[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 THE UNITED NATIONS OIL-FOR-FOOD PROGRAM: SADDAM HUSSEIN'S USE OF OIL 
  ALLOCATIONS TO UNDERMINE SANCTIONS AND THE UNITED NATIONS SECURITY 
                                COUNCIL

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               ----------                              

                              MAY 16, 2005

                               ----------                              

                           Serial No. 109-29

                               ----------                              

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

  THE UNITED NATIONS OIL-FOR-FOOD PROGRAM: SADDAM HUSSEIN'S USE OF OIL
   ALLOCATIONS TO UNDERMINE SANCTIONS AND THE UNITED NATIONS SECURITY
                                COUNCIL


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 THE UNITED NATIONS OIL-FOR-FOOD PROGRAM: SADDAM HUSSEIN'S USE OF OIL 
  ALLOCATIONS TO UNDERMINE SANCTIONS AND THE UNITED NATIONS SECURITY 
                                COUNCIL

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 16, 2005

                               __________

                           Serial No. 109-29

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house


                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida             Ranking Member
  Vice Chairman                      HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky               SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia             BART GORDON, Tennessee
BARBARA CUBIN, Wyoming               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
HEATHER WILSON, New Mexico           BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman           GENE GREEN, Texas
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska                  CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey            JAY INSLEE, Washington
MIKE ROGERS, Michigan                TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho          MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee

                      Bud Albright, Staff Director

        David Cavicke, Deputy Staff Director and General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

              Subcommittee on Oversight and Investigations

                    ED WHITFIELD, Kentucky, Chairman

CLIFF STEARNS, Florida               BART STUPAK, Michigan
CHARLES W. ``CHIP'' PICKERING,         Ranking Member
Mississippi                          DIANA DeGETTE, Colorado
CHARLES F. BASS, New Hampshire       JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  JAY INSLEE, Washington
MIKE FERGUSON, New Jersey            TAMMY BALDWIN, Wisconsin
MICHAEL C. BURGESS, Texas            HENRY A. WAXMAN, California
MARSHA BLACKBURN, Tennessee          JOHN D. DINGELL, Michigan,
JOE BARTON, Texas,                     (Ex Officio)
  (Ex Officio)

                                  (ii)




                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Anderson, Gerald C., Director, Office of Peacekeeping, 
      Sanctions and Counterterrorism, U.S. Department of State...    62
    Fawcett, John, Author, Report for Sources of Revenue for 
      Saddam and Sons............................................    11
    Gordon, Joy, Professor of Philosophy, Fairfield University...    17
    Smego, D. Robert, Arabic Linguist, one of the authors of the 
      Duelfer Report.............................................    16
Additional material submitted for the record:
    Fawcett, John, Author, Report for Sources of Revenue for 
      Saddam and Sons, response for the record...................    84

                                 (iii)

  

 
 THE UNITED NATIONS OIL-FOR-FOOD PROGRAM: SADDAM HUSSEIN'S USE OF OIL 
  ALLOCATIONS TO UNDERMINE SANCTIONS AND THE UNITED NATIONS SECURITY 
                                COUNCIL

                              ----------                              


                          MONDAY, MAY 16, 2005

                  House of Representatives,
                  Committee on Energy and Commerce,
              Subcommittee on Oversight and Investigations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:04 p.m., in 
room 2123, Rayburn House Office Building, Hon. Ed Whitfield 
(chairman) presiding.
    Members present: Representatives Whitfield, Stearns, 
Burgess, Blackburn, Barton (ex officio), Stupak, Inslee, and 
Waxman.
    Also present: Representative Norwood.
    Staff present: Mark Paoletta, chief counsel; Andrew 
Snowdon, majority counsel; Tom Feddo, majority counsel; Chad 
Grant, clerk; Edith Holleman, minority counsel; Voncille Hines, 
research assistant; and Alec Gerlach, minority staff assistant.
    Mr. Whitfield. At this time the committee will come to 
order. Today's hearing for the Subcommittee on Oversight and 
Investigation of the Energy and Commerce Committee is the 
United Nations' Oil for Food program, Saddam Hussein's use of 
oil allocations to undermine sanctions, and the United Nations 
Security Council.
    At this time I would like to ask unanimous consent to move 
documents contained in the binder into the record. And, without 
objection, so ordered.
    I will begin the hearing with an opening statement, and 
then we will proceed with opening statements.
    The United Nations Oil-for-Food program was initiated to 
ease the suffering of the Iraqi people. As we have learned in 
recent months from various reports, this program became a 
mechanism for the former Iraqi regime of Saddam Hussein to 
siphon off billions of dollars in illicit revenues, money that 
rightfully should have gone to the citizens of Iraq. Saddam's 
regime used oil contracts to influence foreign officials and 
well-connected individuals in an effort to undermine 
international economic sanctions, thereby keeping him in power.
    These allegations are not new, but the picture of how this 
could have happened under the oversight of the United Nations 
Security Council has been murky. Today the subcommittee will 
hear testimony and examine a variety of documents, many of 
which have been recently translated for the committee, to 
better understand the abuses of the Oil-for-Food program. The 
hearing will allow members to see how Hussein used oil 
allocations to undermine U.N. sanctions and manipulate 
political divisions within the Security Council and better 
understand the weaknesses in the U.N. Oversight of the program.
    The hearing will also serve the committee's longstanding 
interest in the workings of the United Nations. We will learn 
more today about the inner workings of the U.N.'s operation, 
and how France, Russia, and China in the 661 Committee 
supported the Hussein regime to the detriment of the Iraqi 
people. Saddam Hussein and his supporters found ways to exploit 
loopholes in the Oil-for-Food program to enrich themselves and 
to strengthen Iraq's military capabilities.
    Surcharges and kickbacks, both on oil and humanitarian 
goods contracts soon became the norm under the program. For 
instance, the committee has uncovered a handwritten form 
agreement signed by Iraq's former oil minister which shows 
that, beginning sometime after June 2000, each oil purchaser in 
the program had to agree to pay kickbacks to the regime, either 
in cash or by wire, into an Iraqi bank account outside of the 
program. Equally troubling are the allegations that Saddam 
Hussein may have been able to use the Oil-for-Food program to 
exploit divisions within the U.S. Security Council.
    We will hear today from Dr. Robert Smego, an outside 
consultant retained by the committee to review and translate 
numerous documents, including documents from the Iraqi 
Intelligence Service and State Oil Marketing Organization. Mr. 
Smego will present a series of documents that suggests a 
calculated strategy on the part of the regime to target 
influential businessmen, companies, and government officials 
who could advance Iraq's interests.
    When the names of many prominent political figures, most 
notably those of Russia and France, appeared in the Duelfer 
Report last fall, there were cries of outrage and denial. 
However, the documents presented here today appear to confirm 
that some of these individuals were indeed using the Oil-for-
Food program for their own purposes. I can think of no 
legitimate reason for any politician or government official of 
any nation to receive oil from Saddam Hussein.
    Ironically, every dollar that these people took out of the 
program was money that should have gone to help the Iraqi 
people.
    Could these abuses have been prevented? Perhaps not 
entirely, but there's little doubt that lax oversight on the 
part of the U.N. Secretariat and internal divisions within the 
so-called 661 Committee permitted them to continue.
    Let me note here that I can only imagine the political and 
logistical difficulties involved in running such a massive 
program. However, these difficulties do not justify the 
failures in oversight responsibilities.
    We will also hear today from John Fawcett who, for the past 
decade, has been tracking the financial assets of major human 
rights abusers, such as Slobodan Milosevic, Saddam Hussein, and 
the al Qaeda network.
    Finally, we will hear from Mr. Gerald Anderson of the U.S. 
State Department who will provide some insights into the inner 
workings of the 661 Sanctions Committee, the committee within 
the U.N. That ran the Oil-for-Food program.
    Let me welcome all the witnesses, and thank them for what 
promises to be a most informative hearing.
    [The prepared statement of Hon. Ed Whitfield follows:]

  Prepared Statement of Hon. Ed Whitfield, Chairman, Subcommittee on 
                      Oversight and Investigations

    The United Nations (U.N.) Oil-for-Food Program (Program) was set up 
to ease the suffering of the Iraqi people. But unfortunately, it also 
may have prolonged their suffering. As we've learned in recent months 
from various reports, this Program became a mechanism for the former 
Iraqi regime of Saddam Hussein to siphon off billions of dollars in 
illicit revenues--money that rightfully should have gone to the 
citizens of Iraq. Saddam's Regime also used oil contracts to influence 
foreign officials and well-connected individuals in an effort to 
undermine international economic sanctions, thereby keeping him in 
power.
    None of these allegations are new, but the picture of how this 
could have happened under the oversight of the United Nations Security 
Council has been murky. Today, the Subcommittee will take testimony and 
examine a variety of documents--many of which have been recently 
translated for the Committee--to gain a clearer view into the abuses of 
the Oil for Food Program. The hearing will allow members to examine how 
Hussein used oil allocations to undermine U.N. sanctions and manipulate 
political divisions within the Security Council and apparent weaknesses 
in U.N. oversight of the Program.
    The hearing will also serve the Committee's long-standing interest 
in the workings of the United Nations--particularly at the intersection 
of national security and world energy markets and trade. We will learn 
more today about the inner workings of the U.N.'s operations, and how 
actions there might have prevented such abuses.
    There is no doubt at this point that Saddam Hussein and his cronies 
found ways to exploit loopholes in the Oil-for-Food Program to enrich 
themselves and to strengthen the Iraq's military capabilities. 
Surcharges and kickbacks, both on oil and humanitarian goods contracts, 
soon became the norm under the Program. For instance, the Committee has 
uncovered a handwritten form agreement, signed by Iraq's former Oil 
Minister, which shows that, beginning sometime after June 2000, each 
oil purchaser in the Program had to agree to pay kickbacks to the 
Regime, either in cash or by wire into an Iraqi bank account outside of 
the Program.
    Equally troubling are the allegations that Saddam Hussein may have 
been able to use the Oil-for-Food Program to exploit divisions within 
the U.N. Security Council. We will hear today from D. Robert Smego, an 
outside consultant retained by the Committee to review and translate 
numerous documents gathered from various Iraqi sources, including 
documents from the Iraqi Intelligence Service and State Oil Marketing 
Organization, or SOMO. Mr. Smego will present a series of documents 
that suggest a calculated strategy on the part of the Regime to target 
influential businessmen, companies, and government officials who could 
advance Iraq's interests--particularly within the Security Council.
    When the names of many prominent political figures, most notably 
those of France and Russia, appeared in the Duelfer Report last Fall, 
there were cries of outrage and denial. However, the documents 
presented here today appear to confirm that some of these individuals 
were indeed using the Oil-for-Food Program for their own purposes. I 
can think of no legitimate reason for any politician or government 
official--of any nation--to get oil from Saddam Hussein. Ironically, 
every dollar that these people took out of the Program was money that 
should have gone to help the Iraqi people--the very people that they 
claimed to be helping.
    Could these abuses have been prevented? Perhaps not entirely, but 
there is little doubt that lax oversight on the part of the U.N. 
Secretariat, and internal divisions within the so-called 661 Committee, 
permitted them to continue. Let me note here that I can only imagine 
the political and logistical difficulties involved in running such a 
massive Program. However, these difficulties do not justify the 
failures in oversight responsibilities.
    We will hear today from John Fawcett, who, for the past decade, has 
been tracking the financial assets of major human rights abusers, such 
as Slobodan Milosevic, Saddam Hussein, and the al Qaeda network. Mr. 
Fawcett will provide some perspective how these problems could have 
been avoided, including (1) vetting all contracts for price and 
quality, and (2) performing due diligence on the parties that Saddam 
was contracting with, and (3) increasing transparency in the hiring of 
inspectors.
    Finally, we will hear from Mr. Gerald Anderson of the U.S. State 
Department, who will provide some insights into the inner workings of 
the 661 Sanctions Committee, the Committee within the U.N. that ran the 
Oil-for-Food Program. Let me welcome all of the witnesses and thank 
them for what promises to be a most informative hearing.
    Much of the dispute today involves a lack of transparency in the 
oversight deployed by the United Nations. If we are going to restore 
some trust in that institution as it delves into other matters 
affecting our international energy markets, public health, and welfare, 
the United States--and indeed the entire international community--
deserves a clearer picture of precisely how those important matters are 
being handled. Today's hearing should help us understand how some trust 
might be restored.

