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[casi-analysis] Chalabi's UN troubles, and a scandal fantasia

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Ahmed Chalabi's plummeting fortunes were in evidence during the U.S. political
talk shows this Sunday morning.  Fox News followed a Chalabi appearance by
interviewing a Republican Congressman who said Chalabi was a big part of our
Iraq problem and was not to be trusted. (Again: Fox News. Republican

Because Chalabi is fighting for his political life, many see Chalabi as a player
in the Oil for Food 'scandal'.  At issue is the prominence of the UN role in
postwar Iraq: the stronger the UN's responsibility, the less leverage is
maintained by Chalabi.  If the UN's role is diminished, Chalabi benefits.
Chalabi's associates control many of the documents purporting to detail
corruption, and investigator Claude Hankes-Drielsma is a close associate of
Chalabi (links below).

Separately, there are these threads to watch:
[1] The GAO is investigating the Chalabi-led Iraqi National Congress for use of
taxpayer funds when lobbying for war.  Note that Francis Brooke (cited in the
story below) is a former principal of The Rendon Group.
[2] White House disaffection from Chalabi is detailed in a major WashPost story
that ran yesterday (subhead: "Chalabi and Others Coalition Relied on May Be Left
[3,4] Chalabi's ties to the UN-OFF investigations are noted by the Post and
[5] There are indications the U.S. fears where an OFF investigation might lead.

Those of us in CASI have argued for years that sanctions (and the inadequacies
of Oil for Food) are a major scandal FOR HUMANITARIAN REASONS.  Handwaving over
Oil for Food's accounting practices will ring hollow until sanctions' 500,000
excess deaths become central to the story.

So here's my Oil for Food scandal fantasy:  Shiite Ahmed Chalabi (realizing that
all bridges to Washington are burning and that his neocon constituency is
marginalized), seeks to re-position himself as a champion of the Iraqi people.
He uses UNICEF data and Iraqi Health Ministry documentation to detail the damage
done by sanctions to Iraq.  Chalabi (whose associates control the Hussein trial
proceedings) uses this bully pulpit to publicize sanctions consequences before
the world, detailing the damaging manipulations of both Hussein and the U.S.

Chalabi sues for 150-billion reparations in international courts (the
approximate amount removed from Iraq's economy during the nineties), and
threatens to sue for multiple trillions (while quietly negotiating for debt

Grand Ayotollah Ali al-Sistani (whose core constituency suffered most under
sanctions) joins in the call to investigate, as do Adnan Pachachi and other
prominent Sunnis, and all three major Kurdish parties.

Benefits: a more unified, prosperous Iraq, with some damage done to the guilty.
I'm not holding my breath, but ...

Drew Hamre
Golden Valley, MN USA

Posted on Fri, Apr. 23, 2004

Iraqi exiles may have misused U.S. funds

A leading Iraqi exile group that helped make the case for overthrowing Saddam
Hussein may have violated rules barring it from lobbying.


WASHINGTON - An Iraqi exile group may have violated restrictions against using
taxpayer funds to lobby when it campaigned for U.S. action to oust Saddam
Hussein, according to documents and U.S. officials with direct knowledge of the

If the accusation -- which is the subject of an upcoming probe by Congress'
General Accounting Office -- is borne out, it means that U.S. taxpayers paid to
have themselves persuaded that it was necessary to invade Iraq.

Officials of the Iraqi National Congress, which played a central role in
building support for last year's invasion of Iraq, deny the group crossed the
line prohibiting lobbying or that it broke any other rules.

But officials at the State Department, which managed the INC's U.S. government
grant, said they believe it did, despite what a senior official said were
repeated warnings to the group to avoid lobbying ``or even the appearance of

The officials spoke on condition of anonymity because the government's dealings
with the INC, a favorite of some Pentagon officials and advisors, remain highly
controversial. State Department officials, along with many intelligence
officers, have been longtime critics of the group and want to minimize the
group's role in post-Hussein Iraq.

Federal law prohibits the use of U.S. government funds for lobbying on financial
matters such as government contracts. A grant agreement between the INC and the
State Department prohibited lobbying and propagandizing.

In this case, individuals who held senior positions with the INC set up a
nonprofit group to lobby for U.S. action in Iraq. The group, composed largely of
Iraqi Americans, relied on private funds and wasn't subject to the same lobbying

Even so, the formation of the group surprised and angered U.S. government
officials, some of whom suspected it was an attempt to sidestep the lobbying


The incorporation papers of the spinoff group, the Iraq Liberation Action
Committee, say it was founded ''to work in support of United States and
international efforts to remove the regime headed by Saddam Hussein from power
in Iraq'' and to help in ''drafting resolutions, legislation and regulations''
to advance democracy there.

