Global Policy Forum

Annan Says US and UK Allowed Iraqi Oil Scam


Western allies deny turning blind eye to smuggling by Saddam

By Suzanne Goldenberg

April 16, 2005

Britain and America reacted angrily yesterday to accusations by the UN secretary general, Kofi Annan, that they were partly to blame for the oil-for-food scandal because for years they had overlooked the illegal trade in Iraqi crude. Mr Annan, under fire for his son's role in the worst corruption scandal in the UN's history, made his comment on Thursday, hours after a British oil trader and his US and Bulgarian associates were indicted for paying millions of dollars in bribes to Saddam Hussein's regime to acquire Iraqi oil.

He pointed out that the Iraqi regime profited far more from illicit shipments of oil through Turkey and Jordan which, he said, took place with the almost certain knowledge of Britain and the US - the only countries with the resources to stop the sanctions-busters. "The bulk of the money that Saddam made came out of smuggling outside the oil-for-food programme, and it was on the American and British watch," he told reporters. "Possibly they were the ones who knew exactly what was going on, and that the countries themselves decided to close their eyes to smuggling to Turkey and Jordan because they were allies."

Jack Straw, the foreign secretary, said Britain had helped maintain the international embargo on Saddam's regime and had intercepted shipments in the Gulf. "The United Kingdom was consistently in the lead in seeking to enforce sanctions against Iraq," his statement said. "The fact that the smuggling of oil was most likely to take place to Turkey and Jordan simply reflects the geography of the area. Jordan and Turkey have land borders with Iraq. Jordan and Turkey were primarily responsible for preventing smuggling across their borders."

But the Liberal Democrats said the government had questions to answer. "It was no secret that smuggling was taking place and that both Turkey and Jordan were beneficiaries," its foreign affairs spokesman, Sir Menzies Campbell, said. "Both the British and American governments have got questions to answer. What did they know and when did they know it?"

A US spokesman, Richard Grenell, denied that Washington had known of the smuggling and said there was a difference between illicit trading and a public "waiver" granted to some countries "before the oil-for-food programme even began". The allegation has been around for years that Washington - which had ships in the Gulf to intercept smugglers - looked the other way while Jordan and Turkey profited from smuggled oil. Presidents Bill Clinton and George Bush Sr went to Congress for waivers to allow Jordan and Turkey to continue receiving US aid despite evidence of sanctions-busting.

It is also widely acknowledged that the Iraqi regime earned far more from sanctions-busting - up to $11bn (£5.8bn) - than from bribes from oil companies working under the oil-for-food programme, which earned Saddam's officials an estimated $2bn to $4bn.

Mr Annan's comments were seen as evidence of his growing frustration at Washington, where the Republicans have used the scandal to attack the UN. It has laboured under the scandal for more than a year, and Mr Annan's personal integrity was scrutinised by the independent investigation conducted by the former US reserve chairman Paul Volcker. The committee is to publish its conclusions this summer, and they could lead to criminal prosecutions for bribery and sanctions-busting in several countries. Its interim reports have accused the director of the oil-for-food programme, Benon Sevan, of ethical misdeeds, and raised questions about Mr Annan's son Kojo.

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