Issue 127: Oil-for-Food Scandal: The UN’s Own Tsunami

As the UN struggles to lead global relief efforts for victims of the Indian Ocean Tsunami, the world body’s senior staff are experiencing a tidal wave of their own.  In a sweeping overhaul, Secretary-General Kofi Annan is replacing many of his top deputies, a belated response to the series of UN scandals, from corruption in the “oil-for-food” program to sexual abuse of girls by peacekeepers in Congo that have created, in the words of Annan spokesman Edward Mortimer, “a gathering crisis.”  The Volcker Committee’s preliminary report finds the UN guilty of systematic mismanagement and incompetence in running the $56 billion oil-for-food program, with UN agencies frequently operating in an “ineffective, wasteful and unsatisfactory manner.”  Whether Annan’s management reshuffle will put an end to his self-described “annus horribilis” depends on how damning future revelations will be.

Things looked quite different from the 38th floor of UN headquarters one year ago, when the oil-for-food allegations first broke.  Then, Annan and his staff dismissed out of hand any questions of UN malfeasance in overseeing Saddam’s billion-dollar transactions.  The position of Annan’s spokesman, Fred Eckhard, was that the program had already been “audited to death”.  Not only would no investigation be launched – “these allegations are just not credible from our point of view” -but, the spokesman insisted, “its really not clear to us even what the allegations are”.  Less than a year later, with several major inquiries underway, the allegations have become clear indeed.

In the executive summary that accompanied the Volcker Committee’s release of more than 400 pages of internal audit papers (accessible at www.iic-offp.org), investigators found that the audits described “inadequate procedures, policy, planning, controls and co-ordination across numerous areas. Some reports present a wholesale failure of normal management and controls.”  In the words of The Daily Telegraph, “the UN suffered one of the most far-reaching indictments in its history.” 

“Its a lot harder to shrug this off as a rightwing conspiracy”, conceded Mark Malloch Brown, Annan’s new chief of staff.  Appointed to implement the management shake-up, the highly regarded Briton – who continues to hold his post as head of the UN Development Program until a replacement is found – warned that “the crisis is still building”.  In a remarkably candid interview with the Financial Times, Malloch Brown predicted that further oil-for-food revelations will include “some pretty tough stuff on management.”

The staff changes are significant.  First, Malloch Brown replaces Iqbal Riza, Annans veteran chief of staff.  The 70-year-old former Pakistani diplomat, known for his behind-the-scenes machinations against the U.S. and Israel, sought to spin his departure as a planned retirement.  In fact, as Judith Miller reports in The New York Times, the decision came after a private meeting with Annan.

The Secretary-General’s decision to restructure followed frank assessments given to him, first, by the group of sympathetic foreign policy Brahmins who gathered at the apartment of Richard Holbrooke, former U.S. ambassador to the UN; and then by a UN inner circle meeting at the home of Annan’s deputy, Louise Frechette.  The common message, according to reports, was that the Secretary-General needed to mend fences with Washington, no mean feat given his vocal opposition to the U.S.-led war that ousted Saddam’s regime.

Robert Novak, writing on December 19th, speculated that Annan might break precedent by not choosing an American as new head of UNICEF.  In the end, however, Annan went with President Bush’s preferred candidate, outgoing U.S. Agriculture Secretary Ann M. Veneman.  She will replace Carol Bellamy, a nominee of President Clinton, whose second term expires in April.  In a joint press conference yesterday, Annan acknowledged that Veneman’s “relationships and contacts with Washington will be helpful.”

Several other changes result from scheduled, and unscheduled, retirements.  Peter Hansen leaves his post as head of the UN Relief and Works Agency for Palestinian refugees.  His desire to stay on was ill-served by his recent expression of satisfaction with employing members of the Hamas terrorist group on the UN payroll.  At a meeting in New York last month, reports The Guardian, Annan told Hansen: “I dont have the political capital with the Americans to keep you.”  Jean Arnaud, the former UN deputy envoy to Afghanistan, considered highly competent and professional, is said to be the top candidate to replace Hansen.

Terje Roed-Larsen, the UN’s point man for the Middle East peace process, ended his term in December, and will represent Annan in talks designed to end Syria’s occupation of Lebanon, which was declared illegal by a recent Security Council resolution.  Sir Kieran Prendergrast, being pushed out of his position as head of Political Affairs, is actively lobbying to become the new Mideast envoy.

Finally, Catherine Bertini, the American undersecretary-general for management, said she would resign in the spring; Jean-Pierre Halbwachs, the UN controller, retires in February; and David Veness, a senior counterterrorism official at Britain’s Scotland Yard, has been named to the new post of undersecretary-general for safety and security.

According to Malloch Brown, however, the changes will go further, and include “human accountability reforms” addressing other recent scandals, such as accusations of sexual harassment against senior officials like Ruud Lubbers, head of the UN’s refugee agency.  A new sexual harassment policy will provide “a single standard from the highest level to a peacekeeper on the ground.”

And so the repercussions of the oil-for-food scandal continue to move the earth beneath the UN, shifting the tectonic plates of the most immovable bureaucracy.  Apart from the consequential staff replacements, the scandal, according to Harvard professor John G. Ruggie, enables profound change within the UN by shifting power from those who see the organization as being beholden to member states, into the hands of those who endorse accountability to the UNs own agencies, non-governmental organizations and the public.

Even on a micro-level, the oil-for-food scandal is impacting UN operations.  In an unusual move, the organization announced it would use an outside accounting firm to help track the billions pledged to help Tsunami victims.  Kevin Kennedy, a senior official with the UN Office for the Coordination of Humanitarian Affairs, denied that oil-for-food played any role.  Yet his statement was belied by the Secretary-General’s spokesman who, insisting that lessons of the Volcker Committee were already being applied, emphasized exactly such a connection: “On the financial side of the Tsunami relief effort, the UN is already implementing procedures for greater accountability and transparency.”

By the same token, the UN’s handling of the Tsunami disaster offers Kofi Annan a chance to prove the worth of his institution, and perhaps change the subject from the coming oil-for-food revelations.  In March, Annan is set to publicize his grand vision for institutional reform of the UN, a response to the High Level Panel proposals.  If he can keep his ship steady until then, he may yet have a chance to leave his desired legacy, and not one imposed on him by scandal.

UN Watch