The group's principal founder was Francis Brooke, the INC's Washington
representative, according to the corporate documents obtained by Knight Ridder.

Brooke, in a telephone interview, acknowledged a ''professional relationship''
with the lobby group. But he said there was ``no crossover between that and
anything else.''

Two senators, presumptive Democratic presidential nominee Sen. John Kerry,
D-Mass., and Sen. Carl Levin, D-Mich., asked the General Accounting Office,
Congress' investigative arm, to determine whether the INC violated lobbying


In a March 3 letter, the senators asked the GAO to determine whether taxpayer
funds were used to arrange meetings between Iraqi defectors and journalists, to
influence Congress regarding funding or legislation, or to propagandize the
American public. Their request was first reported by Newsweek magazine.

Kerry, who voted in favor of an October 2002 resolution to authorize the Iraq
war, and Levin, who voted against, cited a State Department funding agreement
with the INC. ''The functions of the INC office and personnel in the U.S. will
strictly exclude any business associated with, or that could appear to be
associated with, attempting to influence the policies of the United States
Government or Congress, or propagandizing the American people,'' that agreement

A GAO official said the agency would look into the matter to see whether a
full-scale review is warranted.

The role of outside groups and advisors in the decision to invade Iraq and in
postwar planning has come under growing scrutiny since it was revealed that much
of the intelligence on Hussein's weapons programs and terrorist ties that
President Bush relied on was inaccurate or fabricated. Some crucial pieces of
intelligence found to be bogus were supplied by Iraqi defectors made available
by the INC and other groups.


The INC, an umbrella group for anti-Hussein Iraqi exiles, received at least $18
million in U.S. funds between 1998 and 2003, according to a January report by
the Congressional Research Service.

Its leader, Ahmad Chalabi, is a member of the Iraqi Governing Council in Baghdad
and has been pushed by some Pentagon and White House officials as Iraq's next


U.S., U.N. Seek New Leaders For Iraq
Chalabi and Others Coalition Relied on May Be Left Out

By Robin Wright and Walter Pincus
Washington Post Staff Writers
Saturday, April 24, 2004; Page A01

The United States and the top U.N. envoy to Iraq have decided to exclude the
majority of the Iraqi politicians the U.S.-led coalition has relied on over the
past year when they select an Iraqi government to assume power on June 30, U.S.
and U.N. officials said yesterday.

The latest shift in policy comes as the U.S.-led coalition has to resolve some
contentious and long-standing issues before the transfer takes place. Earlier
this week, the coalition moved to allow former Baath Party members and military
officers to return to government jobs.

At the top of the list of those likely to be jettisoned is Ahmed Chalabi, a
Shiite politician who for years was a favorite of the Pentagon and the office of
Vice President Cheney, and who was once expected to assume a powerful role after
the ouster of Saddam Hussein, U.S. officials acknowledged.

Chalabi has increasingly alienated the Bush administration, including President
Bush, in recent months, U.S. officials said. He generated anger in Washington
yesterday when he said a new U.S. plan to allow some former officials of
Hussein's ruling Baath Party and military to return to office is the equivalent
of returning Nazis to power in Germany after World War II.

Chalabi has headed the committee in charge of removing former Baathist
officials. In a nationwide address yesterday designed to promote national
reconciliation, U.S. administrator L. Paul Bremer said complaints that the
program is "unevenly and unjustly" administered are "legitimate" and that the
overall program has been "poorly implemented."

That criticism may curtail Chalabi's influence over the removal of former
officials -- and his power over the employment and income prospects of hundreds
of thousands of Iraqis.

Washington is also seriously considering cutting off the $340,000 monthly
stipend to Chalabi's party, the Iraqi National Congress, according to a senior
administration official familiar with the discussions. This would be a major
change, because the INC has received millions of dollars in U.S. aid over the
past decade as the primary vehicle for supporting the Iraqi opposition.

Chalabi is part of a wider problem, however. Polls indicate that most of the 25
members of the Iraqi Governing Council have little public support nine months
after they were appointed. The lack of popular backing is the main reason the
United States and United Nations are seeking a new body to govern Iraq before
national elections are held in January 2005, U.S. and U.N. officials said.

U.N. envoy Lakhdar Brahimi, who is in charge of picking the new government in
consultation with the U.S.-led coalition, made clear yesterday that the council
should disband. "They have said twice, not once, in official documents they
signed, that our term will end on the 30th of June," he said in an interview on
ABC's "This Week With George Stephanopoulos" to be aired Sunday.

