Audits for U.N. criticize oil-for-food program

Internal U.N. audits of the so-called oil-for-food program in Iraq criticize the office led by a former top aide to Secretary-General Kofi Annan for failing to adequately supervise and audit the companies hired to inspect the oil moving out of Iraq and goods going in under the multibillion-dollar program.

An early sampling of 10 reports obtained by The New York Times yesterday chide the United Nations' Office for Iraq Program for permitting the program's major contractors to overcharge the United Nations and understaff posts at ports and borders where oil and goods were supposed to be monitored.


Altogether, the auditors have prepared 58 reports, totaling about 400 pages, many of which criticize how the aid program was administered.

The audits were conducted during several years of the program and have been collected by Paul A. Volcker, who heads a U.N.-appointed commission that has been investigating accusations that billions of dollars were diverted from the program.


Copies were sent late Friday to several congressional committees that are also investigating the program. Volcker is to make the audits public tomorrow.

Accusations that a program intended to keep Iraq's oil proceeds out of the hands of Saddam Hussein, so they could serve the needs of Iraqi's needy, have ignited considerable anger in Washington, and even calls for Annan to resign.

The audits, conducted by the United Nations' Office of Internal Oversight Services, do not contain allegations of bribery or corruption. But they do identify problems with all three of the program's main contractors hired to inspect transactions under the oil-for-food program, which was created in 1996 to ease the effect of sanctions on the Iraqi people.

The United Nations, however, denied allegations that the audits show that the United Nations did not adequately monitor the program. Stephane Dujarric, a spokesman for the United Nations, said the audits showed that "this was a highly audited and supervised program."

"But these reports should not be seen as a final conclusion of how the program was run," he said. The oil-for-food program, he added, was a "highly complex program, done in difficult political circumstances." He said Annan had not seen the audit reports.

Still, the audits seem likely to increase pressure on Annan to respond to congressional calls for greater accountability and transparency in U.N. programs. Congressional investigators who are now reading the audits say they reinforce questions about how poor stewardship by the United Nations played a major role in widespread corruption in the administration of sanctions against Iraq.

The reports note many accounting and operational lapses within the Office for Iraq Program, which was headed by Benon V. Sevan, one of Annan's close aides. The auditors write, for instance, that Sevan's office permitted its employees to lose money and thousands of dollars' worth of equipment in the field and allowed its contractors to overcharge the United Nations and to understaff critical inspection posts where Iraqi oil and imported humanitarian goods were supposed to be inspected.

The reports look closely at three major contractors, Saybolt Eastern Hemisphere, Cotecna Inspection Services and Lloyds Register of Shipping.


The supervision of Saybolt, the Dutch-based company hired to inspect oil shipments from Iraq, was so poor, the auditors found, that it was difficult to evaluate its performance. "No procedures had been established to monitor the services of the contractor," states one report, dated July 3, 2002.