    Mr. Whitfield. At this time I will call on the ranking 
minority member, Mr. Stupak, for his opening statement.
    Mr. Stupak. Well, thank you, Mr. Chairman. This is an 
unusual hearing for an investigative subcommittee. In fact, it 
seems to me that this is a hearing in search of an 
investigation. If you take a look at this morning's Washington 
Post, the lead article gave an astounding level of detail from 
documents collected by the Senate Committee on Saddam Hussein's 
use of oil allocations to influence Russian politicians. This 
story is not new. In September 2002, The New York Times stated, 
``Baghdad owes Moscow $8 billion in debt incurred before the 
Gulf War, and has used trade under the Oil-for-Food program to 
curry Moscow's favor.'' Last year, the Duelfer Report gave the 
names of Russian politicians who received oil allocations. But 
the level of detail about these deals obtained after months of 
investigation is new, and that is what was intriguing about 
this Washington Post story. It involves weeks of overseas 
travel, interviews with former Iraqi officials, and 
international businessmen, and a review of U.S. Government 
investigative documents.
    Frankly, Mr. Chairman, this committee has done--has not 
done anywhere near that level of work and has very little to 
add. There are four other congressional committees focused on 
the United Nations and the Oil-for-Food program. They are all 
far ahead of this committee in their level of investigation and 
knowledge. But there are areas that this committee can 
investigate and no one else seems to want to look at. No one 
seems to want to talk about the United Nations' sanctions and 
oil trading regime which was approved by the Security Council 
of which the United States is a member, or the role of the 
Sanctions Committee, another committee the U.S. was part of 
that oversaw the program and what it knew about the manner in 
which the oil allocations were used by Iraq.
    No one seems to want to know about the relationship of U.S. 
oil companies to the shady middlemen and the oil traders who 
actually lifted oil from Iraq.
    This is not a simple criminal or ethical matter as it is 
often portrayed. It was a system built by geopolitical 
realities that everyone was aware of and either condoned or 
chose to ignore at the time.
    Seventy-five percent of Iraqi oil, regardless of who 
initially purchased it and whether or not they paid illegal 
surcharges, ended up in the United States at U.S. refineries. 
How did it get there? What did the U.S. companies know about 
the illegal surcharges and when did they know it? Some small 
U.S. oil dealers have been indicted. But despite this requests 
from this side of the minority to subpoena documents from those 
companies, it has not been done.
    Some bigger U.S. Oil companies are also being investigated, 
but once again, this committee hasn't even talked to them 
despite staff requests from the minority. No one seems to want 
to talk about the massive smuggling of oil through Jordan, 
Turkey, Syria, and Egypt that was going on. Both the Volcker 
and the Duelfer reports found that the largest sum of the 
illegal revenue obtained by Saddam Hussein came through these 
well-known illegal oil purchases. These oil purchases were 
openly discussed in the press at the time. The Sanctions 
Committee--again, the U.S. was a member of that committee--
discussed it frequently but refused to stop it.
    The International Relations Committee of both the House and 
the Senate received notice every year stating that it was in 
the national interest of the United States to continue foreign 
aid to Jordan and Turkey, even though they were in violation of 
the U.N. Sanctions. Why hasn't the committee looked at the 
United States' role in this massive violation of U.N. 
Sanctions?
    It seems that many in Congress are comfortable with just 
calling this foreign aid and bashing the U.N. But are not 
interested in holding those in the U.S. who may have violated 
these sanctions accountable. Press reports in January of this 
year indicated that the office of foreign assets in the United 
States Treasury actually promised that they would not prosecute 
a U.S. company for breaking the sanctions in early 2003 to 
provide oil to a Jordanian company. Minority staff drafted 
letters to the U.S. Company in February requesting documents 
and interviews, but again, we couldn't get a signature or 
approval from the majority.
    I would ask, Mr. Chairman, instead of joining in the chorus 
of the committees howling at the United Nations to obtain 
diplomatically protected documents, that we head in a different 
direction. This subcommittee should investigate the U.S. oil 
companies who allegedly and knowingly worked around the U.N. 
Sanctions to supply oil to certain countries with the apparent 
knowledge and consent of the U.S. Government.
    Mr. Chairman, we have a choice. We can waste taxpayer 
dollars by duplicating the work of other committees in Congress 
that they have already done by investigating foreign sources, 
or we can be leaders and investigate and expose the domestic 
abuses of the Oil-for-Food program here at home. It is my hope 
that, under your leadership, we will do the latter. With that, 
Mr. Chairman, I would yield back the balance of my time.
    Mr. Whitfield. At this time, the Chair will recognize the 
chairman of the full committee, the full energy and commerce 
committee, Mr. Barton of Texas.
    Chairman Barton. Thank you, Mr. Chairman. I want to commend 
you for holding this hearing. I think we need to put in the 
record that this is the first subcommittee to hold a hearing on 
the U.N. Oil-for-Food scandal, and we did it when I was 
subcommittee chairman back in the Clinton Administration. We 
were also the first subcommittee to hold a hearing in this go-
around, and we have been at the full committee level 
investigating this for the last several years and will continue 
to do so.
    In the last year, we have learned much about the program's 
mismanagement and its manipulation. We know today, for example, 
that Saddam Hussein's officials deliberately underpriced Iraq 
oil so that the middleman and oil traders could kick back 
profits into Saddam's personal bank accounts. We also know the 
regime would overpay merchants for humanitarian goods so that 
the excess money could be diverted to those bank accounts. This 
is something that we learned on a trip that I personally led to 
Iraq last fall and met with some of the Iraqi officials in 
person that were responsible for those particular bank 
accounts.
    We now know that the U.N. Oil overseers identified these 
activities, brought them to the attention of the program's 
leadership, and even proposed mechanisms to prevent the illicit 
activity. Yet nothing was done. Finally, we know that the 
regime perverted the program to influence politicians around 
the world and leaders inside the United Nations by giving them 
personally valuable oil vouchers.
    Today's hearing will examine new documents that illuminate 
influence peddling. Undoubtedly, Saddam's regime hoped that 
these bribes would erode and eliminate the sanctions. I would 
not be surprised if we eventually uncover evidence of quid pro 
quos directly related to these vouchers.
    It seems clear that under Saddam, Oil-for-Food became oil 
for influence. This mismanagement mess, if you will, is a stain 
on the United Nations and its current leaders. If the U.N. 
Leadership had its way, this mess would have been swept under 
the rug. But the U.N. Is not going to have its way today. The 
U.S. Government funds most of the U.N.'s operating budget. We 
are the largest contributor to the U.N. Operating budget. And 
at this moment, our soldiers are risking and giving their lives 
to defend the fledgling democracy in Iraq.
    We must not forget that, if the U.N. Had had its way, 
Saddam Hussein would still be in power, Saddam Hussein would 
still be dispensing bribes, Saddam Hussein would still be 
controlling his Army, Saddam Hussein would still be threatening 
his people, and Saddam Hussein would still be threatening to 
invade his neighbors in the Middle East. But before Iraq was 
liberated, the only program that was meant to bring relief to 
the Iraqi people instead brought Saddam Hussein the key to 
unlocking the greatest threat to his power, economic sanctions.
    We will hear today how the Oil-for-Food program allowed 
Saddam Hussein to enrich his regime, bribe world leaders, and 
begin to build an infrastructure that could 1 day be used to 
reconstruct an arsenal for intimidation and aggression.
    In the meantime, the suffering of the average Iraqi family 
continued. The U.N. 661 Committee watched this scam unfold but 
was paralyzed by bureaucratic infighting. In the end, the Oil-
for-Food program was a profound and dangerous failure.
    I look forward to hearing from our witnesses today. I wish 
to thank them for their attendance. This committee--and I want 
to reiterate. This committee, the Energy and Commerce 
Committee, is not opposed to anything that the other committees 
of the House and Senate are doing. I think collectively all the 
efforts of this committee and the other committees in both 
bodies will get to the bottom of this scandal, but this 
committee is going to be a part of that and in many ways is 
going to lead that effort.
    I also want to begin to investigate the possibility of 
recovering as much of the billions and billions of dollars that 
was looted from the Oil-for-Food program and use that money to 
reinvest in the Iraq of today to try to help the Iraqi people 
today as they fight for their freedoms.
    Thank you again, Mr. Chairman, for your leadership on this 
issue. I look forward to working with you and others of this 
subcommittee to continue this investigation.
    [The prepared statement of Hon. Joe Barton follows:]

 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce

    Thank you Chairman Whitfield. This afternoon we continue this 
Committee's examination of the United Nations Oil-for-Food Program.
    Since last year, we have learned much about both the program's 
mismanagement and manipulation. We know, for example, that Saddam 
Hussein's officials deliberately under-priced Iraqi oil so that 
middlemen and oil traders could kick back profits into Saddam's bank 
accounts. Also, the regime would overpay merchants for humanitarian 
goods so that the excess money could be diverted to those bank 
accounts, outside UN scrutiny. We now know that UN ``oil overseers'' 
identified these activities, brought them to the attention of the 
program's leadership, and even proposed mechanisms to prevent this 
illicit activity. And yet nothing was done.
    Finally, the regime perverted the program to influence politicians 
around the world and leaders inside the United Nations by giving them 
valuable oil vouchers. Today's hearing will examine new documents that 
illuminate influence peddling. Undoubtedly, Saddam's regime hoped these 
bribes would erode and eliminate the sanctions. I would not be 
surprised if we eventually uncover evidence of quid pro quos directly 
related to these vouchers. It seems clear that under Saddam, oil-for-
food became oil-for-influence.
    This mismanagement--this mess--is a stain on the United Nations and 
on its leaders. If the UN leadership had its way, this mess would have 
been swept under the rug, but the UN is not going to have its way 
today. Americans fund most of the UN's operating budget, and at this 
moment, America's warriors are risking and giving their lives to defend 
the fledgling democracy in Iraq. We must not forget that if the UN had 
its way, Saddam would still be dispensing bribes, building his army, 
threatening his people, and invading his neighbors.
    But before Iraq was liberated, the only program that was meant to 
bring relief to the Iraqi people instead brought Saddam Hussein the key 
to unlocking the gravest threat to his power--economic sanctions. We 
will hear today how the Oil-for-Food Program allowed Saddam Hussein to 
enrich his regime, bribe world leaders, and begin to build an 
infrastructure that could one day be used to reconstruct an arsenal for 
intimidation and aggression. In the meantime, the suffering of the 
average Iraqi family continued. The UN's 661 Committee watched the scam 
unfold, but was paralyzed by bureaucratic infighting. In the end, the 
Oil for Food Program was a profound and dangerous failure.
    I look forward to hearing from our witnesses today, and thank them 
for their attendance. We intend to get to the bottom of this scandal.
    Thank you, Mr. Chairman. I yield back the remainder of my time.

    Mr. Whitfield. Thank you, Mr. Chairman.
    At this time, I will recognize Mr. Waxman of California.
    Mr. Waxman. Thank you very much, Mr. Chairman. And I 
appreciate you calling the hearing today. I support the 
committee's investigation and believe Congress should determine 
the full extent of Saddam Hussein's efforts to divert 
humanitarian Oil-for-Food funds that were intended for the 
benefit of the Iraqi people. Although I support the committee's 
goal, I do have a concern with its approach. Today's hearing is 
the 13th congressional hearing about the Oil-for-Food program.
    Tomorrow's hearing by Senator Coleman will be the 14th. My 
concern is that while Congress is actively investigating the 
Oil-for-Food program, we are ignoring our Nation's own actions 
on the development fund for Iraq, the successor to the Oil-for-
Food program run by the Bush administration. The administration 
has failed to properly manage and account for billions of 
dollars in the Iraqi funds, and the committee is doing nothing 
to investigate this.
    I would like to have in the record two charts. The first 
one shows the finding of our own auditors and investigators 
looking into the DFI. First, in January, the special inspector 
general for Iraqi reconstruction, a U.S. Government official, 
concluded that the Bush administration failed to properly 
account for $8.8 billion of Iraqi oil proceeds in the DFI. The 
inspector general concluded that the administration did not 
implement adequate managerial controls, did not implement 
adequate financial controls, and did not adequately control DFI 
contracting actions.
    Second. Just 2 weeks ago the inspector general found that 
the administration failed to account for $96.6 million in cash 
from the Iraqi funds that were supposed to go to local 
reconstruction projects. The IG found that, instead of helping 
the Iraqi people, U.S. officials tried to launder these funds. 
The IG referred these officials for criminal prosecution.
    And, third. The defense contract audit agency, the 
Pentagon's own auditors, concluded that Halliburton has 
overcharged by at least $212 million under its oil contract in 
Iraq. The Bush administration awarded Halliburton's no bid 
monopoly oil contract in secret, and then funded it with Iraqi 
oil proceeds from the DFI.
    My other chart shows findings by U.S. Government officials 
and other independent auditors who conclude that the 
administration has not complied with U.N. Security Council 
Resolution 1483, which requires the administration to use Iraqi 
funds in a transparent manner for the benefit of the Iraqi 
people. On January 30, 2005, the special inspector general for 
Iraq reconstruction concluded that the administration violated 
Resolution 1483 requirement to use DFI funds in a transparent 
manner.
    On April 29, 2005, the international advisory and 
monitoring board, which is charged with monitoring the 
administration's compliance under the resolution, concluded 
that, ``use of DFI resources that is not for the benefit of the 
Iraqi people is in conflict with U.N. Security Council 
Resolution 1483.'' and members can also review a series of 
official Pentagon audits that the administration submitted to 
the United Nations after blacking out more than 460 references 
to overcharges to the DFI.
    Mr. Chairman, Congress should investigate allegations about 
the Oil-for-Food program, but we should also investigate our 
own administration's failure to properly account for Iraqi 
funds. Our commitment in both cases is the same: To ensure that 
the Iraqi people who have been oppressed for decades receive 
the full benefit of their own Nation's funds. Thank you, Mr. 
Chairman.
    Mr. Whitfield. Mr. Waxman, were you asking unanimous 
consent that those documents be entered into the record?
    Mr. Waxman. Yes, I would like to ask unanimous consent.
    Mr. Whitfield. I asked a minute ago to enter some documents 
into the record that were made available to your side last 
Wednesday, about 6, 7 days ago. I have not had an opportunity 
to see that. Could I see this document that you are referring 
to?
    Mr. Waxman. Sure. If you prefer, Mr. Chairman, why don't I 
withhold that unanimous request consent until later in the 
hearing so you would be able to see it.
    Mr. Whitfield. And I would also like to ask, was this a 
study conducted by the Federal Government? Who conducted this 
study?
    Mr. Waxman. We are talking about six reports that are all 
cited in my statement.
    Mr. Whitfield. And who conducted those studies?
    Mr. Waxman. Let me go through. The special inspector 
general for Iraq reconstruction is one. The International 
Advisory and Monitoring Board, two. The Defense Contract Audit 
Agency, which is the Pentagon's own auditors. And there are 
multiple reports by each of them.
    Mr. Whitfield. If you would give me a copy of that. And I 
would just like to reserve a point of order. But, in the 
meantime, I am going to go on and call on----
    Chairman Barton. Mr. Chairman, could you yield to me on 
that point?
    Mr. Whitfield. Yes.
    Chairman Barton. This subcommittee always works in a 
bipartisan fashion. And if the gentleman from California shared 
the documents so that we know before the fact what is in them, 
we are almost always willing to put them into the record. My 
understanding is they have not been shared with the staff. And 
I am sure he is willing to share those so we can look at them.
    Mr. Waxman. Well, let me point out, these are not hidden 
documents. They were furnished to all the committees by the 
Inspector General. But I would be happy to have you look at 
them. I wasn't trying to withhold any documents from you. These 
are documents that have been submitted to the Congress, and 
they have been out in the public domain. And so we would like 
to have them as part of the record after you feel comfortable 
enough to admit them into the record.
    Mr. Whitfield. Well, I think that this would probably be 
fine. But what I think we ought to do is just submit the entire 
report, reports in their entirety.
    Mr. Waxman. I have no problem with that. There are multiple 
reports. I think there are six separate reports. If you want to 
have all of them in their entirety, then that is certainly 
fine.
    Mr. Whitfield. I would prefer that we just submit the 
entire report rather than just excerpts from the reports. So, 
if there is no objection to having the entire reports placed 
into the record, that would be fine.
    [The material referred to is retained in subcommittee 
files.]
    Mr. Waxman. Okay.
    Mr. Whitfield. At this point I would call on Mr. Norwood of 
Georgia for his opening statement. I am sorry. Mr. Burgess, you 
are on the subcommittee. Go ahead.
    Mr. Burgess. Mr. Chairman, I have an opening statement I 
will just submit for the record in the interest of time so we 
can get on to examining the witnesses.
    Mr. Whitfield. Thank you. Ms. Blackburn, do you have an 
opening statement? Mr. Norwood?
    Mr. Norwood. Thank you very much, Mr. Chairman.
    I must admit that this stuff that has just been handed out, 
it looks to me like they are headlines out of The New York 
Times rather than any report that anybody has produced. But I 
think it equally important we find out exactly who produced it 
and consider the source.
    I thank you today for allowing me to join you. I sincerely 
appreciate the courtesy. I have been very concerned about this 
issue of corruption at the United Nations, and that as I 
understand is what this hearing is about. Though there are 
those who would divert it to another subject, I think today is 
about the corruption at the U.N., and with the Oil-for-Food 
program in Iraq. I wanted to be here simply to learn more.
    I would like to start by commending you for continuing to 
focus some attention on the corruption at the U.N. Oil-for-Food 
program. There is plenty to discuss and scrutinize as we have 
seen, and there is plenty being discussed back home in all of 
our districts. I think the American people want to have an 
understanding of this. It is no secret that during my tenure in 
Congress, I have not particularly been a fan of the U.N. I 
think there are some pretty good reasons for that. And this 
committee needs no reminder that for a decade the U.N. allowed 
Saddam Hussein to blatantly defy 18 U.N. Resolutions. The 
United States spends millions, if not billions, of dollars a 
year on U.N. programs and policies that are often totally 
contrary to the principles of freedom that most Americans hold 
dear. That is why people back home where I am from want to know 
what is going on.
    It is truly unfortunate that we do not have the opportunity 
today to question a representative of the U.N. Perhaps that 
opportunity will present itself in the future, Mr. Chairman. 
Regardless, the U.N. is not the topic of the hearing today; the 
U.N. Oil-for-Food program is. As we all know, the Oil-for-Food 
program was established in 1995, April, to strike a balance 
between enforcing compliance of all relevant U.N. Security 
Council resolutions, and alleviating hunger, suffering, human 
suffering in Iraq. Unfortunately, what we all now know is that 
the program was riddled with corruption in many ways.
    What should have been a humanitarian program ended up 
funding Saddam Hussein's dictatorship and possibly terrorist 
groups. The GAO estimates that from 1997 through 2002, the 
former Iraqi regime acquired $10.1 billion in illegal revenues. 
This includes $5.7 billion from oil smuggling and $4.4 billion 
from illicit surcharges on oil sales and after-sale charges on 
suppliers. Numerous United Nations, independent, and Iraqi 
investigations have been directed into these illicitly diverted 
funds. As has been pointed out earlier, major doubts exist 
about the U.N.'s ability to investigate this level of fraud, 
and I am highly suspicious of their resistance to the facts. 
After all, it was under their watch that their own program was 
abused.
    I look forward to the hearing. I look forward to hearing 
the testimony of the witnesses today. And, again, I thank you 
for the opportunity to join you.
    Mr. Whitfield. Thank you. Is there anyone else wishing to 
give an opening statement at this time? If not, then we will 
call panel one, the witness Mr. John Fawcett, Mr. Robert Smego, 
and Dr. Joy Gordon.
    I want to thank the three of you for being with us this 
morning. We look forward to your testimony. You are aware that 
the committee is holding an investigative hearing, and, when 
doing so, has had the practice of taking testimony under oath. 
Do any of you this morning or this afternoon have any objection 
to testifying under oath? Okay. The Chair then advises you 
that, under the rules of the House and the rules of the 
committee, you are also entitled to be advised by counsel. Do 
you desire to be advised by counsel during your testimony 
today? In that case, if you would please rise and raise your 
right hand, I will swear you in.
    [Witnesses sworn.]
    Mr. Whitfield. You are now under oath, and you may give 
your 5-minute summary of your written statement. And, Mr. 
Fawcett, we will begin with you.

