the US Congress—finally!

A commission was appointed with former Fed chair, Paul Volker as its head, to investigate and report to the congress. The amounts of money involved were staggering, and like bears to a beehive, it attracted grifters and thieves of every description. Unfortunately, the investigating committee was not endowed with the legal and law enforcement powers to be in any way effective. It came to be popularly described as “a toothless tiger.”

A Swiss company, Cotecna, was hired—on a percentage basis, 2.2%—to oversee the operation to insure the propriety of fund use and delivery of the supplies to the Iraqi people. In an unusual “coincidence,” Secretary General Kofi Annan’s son Kojo happened to be employed by this firm at the time the contract was awarded. When this impropriety surfaced, he resigned his “position” but was still retained as a “consultant.” His knowledge and experience must have been very valuable to the company and rare in a 22-year-old. As a result, this precocious lad was allowed to continue his association with Cotecna.

Even if you are not actively engaged in commodity trading, the basics are relatively simple.. If one holds the rights, through ownership, to buy a product at a stated price in a specified quantify then any rise in the commodity price will result in an immediate profit upon sale. In a declining market one simply waits it out. Since it is all on paper, no infrastructure is required to store it. Saddam sold Oil For Food vouchers to nations and individuals at bargain basement prices to generate revenue not for the people, but to enhance his depleted military and reinforce his power over the people. Selection of the lucky recipients was determined mainly by the size of the kick back to Saddam. Over the years of the program a limited amount found its way to the populace but in no way comparable to the billions generated by the program. Any unredeemed vouchers would be worth—at Friday’s market close—$126.00 per barrel. The market closed on July 31, 1996 at $16.60

One interesting figure and story in this is that of Benon Sevan, the former head of Oil for Food at the UN. Upon investigation it was determined he had a recent unaccounted for deposit of $160,000 to his personal account at the bank. He claimed it as a gift from his kindly and beloved old aunt. The investigators planned to visit her at her two room apartment in Cyprus. Before the story could be confirmed, she fell down an elevator shaft and died.

In January of ’07 in avoidance of the statute of limitations an indictment was returned naming Benon Sevan. He had previously fled to Cyprus to avoid his comeuppance and now faces a possible 50 years for conspiracy to commit fraud. Being holed up in a small apartment in Nicosia has not prevented him from contact with various UN officials. People in New York would like to be able to speak with him about Ephraim “Fred” Nadler, also indicted, Egyptian by birth and the brother in law of Boutros Boutros-Gahli, the former Secretary General before Annan.

No one is accusing Boutros-Gahli but his name keeps coming up in various investigations. As a frequent visitor to Boutros-Gahli at his home in New York, Tongsun Park of Korea has cast a long shadow on the former Secretary General. Park is currently behind bars for his part in the conspiracy to illegally milk the Oil For Food program.

When programs become measured in billions of dollars, the temptations to manipulate them for minor percentages in out right fraud and kickbacks become too great to resist. Without accountability, it is equally difficult to assign blame to illegal acts. This is especially true when those charged with that accountability are administering the program. In our government, the General Accountability Office (recently renamed) has a mandate which separates it from the branches and agencies which it monitors. It more closely resembles a bank audit which insures trust in that system and provides the opportunity for the government to insure (FDIC) the depositors.

These numbers pass the comprehension of the average person as do the strange sounding names coming from an international pool. This does not mean that the huge sums should be ignored and the miscreants allowed to fall through the cracks of a widely variant set of legalities. Each $6 billion which disappears is $1.00 per person, world wide. Each $60 billion becomes $10.00 per person. For those of us in a successful republic, it is chump change. For some poor guy tending rice in a paddy of Southeast Asia it represents 10% of his monthly income and is therefore extremely important. If he has a wife and three kids it becomes 50%. The billions which find their way into the coffers of ruthlessly corrupt leadership are funds which cannot rightfully be offered to the relief of the deserving poor.

The gap between abstraction and reality widens. We shall continue our look at the United Nations in the coming week. In the meantime, celebrate your mother; honor her, praise her and thank your loving God for her care for you and your family. She represents one of your greatest blessings.

In His abiding love,

Cecil Moon