"All opinion polls, and a lot are taken in Iraq, say that people want something
different" than expansion of the council because they fear council members "will
clone themselves. And why do you want to have that?" Brahimi asked.

U.S. and U.N. officials generally fear that the continued involvement of too
many council members will contaminate efforts to create a credible Iraqi
government, they said.

Under a new U.N. proposal, Brahimi is expected to return to Baghdad around May 1
to finish discussions and then select Iraqis for 29 positions -- a prime
minister to head the government, a ceremonial president and two vice presidents,
plus 25 cabinet officers, U.S. officials said.

In his most specific language to date, Brahimi told ABC that these positions
should be filled by "mainly technocrats" who are "widely representative" of
Iraq's diverse ethnic and religious communities.

Rather than excluding Chalabi or any other Governing Council member by name from
the new government, he said that "people who have political parties and are
leaders of their parties should get ready to win the election . . . and stay out
of the interim government."

Some council members might be retained, but more likely in cabinet posts rather
than in the top four jobs, U.S. officials said. Others could be tapped to
participate in a national consultative assembly, which Brahimi has proposed
should advise the provisional government.

All council members will then be free to test their political appeal in the
January elections to see how they would fare without U.S. support, U.S.
officials added.

With only nine weeks left until the handover, the United Nations, the coalition
and Iraqis are scrambling to come up with lists of candidates for the top jobs,
which Brahimi will compare when he returns to Iraq, U.S. officials said.

But the political battles are not yet over, U.S. and U.N. officials warned.
Chalabi, who went into exile in 1958, is still pressing for the council to be
retained in some form; he also has been a leading critic of Brahimi, a Sunni
Muslim and former Algerian foreign minister, and his proposals for Iraq.

Acknowledging that Chalabi has challenged him as biased against the Shiites,
Brahimi said any such suggestion is "silly." Without referring to Chalabi, he
said those who are "sniping" against him on the religious issue "have agendas
that have nothing to do with the fact that I am a Sunni."

But he said opponents of his new plan for Iraq's transition "may very well
succeed in derailing what we are trying to do. But I think if they succeed, it
will not be very good for Iraq or for the international community."

GAO: Iraq Oil Program Profits Understated
Investigation Finds $10.1 Billion Earned Illegally Under Hussein's Government
By Colum Lynch
Washington Post Staff Writer
Friday, March 19, 2004; Page A16

The former Iraqi government of Saddam Hussein pocketed more than $10.1 billion
in smuggled oil revenue and illicit proceeds from a U.N.-run humanitarian
program between 1997 and 2002, $3.5 billion more than previously estimated,
according to testimony by the U.S. General Accounting Office yesterday.

The latest GAO figures, presented to the House subcommittee on oversight and
investigations, have come to light as a result of a global investigation by the
Iraqi Assets Working Group, according to two GAO officials, Joseph A. Christoff
and Davi M. D'Agostino, who testified yesterday.

The interagency body, headed by the Department of Treasury, is seeking to locate
and seize $10 billion to $40 billion in estimated hidden Iraqi assets that can
be used to rebuild the country. To date, $2 billion in seized Iraqi assets,
including $750,000 in cash found with Hussein, has been channeled into Iraq's

The GAO charged that Iraq's ruling elites acquired $5.7 billion from the
proceeds of oil smuggled through Syria, Jordan, Turkey and the Persian Gulf
region. They raised an additional $4.4 billion in illegal revenue through the
imposition of oil surcharges and commissions from suppliers.

"According to some Security Council members, the surcharge was up to 50 cents
per barrel of oil and the commission was up to 5 to 10 percent of the commodity
contract," the GAO stated. "The funds were paid directly to officials connected
with the Iraqi government."

The GAO testimony came as the United Nations announced that it is seeking to
expand an investigation into allegations of corruption by U.N. officials who
managed the former program, known as Oil for Food. U.N. Secretary General Kofi
Annan has said he has seen no evidence of wrongdoing by U.N. officials, but he
has ordered a preliminary investigation by the agency's internal watchdog, the
Office for Internal Oversight Services (OIOS).

The charges stem from a January report in a Baghdad newspaper that scores of
prominent foreign dignitaries, including the head of the U.N. program, Benon
Sevan, allegedly received vouchers to purchase large quantities of oil for less
than market value. U.N. critics alleged that the recipients of the vouchers
would sell them to middlemen who would resell the oil to a refinery.