   TESTIMONY OF JOHN FAWCETT, AUTHOR, REPORT FOR SOURCES OF 
REVENUE FOR SADDAM AND SONS; D. ROBERT SMEGO, ARABIC LINGUIST, 
   ONE OF THE AUTHORS OF THE DUELFER REPORT; AND JOY GORDON, 
         PROFESSOR OF PHILOSOPHY, FAIRFIELD UNIVERSITY

    Mr. Fawcett. Thank you for inviting me here before the 
committee in today's hearing. I have worked internationally----
    Mr. Whitfield. Would you turn your microphone on, please.
    Mr. Fawcett. Okay. I have worked internationally for the 
past 25 years, I spent 10 years in oil exploration in the 
Middle East and Africa, after which I spent the next 10 years 
involved in humanitarian and human rights work largely in the 
Balkans and Iraq. Over the last 5 years I have been tracking 
the financial assets of major human rights abusers, including 
Slobodan Milosevic, Saddam Hussein, and al Qaeda. I began 
looking at the Oil-for-Food program in 1998 and was a co-author 
with Susan Blaustein of Sources of Revenue for Saddam & Sons. 
The paper was published in 2002 by the Coalition for 
International Justice, and they graciously agreed to sponsor my 
appearance today.
    The Oil-for-Food program cannot be viewed separately from 
the history of corruption under Saddam Hussein. Saddam Hussein 
began his financial rip-offs in the late 1960's with the 
establishment of his first shell companies in Milan and Lugano, 
and continued until he was toppled in 2003. My written 
statement goes into more detail on this topic.
    When the U.N. Began negotiating with Iraq in 1991 to 
establish the Oil-for-Food program, and the first negotiations 
were led by then Assistant Secretary General Kofi Annan, no one 
dealing with Iraq could credibly say they were not aware of the 
potential for corruption. U.N. Secretary General Perez de 
Cuellar knew. His successor Boutros Boutros Ghali knew. Kofi 
Annan knew. The members of the Security Council certainly knew. 
All the permanent members, with the exception of China, had 
been active participants in arms embargo busting with Saddam 
throughout the previous decade, that is, the 1980's.
    By the time the program began in late 1996, the U.N. Had 
ceded to Saddam the authority to choose his business partners 
from both the sale of Iraqi oil and the purchase of 
humanitarian supplies. This crucial decision laid the 
groundwork for the ensuing corruption.
    There were two major methods of illicit profiting: Oil 
vouchers were given to favored individuals or organizations 
that provided Iraq with political support. The vouchers were 
then sold to official U.N. Approved contractors. The illicit 
profit in this scheme amounted to up to $1 million per tanker 
load.
    Two Oil-for-Food contractors who were very adept at this 
were the shady Swiss Liechtenstein firms of Alcon and Fenar. 
These companies were created in the haven of corporate secrecy, 
Liechtenstein, for the sole purpose of doing illicit business 
with Saddam Hussein's Iraq. Aside from kickbacks, the political 
services they provided to Saddam are as yet unknown.
    To this point, the Swiss and Liechtenstein authorities have 
failed to publicize the beneficial owners of either company 
despite these firms having been identified as suspicious as 
early as January 2001. Between them, Alcon and Fenar did nearly 
$2.5 billion worth of business under the program, of which some 
$400 million was done in the last few months of Saddam's reign. 
One wonders whether this money is funding the car bombs that 
are tearing apart men, women, and children in Iraq on a daily 
basis.
    The other major scam in the Oil-for-Food program involved 
overcharging or invoice padding for goods sold to Iraq. One 
commodity in which this practice took place was baby formula. 
It normally sells for about $2,000 per ton, but a corrupt 
supplier under the Oil-for-Food program would charge the U.N. 
On behalf of Iraq 2,500. The difference was, again, split with 
Iraqi officials.
    While the U.N. Children's agency UNICEF and others mounted 
public campaigns decrying the suffering and deaths of Iraqi 
children due to sanctions, price gouging was taking place on 
the very product that could help these children. If there is 
anything that UNICEF knows how to do, it is to procure, 
transport, and distribute baby formula. They do so in war zones 
and disasters worldwide. While UNICEF continually published 
Iraq government statistics on child mortality related to 
sanctions, not once did they raise a voice about the baby 
formula rip-off.
    The inspection procedures for oil exports as well as for 
humanitarian imports were toothless from the beginning. The 
inspectors had no mandate to prevent smuggling of oil out of 
Iraq or smuggling of goods into Iraq. The inspectors have no 
mandate to check the quality of food or medicines entering 
Iraq, and usually failed to check even the quantity of goods 
being imported. At the Jordanian, Syrian, and Turkish border 
crossings, hundreds of trucks entered Iraq daily with 
sanctions-busting goods and left Iraq carrying sanctions-
busting oil. The inspectors could do nothing more than tip 
their hat and wave their clip board, and literally that is what 
they did.
    Knowing the nature both in cruelty and corruption of the 
regime they were dealing with, why would international 
officials allow such a system to come into place? First, there 
is a certain anti-American predisposition that has built up 
over decades within the U.N. Second, there was a perception 
that it was a catastrophic humanitarian situation in Iraq, and 
that the population was on the verge of starvation. Third, 
international officials also stood to gain financially. 
Officials of over 100 countries either profited illicitly from 
the Oil-for-Food program, failed in their oversight duties to 
prevent corruption, or both.
    What made the graft under the Oil-for-Food program 
different from other international financial scandals was the 
use of the illicit gains by Saddam Hussein. He did not just 
fatten the Jordanian and Swiss bank accounts of his family and 
cronies, though there was plenty of that; the illicit funds 
were also used to create a political slush fund of global 
proportions. He bought presidents, prime ministers, 
legislators, Ambassadors, media, and NGO officials, and 
actively funded the anti sanctions campaign.
    Mr. Whitfield. Mr. Fawcett, you are about a minute and 30 
seconds over.
    Mr. Fawcett. All right. Maybe in the questioning I could go 
in, then, to what I think the U.N. Could have done in the midst 
of all of these problems. Though I would like to say, the 
primary importance for the U.N. To act was that it had to be 
led by honest and courageous officials. And I will leave it at 
that.
    [The prepared statement of John Fawcett follows:]

                   Prepared Statement of John Fawcett

                              INTRODUCTION

    Thank you for inviting me to appear before the committee at today's 
hearing. I have worked internationally for the past 25 years. I spent 
ten years in oil exploration in the Middle East and Africa. The 
following ten years I was involved in humanitarian and human rights 
work largely in the Balkans and Iraq. Over the last five years I have 
been tracking the financial assets of major human rights abusers, 
including Slobodan Milosevic, Saddam Hussein, and al Qaeda. I have 
contracted to a variety of governmental, non-governmental, and for 
profit organizations. I began looking at the Oil for Food program in 
1998, and was a co-author with Susan Blaustein of Sources of Revenue 
for Saddam and Sons. The paper was published in 2002 by the Coalition 
for International Justice and they have graciously agreed to sponsor my 
appearance today.

                     HISTORY OF SADDAM'S CORRUPTION

    The Oil for Food program can not be viewed separately from the 
history of corruption under Saddam Hussein. Saddam began his financial 
rip-offs in the late 1960s with the establishment of his first shell 
companies in Milan and Lugano. In the mid 70s he instituted a 5% rake-
off on all Iraqi oil exports, with the proceeds being sent to Swiss 
bank accounts via major US banks in New York City. Shortly after 
seizing the Iraqi presidency in 1979 he invaded Iran and an arms 
embargo was imposed. He actively violated the embargo with the 
assistance of many countries in what came to be known as Iraqgate. 
Within days of his invasion of Kuwait in August 1990, comprehensive 
international sanctions were imposed. Within hours an energetic 
campaign of sanctions busting began. After surviving the first Gulf 
War, he directed that the sanctions busting be greatly expanded.
    When the UN began negotiating with Iraq in 1991 to establish the 
oil for food program, (and the first negotiations were led by then 
Assistant Secretary General Kofi Annan) no one dealing with Iraq could 
credibly say they were not aware of the potential for corruption. UN 
Secretary General Perez de Cuellar knew. His successor Boutros Boutros 
Ghali knew. Kofi Annan knew. The members of the Security Council 
certainly knew. All the permanent members, with the exception of China, 
had been active participants in embargo busting with Saddam throughout 
the previous decade. The embargo busting involved both kickbacks to 
Saddam as well as invoice padding, two methods of illicit activity that 
were later widely used during the Oil for Food Program.

                         TWO TYPES OF RIP-OFFS

    By the time the program began in late 1996, the UN had ceded to 
Saddam the authority to choose his business partners for both the sale 
of Iraqi oil and the purchase of humanitarian supplies. This crucial 
decision laid the groundwork for the ensuing corruption. There were two 
major methods of illicit profiting by the regime and a host of minor 
schemes.
    Oil vouchers were given to favored individuals or organizations 
that provided Iraq with political support. The vouchers were then sold 
to an official UN approved contractor. This contractor received the oil 
at a discount and then sold it on to other traders and eventually to 
major refiners. The illicit profit in this scheme amounted to up to $1 
million per tanker load. Two oil for food contractors who were very 
adept at this were the shady Swiss-Liechtenstein firms Alcon and Fenar. 
These companies were created in the haven of corporate secrecy, 
Liechtenstein, for the sole purpose of doing illicit business with 
Saddam Hussein's Iraq. Alcon and Fenar were official UN contractors as 
well as voucher recipients. Aside from kickbacks the political services 
they provided to Saddam are as yet unknown. To this point the Swiss and 
Liechtenstein authorities have failed to publicize the beneficial 
owners of either company, despite these firms having been identified as 
suspicious as early as January 2001. The Liechtensteiners, who for a 
fee, put their names to the corporate registry documents were; for 
Alcon, Rainer Marxer and Martin Batliner; for Fenar, Patrick Hilty and 
Horst Buchel. Between them, Alcon and Fenar did nearly $2.5 billion 
worth of business under the program, of which some $400 million was 
done in the last few months of Saddam's reign. One wonders whether this 
money is funding the car bombs that are tearing apart men, women and 
children in Iraq on a daily basis.
    The other major scam in the oil for food program involved over 
charging or invoice padding for goods sold to Iraq. One commodity in 
which this practice took place was baby formula. It normally sold for 
about $2000 per ton, but a corrupt supplier would charge the UN on 
behalf of Iraq, $2500. The difference was again split with the Iraqi 
officials. While the UN and others mounted public campaigns decrying 
the suffering and deaths of Iraqi children, price gouging was taking 
place on the very product that could help these children. If there is 
anything that UNICEF knows how to do, it is to procure, transport and 
distribute baby formula. They do so in war zones and disasters 
worldwide. While UNICEF continually published Iraqi government 
statistics on child mortality related to sanctions, not once did they 
raise a voice about the baby formula rip-off.

                            SHAM INSPECTIONS

    The inspection procedures for oil exports as well as for 
humanitarian imports were toothless from the beginning. The inspectors 
had no mandate to prevent smuggling of oil out of Iraq, or smuggling of 
goods into Iraq. The inspectors had no mandate to check the quality of 
food or medicines entering Iraq and usually failed to check even the 
quantity of goods being imported. At the Jordanian, Syrian and Turkish 
border crossings, hundreds of trucks entered Iraq daily with sanctions 
busting goods and left Iraq carrying sanctions busting oil. The 
inspectors could do nothing more than tip their hat and wave their 
clipboard. This was an exercise in futility and many inspectors sunk 
into frustration or inebriation.
    After studying and thinking about this program for several years, I 
have come to the conclusion that the inspections regime established by 
the UN was window dressing only. To be clear, I believe that UN 
officials set up the procurement as well as the inspection regime of 
the Oil for Food program in such a manner as to allow Saddam Hussein to 
personally profit from it. The Security Council was fully aware of the 
potential for corruption under the program at every step of the 
negotiations.

                     WHY WAS IT ALLOWED TO HAPPEN?

    Knowing the nature, both in cruelty and corruption of the regime 
they were dealing with, why would these international officials allow 
such a system to come into place? First there is a certain anti-
American predisposition that has built up over decades within the UN. 
This tends to look skeptically at US positions on issues and more 
sympathetically at US opponents. This is not an unhealthy posture by 
itself. Second, there was a perception that there was a catastrophic 
humanitarian situation in Iraq and that the population was on the verge 
of starvation. All of the data upon which the assessments of the 
humanitarian situation in Iraq were made was generated by the Iraqi 
government. It was also in the financial interest of the UN 
humanitarian agencies to increase the amounts of funds allocated to 
Iraq. These factors contributed towards fostering an international 
public perception of impending disaster. The third reason why 
international officials would agree to a system that profited Saddam 
Hussein is that they also stood to gain financially. Officials of over 
100 countries, either profited illicitly from the Oil for Food program, 
failed in their oversight duties to prevent corruption, or both.
    What made the graft under the oil for food program different from 
other international financial scandals was the use of the illicit gains 
by Saddam Hussein. He did not just fatten the Jordanian and Swiss bank 
accounts of his family and cronies, though there was plenty of that. 
The illicit funds were also used to create a political slush fund of 
global proportions. He bought presidents, prime ministers, legislators, 
ambassadors, media and NGO officials, and actively funded the anti-
sanctions campaign.

                    COULD THE UN HAVE DONE ANYTHING?

    With an Iraqi regime very experienced in corruption, a weak 
Security Council, and officials and businessmen from dozens of 
countries eager to put their hands into Saddam's pockets, was it 
possible for the United Nations to do anything except acquiesce to 
corruption? The answer is yes. In the face of all these cards stacked 
against it, there was one essential ingredient to assist the Iraqi 
people as well as battle corruption. The UN had to be lead by honest 
and courageous officials.
    From 1996 to the end of the program in 2003, had the UN been led by 
honest and courageous officials, they would have done the following.

 Instead of awarding the first major monitoring and banking contracts 
        via a secretive back-door process, senior UN officials would 
        have insisted on adhering to their own competitive bidding 
        regulations and opened the process to public scrutiny. Had they 
        done so the weak monitoring effort would have been exposed 
        before the program began and the allegations of conflict of 
        interest by the Secretary General and his son would have been 
        addressed.
 An aggressive effort would have been made to vet all contracts for 
        price and quality. The Security Council had instructed the UN 
        to do so, but they made token efforts at best. Even the few 
        contracts which UN officials found to be overpriced were never 
        acted upon by the Security Council. However, UN officials did 
        not have to be satisfied with just passing the buck to the 
        Security Council. There was nothing stopping them from 
        releasing all contract data publicly. There would have been 
        some embarrassed businesses and member states, but the practice 
        of invoice padding would have been nipped in the bud.
 The whole process of selecting oil buyers should have been exposed to 
        the light of scrutiny with the public release of oil contract 
        information and an insistence by the UN that all oil purchasers 
        publish shareholder or beneficiary lists. UN officials again 
        excused themselves by claiming that Iraq could choose its own 
        customers as long as those customers were also approved by the 
        relevant member state. As a result the UN found itself involved 
        in financial transactions with weapons dealers, money 
        launderers, organized crime and terrorists. This was 
        inexcusable.
 UN monitors should have acted like the weapons inspectors and been 
        far more aggressive. UN personnel had the right and obligation 
        to monitor any distribution of goods inside Iraq. The great 
        majority of them never left their office and relied exclusively 
        on the government of Saddam Hussein to tell them where and to 
        whom the goods were distributed.

               WE WILL BE PAYING FOR THIS FOR A LONG TIME

    Even though the oil for food program was shut down nearly two years 
ago, the scandal is not receding into history. The oil for food program 
took place during the former Soviet Bloc's transition from a command to 
a competitive economy. It took place during a generational change in 
many of the ruling families in the Middle East. It took place during 
the emergence of new economic powerhouses China and India. During times 
of political and economic ferment, these countries were major players 
in the oil for food scandal. Officials from all of these countries, who 
may be in power for decades to come, took away a clear lesson. The 
ground rules of the new global economy have not yet been written in 
stone. While some argue for transparency, accountability and a level 
playing field, others maneuver for insider advantage and see bribery 
and corruption as acceptable business tools. The oil for food program 
gave a tremendous boost towards the institutionalization of corruption 
within the global economy, the repercussions of which have barely begun 
to emerge.

    Mr. Whitfield. Thank you very much.
    Mr. Smego.

                  TESTIMONY OF D. ROBERT SMEGO

    Mr. Smego. Good afternoon, Mr. Chairman. My name is D. 
Robert Smego. I was retained by the House Energy and Commerce 
Committee earlier this year to review, identify, and translate 
documents it provided to me. I am an Arabic linguist 
knowledgeable--excuse me. I'm a linguist knowledgeable in the 
Arabic language.
    The House Energy and Commerce Committee's majority counsel 
asked me to identify by topic and translate documents regarding 
Oil-for-Food, in particular, Iraqi State Oil Marketing 
Organization documents that had been scanned on to DVDs and 
memoranda prepared by the Iraqi Intelligence Service.
    With the assistance of a native Iraqi linguist, I 
translated 49 documents from more than 23,000 pages that I have 
reviewed for this committee. The translated documents presented 
today accurately reflect the original text. I have not 
corrected the English translations of grammatical errors such 
as run-on sentences, indefinite pronouns, and sentence 
fragments that result from the melodious flow and verbose 
nature of Arabic. I avoided summarizing, paraphrasing, or 
making analytic substitutions for the original language. Any 
redactions in the original documents were maintained in the 
translations.
    I was asked to translate and interpret specific documents; 
I was not tasked to perform any broader analysis or develop a 
professional judgment about the broader context of these 
documents. The guidance of the majority counsel was to sift 
through large volumes of material looking for references to 
particular topics and to translate the documents selected for 
presentation to the committee. The documents presented here 
today provide useful insight into the activities of the former 
Iraqi regime.
    Thank you, Mr. Chairman. I am pleased to appear before this 
subcommittee, and will be glad to address the questions within 
the scope of the work I performed for the committee. This 
concludes my opening statement.
    [The prepared statement of D. Robert Smego follows:]

                 Prepared Statement of D. Robert Smego

    Good afternoon, Mr. Chairman. My name is D. Robert Smego. I was 
retained by the House Energy and Commerce Committee earlier this year 
to review, identify and translate documents it provided to me. I am a 
linguist knowledgeable in the Arabic language.
    The House Energy and Commerce Committee's Majority Counsel asked me 
to identify by topic and translate documents regarding Oil-For-Food, in 
particular Iraqi State Oil Marketing Organization documents that had 
been scanned onto DVDs and memoranda prepared by the Iraqi Intelligence 
Service. With the assistance of a native Iraqi linguist, I translated 
49 documents from more than 23,000 pages that I reviewed for this 
Committee.
    The translated documents presented today accurately reflect the 
original text. I have not corrected the English translations of 
grammatical errors, such as run-on sentences, indefinite pronouns, and 
sentence fragments that result from the melodious flow and verbose 
nature of Arabic. I avoided summarizing, paraphrasing, or making 
analytic substitutions for the original language. Any redactions in the 
original documents were maintained in the translations.
    I was asked to translate and interpret specific documents. I was 
not tasked to perform any broader analysis or to develop a professional 
judgment about the broader context of these documents. The guidance of 
the Majority Counsel was to sift through large volumes of material 
looking for references to particular topics and to translate the 
documents selected by the Majority Counsel for presentation to the 
Committee. The documents presented here today provide useful insight 
into the activities of the former Iraqi regime.
    Thank you, Mr. Chairman. This concludes my opening statement. I am 
pleased to appear before this Subcommittee and will be glad to address 
questions within the scope of the work I performed for the Committee.

    Mr. Whitfield. Thank you, Mr. Smego.
    Dr. Gordon, you are recognized for 5 minutes.

                    TESTIMONY OF JOY GORDON

    Ms. Gordon. I appreciate the opportunity to speak before 
this committee. My background is in political philosophy and 
law. I have been doing research on economic sanctions for 7 
years. Over the last 5 years, I have published on the Iraq 
sanctions in the Yield Journal of International Human Rights 
Law, Ethics and International Affairs, Middle East report, Le 
Monde Diplomatique, and Harper's Magazine. I am currently 
completing a book on the Iraq sanctions regime for Harvard 
University Press.
    I would like to begin by mentioning a crucial distinction 
between the U.N. Taken broadly and the Security Council. Many 
of the accusations that have been lobbied against the United 
Nations regarding the Oil-for-Food program, in fact, go to 
decisions on the part of the Security Council itself or actions 
or failures to act on the part of the member states of the 
Security Council. I would like to briefly address a common 
misconception. It is often said that there was no oversight or 
monitoring or accountability in the Oil-for-Food program. 
That's incorrect. There were, by my count, seven levels of 
oversight and monitoring. All of these are publicly available. 
At the first level was something called distribution plan; 
before Iraq could contract for a single item, it had to submit 
an itemized list of every single item it wished to contract for 
in the next 6 months. Those distribution plans are and have 
always been posted on the OIP Web site. They are not a secret. 
Every item was approved.
    The next thing was that once Iraq contracted, the contract 
initially went through the OIP and then to every single member 
of the Security Council. Every single member of the 661 
Committee had the right to block or delay or question any 
contract indefinitely for any reason. In those cases where 
there were concerns, for example, the U.S. was primarily 
concerned with security issues, the U.S. could block a 
contract, and it did so for $5.4 billion of contracts. The U.S. 
and to some extent the U.K. Could delay contracts by asking for 
information, and in many cases those requests for information 
delayed contracts by as much as 2 years. So it was more than 
possible for the United States to intervene in blocking or 
delaying any contract that raised any concern to the U.S. in 
any form.
    Next, once the goods were purchased, all funds went 
directly through an escrow account. There were no legal funds 
that went through the Iraqi government at all. Funds were--oil 
proceeds went to an escrow account; contracts were paid from 
the escrow account. There were onsite inspectors Cotecna and 
Lloyds Register, for the goods' arrival. And, finally, there 
were hundreds of U.N. Staff on the ground in Iraq to document 
of the distribution of goods, the use of goods, whether they 
arrived at the end user, whether they were consumed by the end 
user correctly.
    Oil sales similarly had multi levels of supervision. The 
Iraqi government it is sometimes said was free to pick prices 
and to set prices low. That is patently incorrect. It had no 
such authority. SOMO had the authority to propose a price. The 
pricing formula for each month period was reviewed by the oil 
overseers. If the oil overseers found it to be consistent with 
fair market value, it recommended approval to the 661 
Committee. The 661 Committee, again, every member had the right 
to block the approval of that formula at any time. It did not 
require consensus, it did not require agreement of any others.
    The companies who were contracting for oil sales similarly 
went through the same process. Every company had to be 
registered. Registration did not mean that OIP reviewed them; 
it meant simply that the permanent nation--the permanent 
mission of that nation to the United Nations submitted a list, 
information about that company, its name and address. Once it 
did that, then any member of the 661 Committee could refuse to 
have that company on the list. If the price was approved by the 
661 Committee and the company had been approved by the 661 
Committee, then the oil overseers went forward with the 
approval of the oil contract. Any member of the 661 Committee, 
including the U.S., could stop the pricing if it ever looked 
unfair or for any other reason. And it could block any company 
if that company looked corrupt or for any other reason.
    Let me address some of the concerns that have come up 
repeatedly over the last year. There have been a lot of 
discussion about the kickbacks, that contracts were routinely 
inflated by 5 to 10 percent, and that that amount was received 
in cash under the table by the Iraqi government. In fact--and 
it is often--the U.N. Is often charged with a failure to 
supervise or negligence in permitting this to take place.
    That is not correct. In those cases where the price 
irregularities were clear, U.N. Staff, the OIP staff went to 
the 661 Committee and said: Here is a contract where the 
pricing is clearly improper. Do you want to block it? It was 
not within the authority of the United Nations' personnel to 
stop the contract; it was only within their authority to 
provide information to and to advise the members of the 661 
Committee.
    It was the responsibility of the members of the 661 
Committee to block a contract for that reason or for any other 
reason. On those more than 70 occasions where OIP staff 
identified such extreme price irregularities as to clearly 
indicate kickbacks, it went to the 661 Committee. On none of 
those occasions did any member state, including the United 
States, choose to take action to block that contract. In cases 
where the--and those were in cases where the irregularities 
were glaring. In cases where the irregularities were 5 to 10 
percent, they were difficult to detect, but even if they had 
been detected we have to assume that the members of the 
Security Council would not have been inclined to act any 
differently for minor increases of 5 to 10 percent if they were 
not prepared to block contracts where the price irregularities 
were very extreme.
    Let us look quickly at oil surcharges.
    Mr. Whitfield. Dr. Gordon, you are also about a minute and 
15 seconds over. So if you could summarize, we would appreciate 
it.
    Ms. Gordon. Okay. As I said before, for the oil surcharges, 
what's--it is the case that for all oil sales--I'm sorry. 
Again, it was the oil overseers, it was the staff of the U.N. 
That brought the oil surcharges to the attention of the 661 
Committee as soon as they became apparent. That was in the fall 
of 2000. In that case, unlike with the import contracts, the 
Security Council chose to respond and to put in place a very 
Draconian measure. However, you cannot lay blame on the U.N. 
Staff. In both cases, they advised the Committee correctly. In 
one case, the committee chose to take action; in the other 
case, it did not.
    I would like to emphasize that the smuggling was by far the 
largest amount of the illicit funds that went to Iraq by any 
measurement, whether it is the GAO, the Volcker report, or the 
Duelfer Report. And of the smuggling, about three quarters was 
through Jordan and Turkey combined. That again, we now well 
know was with the approval and full knowledge of the United 
States in particular. And I--and I will just end my statement 
there.
    [The prepared statement of Joy Gordon follows:]

 Prepared Statement of Joy Gordon, Professor of Philosophy, Fairfield 
                               University

    Mr. Chairman and distinguished members of the committee: Thank you 
for this opportunity to testify before this committee. In taking on the 
difficult endeavor of unraveling the complexities of the Oil for Food 
Program, this committee is undertaking a tremendously important task, 
and it is a pleasure to be invited to contribute to that work. This 
program, its successes and its failures, has broad implications for 
future US foreign policy, as well as for the future of the United 
Nations.
    My testimony today is based on the research I have done in the 
field of economic sanctions over the last seven years, including a 
close study of the Iraq sanctions process from 1990 to 2003. In the 
course of my research I have become familiar with the scholarly work on 
economic sanctions in general and on the Iraq sanctions in particular, 
as well as much of the extensive body of documents generated in the 
course of the Oil for Food Program. Over the last five years I have 
also interviewed many of those involved in the 661 Committee--the 
committee of the Security Council charged with overseeing the sanctions 
regime imposed on Iraq--and the OFF program.
    Over the last year we have heard much about the failures of the Oil 
for Food Program. A great deal has been blamed on the Secretary-General 
for what is seen as an institutional failure on the part of the United 
Nations. As many have noted, there have been failures on the part of 
nearly everyone involved with the program. Most recently the Volcker 
Committee has explored the ethical problems involving Cotecna; the 
possibility of serious improprieties on the part of Benon Sevan, the 
director of the program; and a critical concern about the scope of the 
program's audits.
    But in recent months there has been growing recognition of the 
extent to which the Oil for Food Program, as well as much of the 
oversight, was in fact in the hands of the Security Council and its 
member states--including the United States--not the Secretariat.
    In my testimony today I'd like to address a number of issues 
concerning the Oil for Food Program and the accusations against it:

1. The effectiveness of the program
2. The magnitude of the accusations
3. Transparency and oversight
   Monitoring of import contracts
   Monitoring of oil sales
   Transparency
4. Sources of illicit funds
   Overland smuggling
   Maritime smuggling
   Kickbacks on import contracts
   Oil surcharges
   Iraq's freedom to choose its trade partners
5. The Volcker Committee reports
6. Who was responsible?
   The consensus decision making rule
   The US role
   The State Department's defense of US support for Iraq's illicit 
        trade of Jordan and Turkey
7. Conclusions
1. The effectiveness of the program
    I think it is important to begin by recognizing that the Oil for 
Food Program, and the UN staff involved, were in fact tremendously 
successful at raising the quality of life for the Iraqi population, in 
very measurable ways. The nutritional intake nearly doubled, and acute 
malnutrition in children dropped by half. The health care system was 
much better able to meet the population's needs--surgical operations 
increased by 40%; polio was eliminated, and communicable diseases were 
substantially reduced. Water and sanitation improved considerably, and 
electricity became much more reliable.
    We should be particularly conscious of the significance of these 
accomplishments as we see how difficult it is been in the last two 
years for the US occupation authority and the interim Iraqi government 
to achieve similar standards. This has been particularly true as the 
security situation has deteriorated, and will probably worsen as funds 
for reconstruction are reallocated to security costs.
    The fundamental goal of the Oil for Food Program was to improve the 
lives of the Iraqi population through the import of critical 
humanitarian goods, and that was unquestionably achieved.
The magnitude of the accusations
    While it is common to hear that Saddam Hussein's regime received 
$11 billion in illicit funds through the Oil for Food Program (or more 
recently, $21 billion), in fact the credible accusations are much more 
limited: that the former Iraqi regime obtained somewhere between $2 
billion and $4.4 billion through oil surcharges and import contracts.
    According to both the GAO reports from 2004 and the CIA's report 
from last September, the bulk of the illicit funds that entered Iraq 
came from oil smuggling--which took place prior to the Oil for Food 
Program, and after 1996 occurred entirely outside the program. As 
earlier congressional hearings have made clear, Iraq had ongoing trade 
with Jordan, Turkey, and Syria for many years.
    The major GAO report maintained that from 1997 through 2002, the 
former Iraqi regime acquired $10.1 billion in illegal revenues related 
to the Oil for Food Program.'' 1 $5.7 of this came from oil 
smuggling and $4.4 billion from illicit surcharges on oil sales and 
commissions on imports.2 The report of the CIA's Iraq Study 
Group maintains that the bulk of Iraq's illicit funds came from 
``government to government protocols''--ongoing trade agreements 
between Iraq and other countries, in violation of the sanctions. Iraq's 
income from these, according to the report, came to some $8 billion, 
while kickbacks from import contracts were estimated to be $1.5 
billion, surcharges from oil sales were $229 million, and private 
sector smuggling was estimated at $1.2 billion.3
---------------------------------------------------------------------------
    \1\ ``United Nations: Observations on the Oil for Food Program,'' 
Statement of Joseph A. Christoff, Director, International Affairs and 
Trade. Testimony before the Committee on Foreign Relations, U.S. 
Senate. GAO-04-65IT, p. 2.
    \2\ ``United Nations: Observations on the Oil for Food Program,'' 
Statement of Joseph A. Christoff, Director, International Affairs and 
Trade. Testimony before the Committee on Foreign Relations, U.S. 
Senate. GAO-04-65IT, p. 2
    \3\ ``Comprehensive Report of the Special Advisor to the DCI on 
Iraq's WMD,'' 30 September 2004, Regime finance and procurement 
section, p. 23.
---------------------------------------------------------------------------
    Thus, the most credible accusations--the GAO and ISG reports--
maintain that the Iraqi regime illicitly received at most $4.4 billion 
via some aspect of the Oil for Food Program.
3. Transparency and Oversight
    I'd like to address some common misconceptions about the program. 
Over the last year we've heard people say many times that the Oil for 
Food program had no system of oversight or monitoring, and that there 
was no transparency. It in fact had an elaborate system of oversight, 
and there was an enormous amount of information about the program and 
its operations that was not only available to the UN and the member 
states, but in fact was maintained for the public on the web site of 
OIP (Office of Iraq Programme), the agency established within the UN to 
house the Oil for Food Program and the UN's other Iraq programs.
    It is important to understand that to the extent there were 
kickbacks or improprieties within the program, this occurred not 
because of a lack of systematic monitoring; but rather took place in 
spite of an elaborate monitoring system. This monitoring system 
involved detailed oversight by members of the Security Council, 
including extensive participation by the United States and the United 
Kingdom, each of which received copies of all contracts made by the 
government of Iraq for every purchase of humanitarian supplies and oil 
spare parts.
    It was OIP staff--customs officers--who notified the 661 Committee 
of possible kickbacks on import contracts, on more than seventy 
occasions. No member of the 661 Committee, including the US, then 
exercised its right to block or delay the contract.
    It was OIP staff--the oil overseers--who notified the 661 Committee 
of oil surcharges in October 2000. The US and UK then began withholding 
pricing approval in response.
A. Monitoring of import contracts
    Briefly, the multi-tiered monitoring structure for south/center 
Iraq 4 was:
---------------------------------------------------------------------------
    \4\ Note that in northern Iraq the UN executed the program on 
behalf of the government of Iraq, and in that capacity took over some 
governmental functions. In south/center Iraq, the Iraqi government 
continued to perform normal governmental functions, but was monitored.
---------------------------------------------------------------------------
    1. Distribution plan: Before an application could be submitted that 
would allow Iraq to import goods, Iraq was required to submit an 
exhaustive list of every single item it wished to import, identifying 
quantities and sectors where goods would be used, and the justification 
for prioritizing these goods. The Distribution Plan then had to be 
reviewed and approved by UN staff, often with modifications.
    2. OIP review: Once a contract was negotiated between the Iraqi 
government and the supplier, it was submitted to OIP. OIP staff 
reviewed it to see that it contained all the information required by 
the 661 Committee, and corresponded to the Distribution Plan
    3. UNSCOM/UNMOVIC: The contract was also sent to UNSCOM (later 
UNMOVIC) and IAEA, to determine if there were any military or dual use 
goods
    4. 661 Committee review: The contract was circulated to every 
member of the 661 Committee.5 Each member had the option of 
delaying the contract, asking for more information, or simply vetoing 
it.
---------------------------------------------------------------------------
    \5\ Some goods that the Security Council considered uncontroversial 
were eventually put on a ``green list'' that bypassed the committee 
(pursuant to Security Council Resolution 1409) but went through all the 
other monitoring stages. However, where OIP staff found irregularities 
in ``green list'' contracts, they then presented those to the 
661Committee.
---------------------------------------------------------------------------
    5. Escrow account: Under the terms of the program as designed, no 
program funds ever went directly through the hands of the Iraqi 
government. All proceeds from legal oil sales went into a UN-held 
escrow account, and all import contracts were paid for from this 
account.
    6. On-site inspectors: Upon arrival in Iraq, the goods were 
inspected by Lloyd's Register (later Cotecna) to see that the 
quantities conformed to the contract
    7. End use monitors: Once the goods were in Iraq, staff from the UN 
agencies conducted thousands of site visits, surveys, and spot checks 
to determine if the goods were being distributed equitably and 
efficiently, and to gauge the adequacy of the program.
B. For oil sales:
    1. The Iraqi government proposed pricing formulas, which were then 
reviewed by oil overseers and submitted to the 661 Committee for 
approval.
    2. Every oil contract, including the prices, delivery 
specifications, and all contract terms, was reviewed by ``oil 
overseers''--consultants from the oil industry, hired by the Secretary 
General, with the approval of the members of the Security Council. They 
advised the 661 Committee of any irregularities.
    3. Every member of the 661 Committee had the opportunity to review 
any contract. Any oil contract could be vetoed by any member of the 661 
Committee.
C. Transparency
    In many ways the program was highly transparent. There was a 
considerable amount of information easily available to the general 
public at all times, and there was even more information available to 
the members of the Security Council, which was overseeing the program.