The Wall Street Journal's editorial page and an adviser to the Iraqi Governing
Council, British businessman Claude Hankes-Drielsma, have leveled additional
charges and pressed for an independent investigation.

Sevan has denied the charges through a U.N. spokesman, and Annan has voiced
confidence in the innocence of the longtime U.N. diplomat. But in response to
the allegations, Annan's office has approached members of the Security Council
to explore broadening the investigation and passing a Security Council
resolution requiring states to cooperate.

"We are in the process of turning over to the OIOS all the oil-for-food records,
that's 60 to 80 boxes," U.N. spokesman Fred Eckhard said in an interview
yesterday. "But the secretary general feels that to get a full picture of what
went on with oil for food, we would have to look at the whole picture and not
just Benon Sevan."

Chile's U.N. ambassador, Heraldo Munoz, discussed the issue yesterday with a
senior U.N. aide and said Annan is pressing for the appointment of a review
panel or a private accounting firm to conduct an independent audit of the
oil-for-food program.

"Since an internal audit would be seen as insufficient, the idea of an external
investigator sounds not only reasonable but the most adequate," Munoz said in an

The United States, France and other key Security Council members have yet to
sign on to a broader independent inquiry that could question their oversight of
the program or investigate their national companies.

Senior U.N. officials say they have not ruled out the possibility of corruption
within their ranks, but they have expressed suspicion that the organization is
being unfairly targeted by Iraqi critics when the United Nations is mending its
relationship with the Bush administration and preparing for an expanded role in
Iraq. Critics include U.S. conservatives and Ahmed Chalabi, the fiercest critic
of the United Nations within the Iraqi Governing Council and a close associate
of Hankes-Drielsma's.

The Security Council established the oil-for-food program in December 1996 to
allow Iraq to sell oil to purchase food, medicine and other humanitarian goods.
According to the GAO, Iraq sold more than $67 billion worth of oil before the
program was shut down. The program's proceeds were transferred to an Iraqi
account controlled by the United States and its military allies.

U.N. Council Backs Probe of 'Oil-for-Food'
Panel will look into accusations that officials and firms mishandled the Iraq
humanitarian program for profit.
By Maggie Farley
Times Staff Writer

April 22, 2004

UNITED NATIONS  The Security Council unanimously endorsed an independent
investigation Wednesday into charges that U.N. officials mishandled the Iraqi
"oil-for-food" program, allowing Saddam Hussein to illegally pocket billions of

Former U.S. Federal Reserve Chairman Paul Volcker, named as chairman of the
three-person investigative panel, insisted on securing the Security Council's
formal support before launching his inquiry, saying it was important to "make
sure that member states knew what they were getting into." The resolution
requires all U.N. member states "to cooperate fully" with the inquiry.

The U.N. oil-for-food program was established in 1996 to allow Iraq  then under
U.N. sanctions for its 1990 invasion of Kuwait  to sell oil and use the revenue
to buy humanitarian goods. Oil sales outside the program were prohibited. The
15-member Security Council set the terms for the program.

Allegations of corruption emerged in January in the Iraqi newspaper Al Mada,
which published a list of 270 dignitaries, officials and journalists from 46
countries who allegedly received vouchers from Hussein's regime to buy millions
of barrels of oil at a discount. The coupons allegedly were resold at market
value to oil refinery middlemen.

Among those named by the paper was Benon Sevan, the U.N. official who ran the
program. He has denied wrongdoing. A handful of others on the list have
confirmed that they received rights to Iraqi oil, which they could sell for a
profit, but most have denied any involvement. About a quarter of the names on
the list are companies or officials related to Russian interests.

Documents that appear to detail kickbacks also have been distributed by Claude
Hankes-Drielsma, an advisor to Ahmad Chalabi, a member of the U.S.-backed Iraqi
Governing Council and former exile leader long critical of the United Nations.
The General Accounting Office, the investigative agency of the U.S. Congress,
has said Hussein's government illegally obtained more than $10 billion through
the oil-for-food program.

U.N. Secretary-General Kofi Annan announced last month that he was launching an
inquiry into the corruption allegations, but Security Council endorsement of the
probe was initially resisted by Russia. Moscow relented after Annan called
Foreign Minister Sergei V. Lavrov, who until last month was Russia's ambassador
to the U.N.

"I want to get to the truth and I want to get to the bottom of this," Annan said

The allegations of fraud and mismanagement come at a sensitive time for the
United Nations, tarnishing its image just as Washington is asking the world body
to guide the selection of the transitional government in Iraq and help prepare
elections there.