 The Distribution Plans, showing every item that the UN permitted Iraq 
        to contract for, for every phase of the program, were (and for 
        phases 5-13 continue to be) posted on the OIP web site
 The Secretary General provided reports every ninety days on the 
        program, including detailed information on both oil sales and 
        import contracts, and on the situation in every sector of the 
        Iraqi economy and society, including health, agriculture and 
        nutrition, education, electricity production, 
        telecommunications, transportation, de-mining. All of these 
        reports were (and still are) posted on the OIP web site
 For every 6-month phase, OIP posted charts showing the status of both 
        oil contracts and import contracts: for every sector of the 
        economy, how many contracts had been submitted, how many 
        approved, how much had been delivered, etc. All of these were 
        posted for each phase on the OIP web site.
 OIP issued weekly updates with details of oil liftings, status of 
        holds on particular contracts, and other items. All of these 
        were (and are) posted on the OIP web site.
 The OIP web site also listed every Security Council resolution, 
        Secretary-General report, and every other major report on the 
        program. These were (and still are) posted on the OIP web site.
    The transparency of the Oil for Food Program stands in marked 
contrast with the way that the sanctions program had operated in the 
first half of the 1990s. From 1990-1995, Iraq was permitted to apply to 
the 661 Committee for permission to purchase humanitarian goods 
(although it could not sell oil to generate funds). However, the 661 
Committee was extremely inconsistent in what items it would permit and 
what it would not; refused to generate any guidelines or criteria that 
would allow suppliers or the government of Iraq to know what was 
permitted and what was not; was often inconsistent, permitting a 
contract for certain goods, such as ambulance tires, on one occasion, 
and then a few months later denying a contract for similar goods; and 
once it denied a contract, it would not provide the government of Iraq 
or the supplier with any information as to why the goods were denied.
4. Who was responsible?
    For many months now we've heard accusations leveled against ``the 
UN'' for allowing Saddam Hussein to garner illicit funds through the 
Oil for Food Program. There are some in Congress and elsewhere calling 
for Kofi Annan's resignation. Yet the Secretariat had no decision 
making role in setting the terms of the Oil for Food Program. The 
program itself was a product of a Security Council resolution; all 
subsequent modifications to the program were established through 
Security Council resolutions; and implementation of the program, 
including OIP, was overseen by the 661 Committee, which made the 
decisions regarding implementation.
    Under Article 41 of the UN Charter, it was the responsibility of 
the Security Council, not the Secretariat, to enforce the sanctions 
regime. The role of the Secretariat was limited to execution of the 
program, as the program had been designed by the Security Council; as 
well as providing the Council members with information, and performing 
administrative functions. The Security Council and its members, 
including the United States, played critical roles in allowing 
smuggling and kickbacks to take place.
A. Smuggling
    The bulk of Iraq's illicit income, according to the GAO and the 
CIA's Iraq Study Group, was from smuggling: $5.7 billion according to 
the GAO, and $8 billion according to the ISG.
    According to the ISG report, the majority of this trade--$4.4 
billion--was with Jordan. A significant amount of illicit trade ($710 
million) was with Turkey. According to the ISG report, in 1991 Jordan 
informed the Council of its intention to continue trading with Iraq, 
and the Council ``took note,'' but took no measures to reprimand or 
prevent Jordan from going forward with large-scale, prohibited trade. 
Similarly, in the case of Turkey, the Council turned a blind eye to 
large-scale illicit trade. This included the US, which had a strategic 
alliance with Turkey. All three US administrations over the course of 
the sanctions regime sent waivers to Congress, asking that aid be 
continued to Jordan and Turkey despite their illicit trade with Iraq.
B. Maritime smuggling
    In addition to overland smuggling, there was substantial maritime 
smuggling as well. The Multinational Interception Force (MIF) was 
charged with interdicting ships engaged in illegal trade with Iraq. The 
MIF was created by Security Council Resolution 665, which called upon 
member states with naval forces in the area to intervene to enforce the 
sanctions.
    According to its reports, the MIF was quite active, boarding 
hundreds of ships each year,6 and there is no reason to 
suggest that it was incompetent or poorly run. However, it makes little 
sense to blame the UN for failing to stop Iraq's illicit oil smuggling. 
There was no authorization for any UN entity to take actions to 
intervene; SCR 665 only invited member states to take these measures.
---------------------------------------------------------------------------
    \6\ From 1994 to 2001, there were several hundred boardings per 
year; in 2002 and 2003, there were over 3000 boardings per year.
---------------------------------------------------------------------------
    The MIF involved some participation, at various points, from twenty 
or so different nations. But it was overwhelmingly dominated by US 
naval forces. The commanders at every point in the MIF's history were 
US naval rear admirals or vice admirals in the US Fifth 
Fleet.7 The force itself consisted overwhelmingly of US 
ships. In 2000, for example, the US contributed 86 vessels; the UK 
seven vessels; Canada contributed one vessel for two months, and the 
Netherlands contributed one vessel for one month.8 MIF 
commanders periodically reported to the 661 Committee.
---------------------------------------------------------------------------
    \7\ The commanders of the MIF were Rear Admiral A.K. Taylor (1991-
1992); Vice Admiral D.J. Katz (1992-1994); Vice Admiral J.S. Redd 
(1994-1996); Vice Admiral T.B. Fargo (1996-1998); Vice Admiral C.W. 
Moore Jr. (1998-2002); and Vice Admiral T.J. Keating (2002-2003).
    \8\ In 2001, the US contributed 90 vessels, the UK contributed 
four, and all other participating countries contributed one or two. In 
2002, the US contributed 99 vessels, five nations contributed ten or 
more, and several other countries contributed less than ten.
---------------------------------------------------------------------------
Kickbacks on import contracts
    OIP has been accused of failing to stop illegal kickbacks. However, 
OIP had no authority to block improper contracts. It was authorized to 
request clarification in the case of irregularities, and provide that 
information to the 661 committee. Only the members of the Security 
Council had the power to block contracts. Where price irregularities 
were clear, the customs officers of the OIP staff did in fact inform 
the 661 Committee, giving each member the opportunity to block the 
contract, or to ask for further information before approving. On over 
70 occasions, this was done. On none of those occasions did any member 
of the Council--including the US--seek to delay or block the contract 
for pricing irregularities.
D. Oil surcharges
    In October 2000, while reviewing Iraq's proposed pricing formulas, 
the oil overseers noted that the proposed formulas did not reflect fair 
market value. In their contacts with potential oil buyers, they learned 
that the Iraqi authorities had started requesting payment of a 
surcharge of up to 50 cents per barrel. The oil overseers reported both 
of these facts to the 661 Committee. In March 2001, the Secretary 
General drew attention to this problem in a public report to the 
Security Council.
    In response to this information, the US and UK implemented a 
``retroactive pricing policy.'' The normal practice in the industry, 
and for the Oil for Food Program, was to set the price for the coming 
month. Under retroactive pricing, the US and the UK withheld their 
approval for the price until the month had passed. This meant that 
buyers literally were required to sign contracts for oil purchases 
without knowing what the price was until after they were committed. The 
US and UK took the position that this allowed the committee to 
determine retroactively what the fair market value of the oil had been 
the previous month, and charge buyers accordingly. Thus, the argument 
went, Iraq was receiving no more nor less than fair market value; that 
eliminated the premia that went to middlemen; and consequently 
eliminated the possibility that the middlemen would pay Iraq illicit 
surcharges.
    The new pricing policies did in fact eliminate any margin for 
surcharges. But it had another result as well: that oil sales were 
substantially compromised. Predictably, few buyers were prepared to 
purchase Iraqi oil without knowing the price. It did not help much to 
provide assurances that the price they were ultimately charged would be 
``fair market value,'' as determined by the 661 Committee. As a result, 
the retroactive pricing mechanism created a financial crisis in the OFF 
program from 2001-2003. In 2001, oil exports averaged 1.7 million 
barrels per day. In 2002, the average was 1.1 million BPD. By September 
2002, that number had dropped to 400,000 BPD. The result was a dramatic 
shortfall in funding for humanitarian contracts. As of February 2002, 
there were nearly 700 fully approved contracts, with a value of $1.6 
billion, for which there was no funding; and another $5.3 billion of 
contracts on hold, awaiting approval; for a total potential shortfall 
of $6.9 billion. One member of the 661 Committee noted that ``exports 
are now so low that the program is on the verge of collapsing.'' 
9 Income remained at this reduced level for the duration of 
the program.10
---------------------------------------------------------------------------
    \9\ In June 2001 Iraq stopped producing oil in protest against a US 
proposal to modify the sanctions regime, and in April 2002 Iraq again 
declared a moratorium, to protest Israel's treatment of Palestinians. 
However, the retroactive pricing mechanism was by far the major factor 
in the financial crisis of the OFF program from 2001-2003.
    \10\ Income from oil exports increased steadily for the first eight 
phases, from $2.1 billion in Phase 1 to $9.6 billion in Phase 8, which 
ended in December 2000. For Phase 9, the oil exports fell to $5.6 
billion; Phase 10, $5.4 billion; Phase 11, $4.6 billion; Phase 12, $5.6 
billion; Phase 13, $4.4 billion.
---------------------------------------------------------------------------
E. Iraq's freedom to choose its trade partners
    The CIA's report makes much of the ``secret oil voucher'' system, 
by which Iraq designated oil purchasers. However, this appears for the 
most part to be simply Iraq's record-keeping system for exercising the 
rights it had under the terms of the OFF program to select its trading 
partners. While it may be said that particular purchasers should not 
have been approved, the fundamental decision to allow Iraq to choose 
its oil buyers and import contractors--and the political leverage that 
accompanied that--was a decision made by the Security Council, with the 
participation and agreement of the United States. It may be that the 
Council felt that the elaborate system of monitoring and the multi-
tiered approval process would serve as a sufficient mechanism of 
oversight. But the decision to allow Iraq to select its trading 
partners was not a failure of judgment or oversight on the part of the 
Secretariat. It was a decision of the Security Council, with the 
agreement of the United States.
5. The Volcker Committee Reports
    In its February report, the overall finding of the Volcker 
Committee regarding the account discussed (the 2.2% account) was that 
it was run carefully and well. The reports generated by the Independent 
Inquiry Committee chaired by Paul Volcker have been by far the most 
rigorous and careful studies of the accusations against the Oil for 
Food Program to date. Of the accusations addressed in the IIC's reports 
thus far, some concern the operation of the program; some concern 
individual acts which did not have significant effects on the program; 
some improprieties served the interests of the Iraqi government, and 
some did not.

 The most significant issue concerning the program's structure was the 
        claim that the OFF program should have conducted internal 
        audits. This issue raised by the Volcker Committee goes to one 
        of the fundamental problems in the basic structure of the 
        program: that it was a program created, designed, and enforced 
        by the Security Council under its powers in Chapter VII, but 
        administered by the Secretariat. There is no provision in the 
        UN Charter for the Secretariat to override or modify any 
        decision by the Security Council, in any form.
      Under the terms of the program's mandate, contained primarily in 
        Security Council Resolution 986 and the Memorandum of 
        Understanding, only external audits were authorized. According 
        to the February report of the Volcker Committee, these were 
        conducted and submitted to the Security Council, as required. 
        Under standard UN practice, contracts to which the UN is a 
        party are audited; but the import and export contracts in the 
        OFF program took place between Iraq and commercial enterprises. 
        While we may now say that internal audits should have been 
        conducted, or that the import and export contracts should have 
        been audited, that was not how the Security Council chose to 
        design the program, and the Secretariat did not have authority 
        to override the Security Council on these or any other aspects 
        of the OFF program.
    The other major issues discussed in the Volcker Committee reports 
released to date do not indicate that program's basic structure or 
operations were fundamentally compromised:

 A great deal has been said about the claim that Kofi Annan's son may 
        have been involved in the decision to award an inspection 
        contract to Cotecna. But while this issue has gotten enormous 
        attention from the media, it is not a significant factor in the 
        operation of the Oil for Food Program. The Cotecna contract 
        involved a minor part of the program (the 2.2% account). 
        Further, the accusation is that the contract was improperly 
        awarded to Cotecna; not that Iraq's humanitarian imports were 
        compromised by any practices of Cotecna.
 The improprieties in contracting identified by the Volcker Committee 
        in the February report indicate that the program was subject to 
        a series of manipulations for political purposes, but that 
        these generally did not in fact serve the interests of the 
        Iraqi government. The report of February 3 notes that of the 
        three major contracts under the 2.2% account, only one (the 
        banking contract) was awarded with the agreement of the Iraqi 
        government; and that arrangement had the support of the US and 
        UK. The Saybolt contract was improperly awarded to a Dutch 
        company, on the grounds that the Netherlands supported the 
        enforcement of sanctions against Iraq. The inspection contract 
        to Lloyd's Register was improperly awarded to a British 
        company, through the influence of the British Mission to the 
        UN.
 The Volcker Committee gives evidence for serious concerns that Benon 
        Sevan improperly received $160,000 through his involvement with 
        one company that bought Iraqi oil through the program. If true, 
        Sevan's actions would clearly be improper and may be illegal as 
        well. However, it is not clear that Sevan in fact used his 
        position to serve illicit interests on the part of the Iraqi 
        government. The Volcker report indicates that the Iraqi 
        government wanted Sevan to use his influence to persuade the 
        Security council members to lift holds on oil spare parts and 
        equipment. The Volcker report notes that the Iraqi government 
        was disappointed that Sevan did not do so, and cancelled 
        further oil allocations. In fact, Sevan did argue for lifting 
        holds on oil spares parts and equipment, on the grounds that 
        these were necessary for oil extraction. But that was also the 
        position held by the oil overseers, as well as most members of 
        the Security Council.
6. Who was responsible?
A. The consensus decision making rule
    Prior witnesses at these hearings have suggested that the consensus 
requirement of the 661 Committee made it difficult to establish 
effective oversight of the Oil for Food program. However, for the most 
part the consensus requirement in fact operated in exactly the opposite 
way: in the absence of consensus, the default position was denial of 
import or oil sales, not approval. In most contexts, the consensus 
requirement did not prevent unilateral US action. It was in fact the 
structure that enabled the US to impose many policies and decisions 
unilaterally.

 Import contracts: All contracts (except those eventually included on 
        the Green List) were circulated to every member of the 661 
        Committee, and required the approval of every member of the 
        Committee. Thus, any single member could block any contract, 
        regardless of whether other members objected.
      The United States unilaterally blocked massive quantities of 
        import contracts, citing security concerns. It was occasionally 
        joined by the UK, but the overwhelming majority of the holds 
        (typically 90-95% at any point in time) were imposed by the US 
        and the US alone.
 Oil contracts: the US, joined by the UK, used the consensus rule to 
        delay approval of oil pricing, and did so over the objections 
        of others in the Council until October 2001, when the 661 
        Committee finally agreed to retroactive oil pricing.
 The negotiation of ``rollover'' resolutions (the Security Council 
        resolutions extending the program for an additional six months) 
        were occasions for dispute. On one hand, there was considerable 
        controversy over US holds on humanitarian goods; on the other 
        hand, the US and UK would raise the issue of smuggling, and 
        seek to include stronger measures against smuggling in the 
        rollover resolution. On these occasions, France and Russia 
        opposed such measures, arguably because of their own interests. 
        However, it appears that the US also had little credibility on 
        this issue with the committee, since the US did not want to 
        enforce such measures against its allies, Jordan and Turkey, 
        but only against other nations.
B. What was the US role?
    The history of the program does not support the claim that the US 
was concerned about illicit funds entering Iraq, or would have done 
more if it had not been stymied by other members of the council. By all 
accounts, and based upon the US policies and decisions, the US was 
singularly preoccupied with military concerns, in particular WMD.

 The US blocked billions of dollars of import contracts--$150 million 
        as of November 1998, then growing to $5 billion as of July 
        2002. All of these were blocked on the grounds that they 
        contained items that could have military applications, or else 
        contributed to Iraq's infrastructure, thereby creating the 
        possibility of rebuilding its military capacity.
      There was nothing in the 661 Committee's procedures that 
        prevented the US from blocking questionable contracts, for 
        either imports or oil sales. To the contrary, the consensus 
        rule was the mechanism that allowed the US to impose far 
        greater restrictions on import and oil sales than other members 
        of the Security Council supported.
 The US declined to block any of the import contracts presented, on 
        the more than seventy occasions on which the US and the other 
        member states were explicitly informed by UN staff of pricing 
        irregularities suggesting possible kickbacks.
 US officials did on occasion report rumors of kickbacks and ask for 
        investigations. However, when asked to provide specifics that 
        could be investigated, US officials failed to provide any 
        information on which to base an investigation.
 All three US administrations explicitly permitted large-scale illicit 
        overland trade between Iraq and Jordan, and between Iraq and 
        Turkey, throughout the history of the sanctions regime.
 To the extent that there was maritime smuggling, this occurred not 
        through failures on the part of the UN, but rather on the watch 
        of the US Fifth Fleet. The MIF fleet was overwhelmingly made up 
        of vessels from the US Fifth Fleet, and was at all times 
        commanded by US naval officers.
 The US approved the hire of every oil overseer hired by the 
        Secretariat
 When the oil overseers--UN staff--informed the 661 Committee of 
        pricing irregularities in oil sales, the US and UK implemented 
        a harsh policy of retroactive pricing. Far from being stymied 
        by other members on the Council, this practice began despite 
        the objections of others on the Council.
 The US voted for Security Council Resolution 986 and agreed to the 
        Memorandum of Understanding, which gave the government of Iraq 
        the right to select its trading partners. This was crucial in 
        permitting Iraq to use the OFF program to generate political 
        support.
 The US voted for Security Council Resolution 986, which only required 
        the OFF program to be subject to external audits, not internal 
        audits.
C. The State Department's defense of US support for Iraq's illicit 
        trade with Jordan and Turkey
    In the congressional hearings that have taken place over the last 
several months, it has become known publicly what research specialists 
have known for the entire Iraqi sanctions episode--that all three US 
administrations turned a blind eye to this smuggling, and in fact took 
efforts to prevent the imposition of penalties under US 
law.11 Despite more than a year of harsh attacks on the 
United Nations--particularly the Secretariat--for claimed mismanagement 
of the Oil for Food Program, the fact is that the bulk of the illicit 
funds that the Iraqi regime acquired in fact had nothing to do with the 
Oil for Food Program.
---------------------------------------------------------------------------
    \11\ As Mr. Schweich explained in his testimony, since 1991, under 
federal law there have been restrictions on US assistance to countries 
not in compliance with Security Council sanctions against Iraq. 
However, all three administrations filed waivers with Congress 
throughout the history of the sanctions regime, finding that it was in 
the national interest to provide aid despite these violations.
---------------------------------------------------------------------------
    It is clearly a matter of some embarrassment to the State 
Department that the United States itself knew, approved of, and took 
efforts to protect the ongoing smuggling which generated the majority 
of these funds, specifically in regard to Turkey and Jordan. The 
current response of the State Department is that this smuggling was 
legitimate and transparent, unlike that smuggling, done by Syria, or 
other corrupt practices such as kickbacks and bribery. Such a claim 
seems quite absurd in light of the actual history of US policy choices.

 In light of the research conducted by Dr. Paul Conlon, who testified 
        before Congress last month, it is not correct to portray Jordan 
        as being honest and above-board, when there was evidence from 
        nearly the beginning that Jordan misrepresented its activities 
        to the Committee on an ongoing basis. Indeed, it was Dr. Conlon 
        himself who wrote the report informing the 661 Committee of 
        this.12
---------------------------------------------------------------------------
    \12\ ``Data on Iraqi Trade/Rev.3,'' memorandum dated 1 December 
1993 from Paul Conlon to James C. Ngobi
---------------------------------------------------------------------------
 In the case of Turkey, it was precisely the fault of the United 
        States that Turkey's ongoing illicit trade was not granted any 
        legitimacy. Whereas other countries on the 661 Committee 
        repeatedly asked that Turkey's appeal for relief under Article 
        50 be considered, and Turkey placed this on the Committee's 
        agenda over a dozen times, it was the United States 
        (occasionally joined by the UK) that blocked the Committee from 
        considering Turkey's request.
The State Department's current position
    In his testimony on April 12 before the House Committee on 
Government Reform, Thomas Schweich of the State Department maintained 
that the large-scale ongoing illegal trade that Iraq maintained with 
Jordan and Turkey was ``in no way comparable to the kind of corruption, 
bribery, or kick backs'' that have been investigated by congressional 
committees.13
---------------------------------------------------------------------------
    \13\ All quotes from Mr. Schweich are from the Federal News Service 
transcript of his testimony (unpaginated).
---------------------------------------------------------------------------
    According to Mr. Schweich, the 661 Committee's decision to turn a 
blind eye to Jordan's smuggling was ``not a back room deal.'' Rather, 
he said, in 1991 Jordan sought relief under Article 50 of the UN 
Charter, and the Committee never acted. Consequently, Jordan informed 
the Committee that a loss of trade with Iraq would cause considerable 
damage to its economy, and simply notified the Committee that it 
intended to continue importing oil from Iraq. The Committee ``took 
note'' of this without objection, and asked Jordan to report on its 
trade. Thus, according to Mr. Schweich, ``it wasn't really secretive.'' 
Similarly, according to Mr. Schweich, in 1996 Turkey requested Article 
50 relief, also because of the consequences of sanctions on the 
economy. He stated:
          The Jordanian and Turkish protocols were done to alleviate 
        economic hardship, it was an exception to the sanctions regime 
        because of the severe consequences that a failing Jordanian and 
        Turkish economy might have on the world, it was done 
        transparently, openly with the knowledge of the entire 661 
        Committee and the international community and for a valid 
        purpose.
          And to allow countries and individuals to equate that with 
        the type of corruption that went on could seriously undermine 
        our efforts to reform the UN that are going on now.
    Other countries, such as Syria, did not receive similar relief, 
according to Mr. Schweich; Turkey and Jordan, by contrast, ``came hat 
in hand, asked for Article 50 relief, and really did it by the book. 
Syria just engaged in massive fraud . . .''
    Contrary to the State Department's claims, the open smuggling was 
never considered legal. There was clear favoritism based upon US 
strategic alliances, not altruism or international law; and the US in 
fact blocked attempts to grant proper, transparent, legal relief under 
Article 50.
Jordan
    In his 1996 article ``How Legal Are Jordan's Oil Imports from 
Iraq?''' 14, Dr. Paul Conlon wrote about this issue in great 
detail. He noted that:
---------------------------------------------------------------------------
    \14\ Florida State University Journal of Transnational Law & 
Policy, vol. 6 (Fall 1996).

 When India made a similar request, citing the Security Council's 
        approval of Jordanian trade, it was rejected. In a formal 
        opinion ``of considerable precision and clarity'' from the 
        office of the UN's Legal Counsel, ``the Committee concluded 
        that an exemption would be illegal.'' 15
---------------------------------------------------------------------------
    \15\ Ibid., p. 112.
---------------------------------------------------------------------------
 Although Jordan provided annual reports to the 661 Committee 
        concerning its Iraq trade, by 1993 it was apparent that these 
        reports were not truthful. Jordan's official reports to the UN 
        data base on world trade reported much higher 
        amounts.16 An internal report regarding these 
        discrepancies was circulated to multiple members of the 661 
        Committee, but the committee declined to discuss 
        it.17
---------------------------------------------------------------------------
    \16\ Ibid., p. 115.
    \17\ Ibid., p. 116.
---------------------------------------------------------------------------
 Research conducted in 1994 indicated that ``considerable manipulation 
        was involved'' in Jordan's reports to the 661 Committee: 
        Jordan's actual oil imports from Iraq--according to Jordan's 
        own reports to other UN bodies--were 81% greater (in dollar 
        value) than the amount it reported to the 661 
        Committee.18
---------------------------------------------------------------------------
    \18\ Ibid., p. 117.
---------------------------------------------------------------------------
 There in fact was no transparency on this issue. Some countries 
        believed that the committee had actually granted Article 50 
        relief.19 While the illicit trade was widely known, 
        ``[o]riginally, the pseudo-agreement's existence was held to be 
        a secret. It was never mentioned in any published UN 
        document.'' 20
---------------------------------------------------------------------------
    \19\ Ibid., p. 118.
    \20\ Ibid., p. 115.
---------------------------------------------------------------------------
 The practice of ``taking note'' of Jordan's practices, which occurred 
        each year, had no basis in any relevant legal authority, either 
        Article 50 or paragraph 23 of Resolution 687.21
---------------------------------------------------------------------------
    \21\ Ibid., p. 114.
---------------------------------------------------------------------------
 This arrangement continued well past any legitimate concerns with 
        Jordan's inability to obtain substitute oil supplies. Far from 
        seeking alternate sources of oil, Jordan actually increased its 
        dependence on Iraqi oil during the sanctions 
        regime.22
---------------------------------------------------------------------------
    \22\ Ibid., p. 116.
---------------------------------------------------------------------------
    In the case of Jordan, there was no transparency. An open secret of 
improper activities is not ``transparency.'' Nor could the 661 
Committee view this as legal, in light of the legal opinion stating 
strongly that it was not.
Turkey
    In a letter dated August 5, 1996, Turkey submitted a formal request 
to the 661 Committee for relief, citing the economic hardship due to 
trade disruption with Iraq resulting from the sanctions. Turkey sought 
permission to resume oil imports, and to in turn provide Iraq with 
goods for the civilian population. Far from supporting Turkey's appeal 
for Article 50 relief, the US delegate on the 661 Committee said in an 
August 1996 meeting (meeting no. 142) that Turkey's request would 
compromise the integrity of the sanctions regime, and that the matter 
should be postponed to a later time. The issue was raised again, and 
again, and again--in meeting 143 (August 28, 1996); meeting 144 
(October 14, 1996); meeting 145 (December 3, 1996); meeting 146 
(December 18, 1996); meeting 148 (January 28, 1997); meeting 150 
(February 21, 1997); meeting 151 (March 17, 1997); meeting 152 (March 
24, 1997); meeting 155 (May 14, 1997); meeting 157 (June 11, 1997); 
meeting 159 (July 17, 1997); meeting 160 (August 27, 1997); meeting 166 
(January 4, 1998); meeting 171 (May 12, 1998); meeting 172 (June 
18,1998); and meeting 176 (December 1, 1998).
    As the issue dragged on for years, the US position remained 
unchanged. Again and again, the US delegate reiterated the same 
position: that the view of the United States had not changed, thus 
blocking any possibility of considering Turkey's appeal for relief in a 
public, legal, and transparent form.
    It was the US who maintained that the Committee did not have 
authority to grant a sanctions exemption to Turkey--over the opposition 
of others on the 661 Committee. In one instance, the US objected to a 
French proposal that the Secretariat provide a report on the effects of 
the sanctions on neighboring states.23 The delegates from 
China and Bahrain spoke in support of the proposal. However, the US 
(joined by the UK) refused to agree, thus preventing consensus 
(effectively vetoing) even a request to the Secretariat to provide 
information on the impact of sanctions on Turkey and other nations.
---------------------------------------------------------------------------
    \23\ Meeting 171, May 12, 1998.
---------------------------------------------------------------------------
Conclusion
    In the cases of Jordan and Turkey, the State Department currently 
maintains that the US did not approve of or participate in any 
impropriety, on the grounds that these arrangements were transparent 
and honest. They were not.
7. Conclusions
 The bulk of the illicit funds that arrived in Iraq over the course of 
        the sanctions regime had no relation to the Oil for Food 
        Program. They occurred through large-scale ongoing smuggling, 
        which began well before the OFF program, and had no relation to 
        the program at all.
 Contrary to common views, the Oil for Food Program did not ``give 
        Saddam Hussein a free hand'' to use oil proceeds as he wished, 
        without oversight or monitoring. Rather, the OFF program had 
        multiple levels of oversight for both import contracts and oil 
        sales, involving scrutiny by UN staff and by every member of 
        the Security Council, of nearly every aspect of every 
        transaction. To the extent that there were kickbacks or other 
        improprieties in the program, these occurred not for lack of 
        oversight; but rather occurred despite an elaborate system of 
        oversight.
 Contrary to common views, the Oil for Food Program was not 
        characterized by an absence of transparency. In many regards 
        the program was highly transparent, not only to the members of 
        the Security Council--which authorized and supervised the 
        program--but to the general public as well.
 Contrary to common views, the UN Secretariat was not responsible for 
        what are seen as the major failures of the program: the ability 
        of Iraq to choose its trade partners; the kickbacks on import 
        contracts; the surcharges on oil contracts; the large-scale 
        smuggling. The design of the program, and the enforcement of 
        the sanctions, was in the hands of the Security Council and its 
        members, not the Secretariat.
 Contrary to common views, the US did not show significant concern 
        regarding smuggling and kickbacks. Rather, the US was 
        preoccupied with blocking military goods from entering Iraq. 
        The US generally showed a lack of interest in stopping illegal 
        funds from entering Iraq, and this was particularly true where 
        US strategic allies were involved in illicit trade with Iraq.
 It is not plausible to attribute the poor humanitarian situation in 
        Iraq to the failures of oversight of the Oil for Food program. 
        These kickbacks and oil surcharges are estimated to be at most 
        $4.4 billion, over the seven-year course of the program. What 
        was far more damaging to Iraq's economy and society were the 
        limitations that compromised oil sales (including retroactive 
        oil pricing) and large-scale holds on equipment and goods 
        necessary for infrastructure and for the operation of an 
        industrialized society--electricity production, water and 
        sewage treatment, telecommunications, transportation, 
        construction, industrial production, agriculture. These were 
        imposed almost entirely by the United States. US holds on 
        critical humanitarian and infrastructure supplies at just one 
        point in time--July 2002--totaled some $5 billion. In the end, 
        the total goods that actually arrived in Iraq from the 
        program's inception through May 2003 came to only $4.6 billion 
        per year, or about $191 per person per year. The extreme 
        impoverishment of the Iraqi population would not have been 
        significantly affected if that amount were increased to $200 
        per person per year, which is approximately the difference that 
        $4.4 billion would have made.
      We may be shocked that as much as $4.4 billion in illicit funds 
        slipped through the oversight structures of the Oil for Food 
        Program. But the reality is that in the face of such severe, 
        longstanding, and widespread impoverishment, the actual impact 
        of the kickbacks and surcharges that have been denounced by 
        many as a scandal of historic proportions was in fact 
        negligible in comparison to the economic sanctions themselves, 
        and the additional strictures imposed by the US and the UK.