Even before the accusations of corruption in the oil-for-food program arose,
many Iraqis had a negative view of the United Nations, blaming it for shortages
of critical goods during the period of sanctions.

Annan said that whatever the outcome of the inquiry, he hoped that the U.N.'s
history of helping people in Iraq would not be overlooked. "I hope the Iraqis
realize that even if there have been wrongdoings by certain members on the U.N.
staff, the U.N.  did make a genuine effort to fill their humanitarian needs,"
he said.

Annan said he selected the independent panel of highly regarded experts to
untangle the many threads of national, political and personal interests
complicating the issue. Besides Volcker, the panel includes Balkan war crimes
prosecutor Richard Goldstone of South Africa and Mark Pieth, a Swiss criminal
law professor with expertise in money laundering. It will start its work

At a news conference Wednesday, Volcker said: "I didn't agree to do this
lightly, but I think there are very important accusations made about the U.N.,
accusations about the administration of the program, and accusations about
activities outside the U.N., which need to be resolved.

"There's always some damage in the accusations, but what seems to be important
is finding out whether there is any substance to those," he added. "If there is
substance to them, get it out there, get it out in a hurry and cauterize the

=== [5]
Bush Leagues
Bush Conceals Names of U.S. Firms That Paid Kickbacks to Saddam
McClatchy Newspapers
Apr 8, 2004, 06:41

Saddam Hussein siphoned off $10.1 billion from Iraq's oil-for-food program
through illegal oil contracts and kickback deals with private suppliers of food
and medicine, a congressional agency said Wednesday.

John Negroponte, U.S. ambassador to the United Nations, told the Senate Foreign
Relations Committee that the Bush administration can identify the private
business firms that cut kickback deals with Saddam Hussein, but intends to keep
the names secret.

Sens. Richard Lugar, R-Ind., and Joseph Biden, D-Del., urged Negroponte to make
the names public so that the United States can prevent shakedowns by the new
Iraqi government scheduled to assume power on June 30.

"This corruption was not solely a product of Saddam Hussein's machinations,"
Lugar said. "He required members of the U.N. Security Council who were willing
to be complicit in his actions, and he required U.N. officials and contractors
who were dishonest, inattentive, or willing to make damaging compromises in
pursuit of a compassionate mission."

Patrick Kennedy, a U.S. official working on United Nations management reform,
said Saddam's regime "was very clever at adding tiny amounts to contracts to
provide kickbacks and additional revenue. They added a little bit to a lot and
made it up in volume."

Negroponte said efforts by the United States to halt the kickback schemes were
blocked by Russia, France and China. He said it has been difficult to document
the corruption because much of the paperwork was destroyed during the U.S.-led
invasion of Iraq last year and its aftermath.

Biden warned that corrupt Iraqi politicians could steal large sums from the
billions of dollars President Bush wants to spend on the reconstruction and
establishment of democracy in Iraq.

Robin Raphel, coordinator of the U.S. office of Iraq reconstruction at the State
Department, said the United States has reason to be concerned that the next
Iraqi government will engage in the same corrupt practices as Saddam Hussein.
She said U.S. officials will try to block the kickbacks while serving as
technical advisers to the new Iraqi government agencies.

"There is no doubt that billions of dollars that should have been spent on
humanitarian needs in Iraq were siphoned off by Saddam Hussein's regime through
a system of surcharges, bribes, and kickbacks," Lugar said.

Lugar said a "portion of those illicit funds" might be supporting the Iraqis
fighting the U.S.-led coalition in Iraq.

Sen. Christopher Dodd, D-Conn., said that 72 percent of the $63 billion revenue
from legal sales of Iraqi oil was spent on food and medicine that "saved the
Iraqi people from a human tragedy."

U.S. officials said that $7 billion was taken from the oil fund to pay for
Iraq's postwar reconstruction.

In a new report, the congressional General Accounting Office estimated that
Saddam's regime from 1997 through 2002 acquired $10.1 billion illegally through
the sale of $5.7 billion in oil smuggled to Syria, Turkey and Jordan, and $4.4
billion through kickbacks paid by firms selling food, medicine and other goods
to Iraq.

The GAO's estimate of $10.1 billion was $3.5 billion higher than its estimate in
2002 as the Bush administration accused Iraq of violating United Nations
sanctions imposed in 1990 after Iraq invaded Kuwait.

Joseph Christoff, the GAO director for international affairs and trade, said the
pattern of corruption "raises concerns about the Iraqi government's ability to
manage the oil-for-food commodities and about $32 billion in expected donor
reconstruction funds."

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