    Mr. Whitfield. Dr. Gordon, thank you very much. And I 
appreciate the testimony of all of you. I might say that Gerald 
Anderson will be testifying on the next panel, and I do know 
that in his testimony he is going to say that the U.S. and 
Britain made 40 attempts in formal and informal meetings with 
the 661 Committee to address the oil surcharge problem.
    Now, Mr. Smego, you testified that you reviewed more than 
23,000 pages of documents or DVDs equivalent of 23,000 pages. 
Is that correct?
    Mr. Smego. That is correct, sir.
    Mr. Whitfield. And these are documents from the Iraqi 
Intelligence Service or the state oil ministry?
    Mr. Smego. The 23,000 pages were actually from a larger 
amount of 60,000 pages from the Iraqi State Oil Marketing 
Organization, otherwise known as SOMO.
    Mr. Whitfield. And did you translate Iraqi Intelligence 
Service memos?
    Mr. Smego. Yes. I also did translate nine documents from 
Iraqi Intelligence Service.
    Mr. Whitfield. And, now, you were with the Iraqi survey 
group for a period of time. When was that?
    Mr. Smego. That is correct. I was there from April 2004 to 
January 2005.
    Mr. Whitfield. Now, it appears that in some point in 2000, 
Saddam Hussein began demanding a surcharge on Iraqi oil 
contracts. During the course of your work, did you uncover any 
documents pertaining to those oil surcharges?
    Mr. Smego. Absolutely, sir.
    Mr. Whitfield. And which exhibit is that?
    Mr. Smego. Exhibit 1.
    Mr. Whitfield. And what does that say?
    Mr. Smego. Exhibit 1 is a handwritten document in English 
regarding contracts under the eighth phase of the Oil-for-Food 
program stating that the buyer--it is between the seller and 
the buyer--for the purchase of however many barrels of crude 
oil, and that a payment of so much dollars per barrel would be 
charged as a surcharge.
    Mr. Whitfield. And paid either directly in cash or to a 
SOMO bank account?
    Mr. Smego. That is correct.
    Mr. Whitfield. And who signed that document?
    Mr. Smego. At the first page, at the top left of the 
document it is signed by Amer Mohammed Rasheed, who was the 
minister of oil at that time.
    Mr. Whitfield. Okay. Now, during the course of your work 
for the committee, did you examine any documents that purport 
to show that Saddam Hussein and members of his regime used, or 
at least attempted to use oil allocations under the program to 
influence individuals and entities?
    Mr. Smego. Absolutely. Certain documents within the Iraqi 
Intelligence Service, for example, document 3--excuse me, 
Exhibit 3 in 1998 states that Iraq was planning to take a 
portion of its oil during the phase and distribute it to 
friendly companies and distinguished personalities. 
Approximately 80 million barrels ``to the friendly nations, 
companies, and political establishments,'' at the rates 
specified.
    Mr. Whitfield. Okay. And that was Exhibit 2 or 3?
    Mr. Smego. That was Exhibit 2. I stand corrected.
    Mr. Whitfield. And Exhibit 2, does it also mention Russia, 
France, and China?
    Mr. Smego. Yes. At the rates of Russia receiving 40 
percent, France 15 percent, and China 11 percent of the 
approximately 80 million barrels.
    Mr. Whitfield. And then on Exhibit 3, does it specifically 
mention those countries as being a part of the permanent 
membership of the Security Council?
    Mr. Smego. Absolutely. Exhibit 3 is a disclosure of the oil 
allocations after the sixth phase. It is subtitled Special 
Orders.
    Mr. Whitfield. Now, they refer I believe in that exhibit 
also to standard oil--standard orders and specific orders or 
special orders. What's the difference in those two?
    Mr. Smego. Underneath special orders, the committee can see 
that certain entities and individuals are listed. They are 
nonstandard--they are not oil companies themselves. So one 
could certainly draw the conclusion that the standard orders 
were for the oil companies, whereas the special orders were for 
those entities that were not standard purchasers.
    Mr. Whitfield. Now, is my understanding correct that, under 
a special order, you can literally walk away from the 
contractual obligation?
    Mr. Smego. I would not be qualified to answer that.
    Mr. Whitfield. Okay. Now, I want to ask you a few questions 
about this Iraqi Intelligence Service documents. You mentioned 
that you translated I think nine of those; is that correct?
    Mr. Smego. Yes. Nine documents, sir.
    Mr. Whitfield. Does it appear from those documents that 
Saddam Hussein attempted to implement a strategy of improving 
relations with the French government?
    Mr. Smego. Certainly. By January 2002, under Exhibit 4, a 
memorandum from the Office of the Secretary of the President 
Abed Hamid al-Hattab, stated, and I quote: ``the present 
leader, God bless him, ordered the improvement of dealing with 
France.''
    Mr. Whitfield. And did the IAS subsequently take steps to 
carry out that directive from Saddam Hussein?
    Mr. Smego. Yes, sir. The Exhibit 5 states, with the subject 
of Iraqi-French relations, to prepare an Iraqi delegation to 
France in exchange for an invitation of French delegations to 
Iraq. And that specifically, under point number 5, economic 
privilege such as oil and trade was to be given to French 
political and economic individuals close to the center of 
political decisionmaking.
    Mr. Whitfield. Okay.
    Mr. Smego. There was also allegations of support--or at 
least, I should say, number 7 specifies the study, the 
possibility to support one of the candidates in the French 
Presidential elections.
    Mr. Whitfield. Okay. Now, let me ask you. On exhibit 11--or 
I want to call your attention to that a minute. This document 
purports to show that the regime, the Saddam Hussein's regime 
subsequently refined their strategy on influencing French 
companies or delegations, et cetera. Could you discuss for us 
what that says?
    Mr. Smego. Absolutely, sir. By April 2002, point 2 approves 
the granting of contracts to the French companies which are the 
most important and influential in the French field. However, 
point 3 of the document refines it in saying that: Regarding 
the subject of doing business with the small French companies, 
it is understood that the small companies are not beneficial to 
the country. Meaning Iraq.
    Mr. Whitfield. So they focused on large French companies?
    Mr. Smego. Absolutely. The small companies apparently did 
not pan out for them.
    Mr. Whitfield. Now, did you find any documents during your 
work for the committee that identified specific individuals 
that the regime sought to target?
    Mr. Smego. Yes, sir. Examples 6 and 7 are the best--
Exhibits 6 and 7 are the best examples of such.
    Mr. Whitfield. Now, Exhibit 6, what does it say in Exhibit 
6?
    Mr. Smego. The subject of the memorandum, it's dated in 
February 2002 from the assistant director of the Iraqi 
Intelligence Service to the director regarding Iraqi-French 
relations. They named 12 French individuals of influence, among 
them the former French president Valery Giscard d'Estaing, 
Charles Pasqua, Jean-Pierre Chevenement. Please forgive my 
pronunciation of French names. Jacques DeLors. And other 
individuals.
    Mr. Whitfield. Now, did you find any documents showing that 
any payments were made, for example, to Charles Pasqua?
    Mr. Smego. The documents that I have presented here today, 
I do not have anything that directly denotes a payment to Mr. 
Pasqua. However, there were several documents regarding--or 
that at least mentioned Mr. Pasqua in them. Among them, the 
first would be Exhibit 13.
    Mr. Whitfield. And according to the Duelfer Report, Mr. 
Pasqua received allocations for 11 million barrels of oil, of 
which 10.75 was actually lifted. But would you walk us through 
Exhibit 13?
    Mr. Smego. Certainly. Exhibit 13, the first bullet under 
which states that: First of all, the subject is the French 
individual or dignitary, Charles Pasqua, that Saddam Hussein 
personally approved designating 3 million barrels of oil to 
Charles Pasqua. And that the Frenchman Bernard Guyet, who 
represented Charles Pasqua also visited and requested the 
contract be under Genmar Company. It was a Swiss company. 
However, when the Iraqi side made it clear that it was 
necessary to choose a French company, apparently Mr. Bernard 
Guyet stated that it was not possible for political reasons.
    Mr. Whitfield. And was there any additional information on 
that page?
    Mr. Smego. Absolutely. When the Iraqi State Oil Marketing 
Organization requested from Mr. Guyet a letter of authorization 
from Mr. Charles Pasqua to Genmar for Genmar to lift the crude 
oil, Mr. Guyet refused and clarified that they could not 
provide that because of a fear of political scandal.
    Mr. Whitfield. Okay.
    Mr. Smego. Subsequently, a few days later, Exhibit 14, a 
letter from the office of the deputy prime minister reminds the 
SOMO executive director that Mr. Bernard Guyet is the 
diplomatic and political adviser for Mr. Pasqua, and he 
represents him to receive the oil allocation.
    Mr. Whitfield. Okay. Now, are you familiar with a company 
called Ibex Energy?
    Mr. Smego. Yes, sir, I am.
    Mr. Whitfield. During the course of your work, did you find 
any documents relating to Ibex?
    Mr. Smego. Yes, sir, I did.
    Mr. Whitfield. Is Ibex a French company?
    Mr. Smego. I would not be qualified to answer that.
    Mr. Whitfield. Okay.
    Mr. Smego. Exhibit 37, if you would, please. Now, the Iraqi 
document does specify that Ibex Energy is a French company, but 
I have not validated such.
    Mr. Whitfield. Okay.
    Mr. Smego. Exhibit 37 is a letter from the Iraqi vice 
president Taha Yassin Ramadan, who addressed the letter to the 
minister of oil approving the supply of Ibex with a quantity of 
1.8 million--or, excuse me, 1.8 million barrels of oil to be 
included in phase 5 specifically ``as the beginning of doing 
business with this company as well as to know the potential of 
advantage from their activities in other fields.''
    Mr. Whitfield. And then I notice on Exhibit 38 a payment of 
$19,700 was made to a Portuguese citizen named Armando Carlos 
for services rendered. Is that correct?
    Mr. Smego. Yes, that is correct, it did appear on Exhibit 
38.
    Mr. Whitfield. And who is Mr. Carlos?
    Mr. Smego. Mr. Carlos is apparently an oil inspector as 
reviewed in Exhibit 39.
    Mr. Whitfield. And what does Exhibit 39 point out?
    Mr. Smego. Exhibit 39 is a letter from the minister of oil 
in April 2002 to the deputy prime minister stating that two 
additional quantities of oil had been loaded from the Min al 
Bakar terminal with the coordination of the oil inspector, the 
agreement with the oil inspector for his share of 2 percent of 
the profit of the additional quantity in exchange for his 
services. And point 3 specifically names that Armando Carlos 
has been paid $105,819 for both aforementioned shipments.
    Mr. Whitfield. Okay. I see my time has expired. So at this 
point, I would recognize Mr. Stupak for 10 minutes of 
questioning.
    Mr. Stupak. Mr. Smego, in your testimony you were requested 
to look for documents that referred to particular topics. Is 
that correct?
    Mr. Smego. That is correct, sir.
    Mr. Stupak. What were those topics?
    Mr. Smego. The majority counsel specified that we would be 
searching the oil documents for transactions that would be from 
entities or regarding individuals or entities from the United 
Nations permanent Security Council member nations that did not 
appear to have an established history in the oil trading 
industry.
    Mr. Stupak. So if an oil company would be an established 
entity that had traded in the oil world market, you wouldn't 
look at those?
    Mr. Smego. We generally went over the companies that did 
not have a specific influence or any signs of outside influence 
or use of oil for influence.
    Mr. Stupak. Well, did you look for things like Coastal Oil? 
Did you look for that entity.
    Mr. Smego. Coastal Oil did appear. Coastal Oil documents 
were very lightly referenced in those pages.
    Mr. Stupak. But they were referenced.
    Mr. Smego. But we do not have anything that was presented 
here today.
    Mr. Stupak. Why not?
    Mr. Smego. It was not the discretion--or, excuse me; it was 
at the discretion of the majority counsel.
    Mr. Stupak. What about Bay Oil?
    Mr. Smego. Again, that would be at the discretion of the 
majority counsel.
    Mr. Stupak. Did you see Bay Oil in there, though?
    Mr. Smego. I do not recall any specific documents.
    Mr. Whitfield. Mr. Stupak, I might just mention, in the 
binder there are some letters from Oscar Wyatt of Coastal that 
was translated by Mr. Smego. I just would point that out to 
you. It is Exhibits 40 and 41.
    Mr. Stupak. So the documents you looked at, you were really 
directed by the majority counsel to look at these documents and 
you didn't go much further than that?
    Mr. Smego. There were 21 DVDs containing 60,000 pages. We 
certainly had our hands full with the amount of pages, and to 
quickly triage or at least have gone through 23,000, we hit 
what we could.
    Mr. Stupak. Okay. I guess what I am trying to focus on, how 
did you focus your investigation; on what majority counsel told 
you, or were you trying to get at companies that dealt with 
Iraqi Oil-for-Food program that looked questionable?
    Mr. Smego. I brought documents to the attention of the 
majority counsel. It was upon his approval that documents would 
be translated and presented.
    Mr. Stupak. Okay. Besides looking at these documents as far 
as them being accurate, would you have any personal knowledge 
of them being accurate?
    Mr. Smego. Would you be saying authentic, or the 
translation?
    Mr. Stupak. Authentic. I am sure your translation is 
correct. The authenticity.
    Mr. Smego. I am not sure if I would be qualified to provide 
an answer, based that I have not inspected the original 
document itself.
    Mr. Stupak. Okay. Do you know whether the statements 
contained in these documents like Exhibit 4 and 5 and 11 and 6 
and 7, do you know if they are true?
    Mr. Smego. I can simply state that the documents were 
written by, or at least from the perspective of the Iraqi side, 
whether the author of the Iraqi document put fact in there I am 
not aware. I cannot confirm the facts. I can simply tell you 
what the document states.
    Mr. Stupak. Should we assume, then, that only the people 
who wrote them and those who received them can really testify 
as to their truthfulness or accuracy?
    Mr. Smego. Well, I can simply tell you what the language 
states. Whether to be confirmed or not, no in-depth analysis 
was performed.
    Mr. Stupak. Okay. When you look at so many of these 
documents, some of these dates just seem to be off base. One 
date, and then it is a year later you see another date. Like, 
take document 2 and 3, the ones you pointed out here. Take a 
look at No. 2. The date on that document, if I am reading this 
right, is November 22, 1998. And then you look at document No.3 
which you reference as part of it, and that is a year later.
    Mr. Smego. Yes, those dates are accurate.
    Mr. Stupak. So how do you tie these two into each other is, 
I guess, what I am trying to figure out. On Document 2 you say 
Russia gets 40 percent, France 50, and China 11. And then you 
go to document No.3 here and it is a whole year later.
    Mr. Smego. That is correct, sir. In November 1998 the 
decision was made to withhold a portion of the oil during that 
phase and split it as we have--the document states. Exhibit 3 
shows that a year later, that the Iraqi State Oil Marketing 
Organization had put together a spreadsheet outlining No. 1, 2 
and 3, being Russia, China and France, under the subheading of 
``countries of permanent membership.''
    Mr. Stupak. Okay. In this whole deal here, when you talk 
about individual profits, these individuals again, this, for 
Mr. Pasqua and all that, whether they received that money you 
have no idea; right?
    Mr. Smego. I do not have access, or I was not presented 
with any documents regarding that. I can simply have the 
documents from the State Oil Marketing Organization.
    Mr. Stupak. Okay.
    Dr. Gordon, if I can ask you this question. In your 
testimony you seem to put all the blame on the problems with 
the Oil-for-Food program on the Security Council and 661 
sanctions committee. I call it the sanctions committee. Do you 
believe that the U.N. staff and the Office of Iraqi Programs 
were aggressive enough in identifying the problems and bringing 
them to the sanctions committee attention?
    Ms. Gordon. Yes. From everything I have seen I think that 
is quite true. If you look at what is called the customs 
officer within the OIP, they absolutely did find several dozen 
instances of clear price irregularities and all of those 
occasions brought them directly to the 661 committee. In the 
case of the oil overseers it was the same. They noted very 
quickly when the oil prices were not consistent with fair 
market value, immediately brought these to the attention of the 
661 committee. That is correct.
    Mr. Stupak. Mr. Fawcett, do you agree with that?
    Mr. Fawcett. No, I don't. I think out of the 20,000 
contracts for the U.N. officials, to find 70 that were a 
problem, I think they could have done that by the end of 
breakfast. The fact that these were----
    Mr. Stupak. What would make a contract out of order, then, 
other than price?
    Mr. Fawcett. I think price, the fact that there was no 
competitive bidding, should have shown to anyone looking at 
this--to see a company from a country that is closely allied 
with Iraq would immediately raise the attention of an inspector 
or of a customs official. Also, the great majority of the goods 
going in were commodities. They were not difficult to price. It 
was not difficult to work out what was the standard world price 
for a commodity; therefore, what should the price actually be.
    Mr. Stupak. You said one of the things you look at is 
countries closely aligned with Iraq. But 75 percent of that oil 
ended up back here in the United States, and the United States 
really isn't closely aligned with Iraq.
    Mr. Fawcett. Correct. But we are talking about the 
contractor, the first contractor. The game with the oil 
purchases was to allow someone else to pay the kickbacks, not 
the major oil companies of the world, not the refiners. 
Clearly, the end user would know there is a problem, but they 
would not be the one paying the kickback themselves.
    Mr. Stupak. And everyone knew there were kickbacks going 
on.
    Mr. Fawcett. Absolute, without a doubt.
    Ms. Gordon. Mr. Stupak, I wonder if I might address this 
notion that only 70 of the 20,000.
    Mr. Stupak. Sure.
    Ms. Gordon. I understand Mr. Fawcett to be suggesting that 
they weren't working that hard to come up with that 70. I think 
what is important to understand is that the Iraqi Government 
was not stupid. If they had had extreme price irregularities 
and frequency, that would have been noted. What they did do was 
pad the contracts, for the most part, in fairly small amounts, 
5 to 10 percent, where the result of padding was often in 
contracts that were made to order, that were built to 
specifications, for which there were not in fact standard oil 
prices.
    I think what we see is not a failure to discern extreme 
pricing irregularity, but in fact consistence in finding those. 
And no one is seeing the irregularities when they were 
marginal, 5 to 10 percent.
    I would also point out that by the history of what we have 
seen so far, there is no reason to think that the Security 
Council would have responded any differently if in fact OIP had 
presented more contracts with price irregularities.
    Mr. Stupak. Mr. Fawcett, let me ask you this. In your 
longer report, you stated that although the major oil companies 
stopped buying Iraqi crude from middlemen after Saddam imposed 
a surcharge, BP and Exxon began to buy again after just a 
couple of months and claimed they did not deal with companies 
that did pay surcharges. Do you think their claims should be 
investigated? And wasn't the surcharge just passed on to the 
end user, basically the American people?
    Mr. Fawcett. From all appearances, that is correct.
    Mr. Stupak. Do you think it should be investigated?
    Mr. Fawcett. I think someone should investigate, whether 
it's this committee or not. And if you do, I am glad to help.
    Mr. Stupak. Thank you. It looks like my time's expired Mr. 
Chairman.
    Mr. Whitfield. Thank you Mr. Stupak.
    At this time I will recognize the chairman of the 
committee, Mr. Barton, for 10 minutes.
    Chairman Barton. Thank you, Mr. Chairman. I have got some 
general questions. Then I am going to have some specific 
questions about the documents that are before the subcommittee 
this afternoon.
    My first general question is to Mr. Fawcett. Do you have 
any estimation of how many billions of dollars were skimmed 
from the Oil-for-Food program?
    Mr. Fawcett. I think the estimates have continually risen. 
In 2002 we estimated it was about 2.1 or 2.2 billion. However, 
we have not looked at the humanitarian supply side. So clearly 
it is higher. I think the latest is up to 4, 4.5. And whether 
that is the end or not, I doubt it. The one thing I've seen 
about this program is it's always worse than you think.
    Chairman Barton. Well, let me ask you a question. 
Regardless of how many billions were taken off the top, how 
much of that money, say we got a--if it could be proven that 
one of these officials got a personal voucher--and the one that 
is referenced in one of the documents is this Mr. Pasqua--be 
allocated 3 million barrels, well at $15 a barrel, that is $45 
million. At $20 a barrel that's $60 million. If we could locate 
those funds, could they be recovered and remitted to the 
current Iraqi Government?
    Mr. Fawcett. Well, the vast majority of that money actually 
went to the U.N. Account. We are only looking, on the kickback 
you're looking at maybe 50 cents a barrel, maybe less. So the 
type of money there would be $1 million, $1.5 million. 
However----
    Chairman Barton. So the fact that he got the voucher, he 
didn't get the total proceeds.
    Mr. Fawcett. No, not at all.
    Chairman Barton. Even if we could prove it, nobody alleges 
that he got the full value of those 3 million times whatever.
    Mr. Fawcett. Not at all.
    Chairman Barton. He got some sort of a commission.
    Mr. Fawcett. That's correct. However, to address your point 
of the bigger picture of recouping Iraqi assets, let's not 
forget that over history and over time, over the last three 
decades, Saddam has ripped off tens of billions of dollars, 
long beyond the Oil-for-Food. The highest estimate we have 
heard is $140 billion. The Oil-for-Food program is really only 
the latest, and that is what makes it important because it 
provides a window into Saddam's manipulation over the last 30 
years. And the most recent information that we have, and this 
is why I think these investigations are very important, is they 
might lead us toward the money that he stole over time.
    Chairman Barton. Well that's my point. You made it better 
than I could through questioning. That at some point in time, 
all the investigations by all the various committees, various 
international bodies, not just the U.S. Congress, hopefully 
will result in an identification of recoverable assets.
    Mr. Fawcett. Absolutely. And that's--again, the Oil-for-
Food is important because it is more recent. The old rip-offs 
have now been turned into investments, into real estate, into 
stocks, into bonds, into things that wealthy individuals invest 
in, much more difficult to find. But if we see in the Oil-for-
Food, we find the same mechanisms, the same people involved 
that helped Saddam launder his money back in the seventies and 
eighties, so instead of separating this out and saying, well, 
he only ripped off this amount in the Oil-for-Food and he 
smuggled this amount, actually the stories should be merged in 
order to do the best for finding the ripped-off assets and 
returning them to the Iraqi people.
    Chairman Barton. Well, step one is to identify the theft. 
Step two is to recover the goods if we can identify where the 
stolen goods were. And unfortunately, and it is frustrating and 
I think members on both sides of the aisle share the 
frustration. We are still in step one. I'd rather be in step 
three, going after the goods and trying to get them back to the 
Iraqi people.
    I want to ask Mr. Smego a question. The documents that you 
reviewed for this committee and that you have translated, is 
there any reputable authority that disputes your translation?
    Mr. Smego. I would encourage that if there is any doubt 
about a personal--or a certain section of the translation, by 
all means you can certainly seek a second opinion.
    Chairman Barton. No. I am just saying since you have done 
the translations and they have been available, at least for 
review by staffs and I would assume others in official 
capacities, is there anybody out there that says you 
mistranslated them? Or can we stipulate that your translation 
is the correct translation?
    Mr. Smego. There is no indication to me, no one has 
approached me to say that these translations aren't correct.
    Chairman Barton. As far as this subcommittee is concerned, 
your translation can be considered to be a correct translation.
    Mr. Smego. That's correct. If another linguist were to 
translate the context or the substance, the message would not 
change.
    Chairman Barton. I know, Dr. Gordon, you are not a 
translation expert, but do you have any reason to doubt the 
veracity of the translations?
    Ms. Gordon. No, sir. I don't speak Arabic.
    Chairman Barton. Okay. Well, I just wanted to try to assert 
that our translations are the correct translation.
    Mr. Smego. One thing that I can suggest, sir, that with the 
assistance of the native Iraqi linguist, when you pair a native 
Iraqi speaker and a native English speaker and having actually 
two linguists work on the document, you produce a far superior 
translation than any one individual could produce.
    Chairman Barton. Okay. On document No. 5 in our binder, 
what--when we talk about the implications of this document, 
could you enlighten us a little bit on the implication of this 
document No. 5 that the present leader, Saddam Hussein--God 
bless him and protect him--has ordered the improvement of 
dealing with France, and then Iraq is going to send official 
political and social delegations to France; they are going to 
organize a roundtable in Baghdad and Paris to develop the 
relationship between both countries. The Foreign Minister is 
going to visit Paris, and tasking the International Council and 
Office of Foreign Relations of the party to approach the most 
influential parties in France and the French Parliament?
    And then item No. 5 on the second page of this document, do 
not consider granting economic privilege, oil and trade, to 
those who are not effective or do not have leverage. However, 
these privileges will be given to French political and economic 
individuals close to the center of the political 
decisionmaking. What does that imply, this document taken as a 
whole, in your opinion?
    Mr. Smego. Well, while I cannot specify as to what it 
implies, I can reassure you that these are recommendations from 
the assistant director of the Iraqi Intelligence Service, made 
to his boss, the director of the Iraqi Intelligence Service, on 
how possibly relations could be improved. Of note would be the 
director's margin note that is listed under the first margin 
note. The director questioned, how do we begin? Where do we go 
with this? He is basically questioning how to implement this 
plan and who the targets would be to influence. This memorandum 
followed subsequently Exhibit----
    Chairman Barton. Well, if I wanted to imply--having read 
the documents, if I wanted to imply that this would be 
considered an official document of Saddam Hussein's regime, 
that they wanted to find out the people that counted in France 
and try to bribe them, would that be a wrong implication? I'm 
not saying it's a fact, but if I were to read this document, do 
not consider granting economic privilege to those who are not 
effective or do not have any leverage, the fact that it says 
granting economic privilege would indicate to me that at least 
somebody was thinking about bribing somebody in the French 
Government if they thought they had leverage. Would I be wrong 
to imply that?
    Mr. Smego. I wouldn't be qualified to judge that.
    Chairman Barton. Mr. Fawcett, would I be wrong to imply 
that?
    Mr. Fawcett. Well, without having seen the document it's 
hard for me to say. However, there is a lot of other 
corroborating evidence to show that that was----
    Chairman Barton. And I'm not saying it's a fact. I'm just 
saying a person of normal intelligence, if we assume that these 
documents are correctly translated--and nobody apparently is 
asserting that the gentleman to your left has improperly 
translated them--if you just read the language and the plain 
meaning of it, it would imply to me that Saddam Hussein was 
thinking about bribing people in France if they were in a 
position of power. That is my implication.
    Mr. Fawcett. They also publicly went on the record long 
ago, back in the late nineties, saying that they were going to 
skew the contracts toward those political supporters 
internationally. So this is not strange at all. This fits 
exactly in with their policy.
    Chairman Barton. Well, my time is about to expire. My last 
question on this document 13, where the French dignitary 
Charles Pasqua says the present leader, Saddam Hussein, God 
bless him, approved designating 3 million barrels to him, the 
French dignitary. Why in the world would the Iraqi Government 
give Mr. Pasqua the concession for 3 million barrels? He's not 
an oil trader, that I am aware of. I mean, Mr. Stupak has 
pointed that out. So why would they do that? Why didn't they 
pick Congressman Joe Barton, or you, or the good professor to 
your left? Why did they pick him?
    Mr. Smego. Is that question directed to me, sir?
    Chairman Barton. It is a question, yeah. Just out of the 
blue, why did he get picked? Did he have any ability to 
influence things in the French Government or maybe be an 
influence maker himself? If I were trying to influence the 
French Government, might I pick him?
    Mr. Smego. One might go back to Exhibits 6 and 7, No.2 of 
Exhibit 6, subparagraph (b). The French Charles Pasqua was the 
former Minister of the Interior and the French candidate for 
Presidential elections in the current period. And it references 
that it would be possible to approach Mr. Pasqua through the 
relationship of Tarik Aziz.
    Chairman Barton. So he might be able to influence the 
French decision on these sanctions, the position the French 
Government might take in the U.N. regarding these sanctions and 
regarding lifting the sanctions, mightn't he?
    Mr. Smego. That is what Exhibit 6 might mean.
    Chairman Barton. It might be money well spent if you were 
Saddam Hussein. Might be. I think it would be. If I decided I 
wanted to bribe somebody in France, he'd be a good target.
    Mr. Chairman, I yield back my time.
    Mr. Whitfield. Thank you, Mr. Chairman. Mr. Waxman is 
recognized for 10 minutes.
    Mr. Waxman. Thank you, Mr. Chairman. It seems that what we 
have here is a story of smuggling going on, even though there 
was an embargo and kickbacks, in the sale of oil, the proceeds 
of which were supposed to provide food for the Iraqi people. 
Mr. Fawcett, is that what we are looking at?
    Mr. Fawcett. Yes, that's right.
    Mr. Waxman. Okay. And the kickbacks, from what we know from 
these documents and otherwise, were to whom? To countries, to 
individuals, to oil companies?
    Mr. Fawcett. The kickbacks were sent back to bank accounts 
in Jordan largely. And the accounts were, depending on the 
humanitarian side, the accounts were registered to the relevant 
ministry. And my understanding of the mechanism, that the 
signators from that ministry, as soon as the money was 
received, sent it on to another bank account of which they 
didn't know much about, implying that it was going to either 
Saddam's family or to the Iraqi intelligence.
    Mr. Waxman. I see.
    Dr. Gordon, was the U.N. supposed to be monitoring this 
whole program to provide some kind of transparency?
    Ms. Gordon. The whole program meaning the Oil-for-Food 
program?
    Mr. Waxman. The Oil-for-Food program.
    Ms. Gordon. Again, I think you have to start by not 
speaking of the U.N. as a whole. I think that it is easy to not 
see how things function if you only look at, quote, the U.N. 
What is really important is to look at what were the 
obligations and responsibilities of the Secretariat, which 
included the OIP, the Office of Iraq Programs, and what were 
the responsibilities and obligations of the Security Council. 
Obviously both are within the United Nations, but as we talk 
these days about whether Kofi Annan should step down or what 
the failures were on the part of Secretariat or whether the 
U.N. as a whole needs to be reformed, what is really crucial is 
to say who exactly made what decisions, when. Who exactly had 
what oversight responsibilities?
    Mr. Waxman. What was the committee, the 661?
    Ms. Gordon. It was a committee of the Security Council that 
mirrored the Council. There were 15 members, one from each 
member state of the Security Council. It operated by consensus, 
so any member of 661 committee could veto any matter at any 
point for any reason.
    Mr. Waxman. And so they were supposed to oversee the 
program.
    Ms. Gordon. That's correct.
    Mr. Waxman. And the U.S. was part of that?
    Ms. Gordon. Yes, of course.
    Mr. Waxman. And this committee signed off on all the deals?
    Ms. Gordon. That's correct. More than signed off. Had full 
knowledge at every point. That was what the U.N. staff of the 
Secretariat did, and did very well. They provided information. 
They provided advising. If I could identify one particular 
decision of the Security Council, as the Congressman before was 
looking at Mr. Smego's documents--and we have heard a great 
deal about the vouchers that went to Russians, the vouchers 
that went to French officials, and it is as though this is new 
information or somehow surprising that Saddam Hussein would use 
oil sales to garner political leverage. In fact, that was an 
explicit decision on the part of the Security Council when it 
passed Security Council Resolution 986 on the memorandum of 
understanding, which is, it was an explicit decision to give 
Iraq the right to choose its trade partners both for import 
contracts and for oil sales. It was understood at that time 
that Iraq was likely to use that to get--for political 
leverage.
    As we see, the memo consisted of vouchers and secret 
vouchers. In fact, as far as I can see, those vouchers are 
nothing other than the bookkeeping device by which the Iraqi 
Government exercised the right that the Security Council gave 
it to choose its trade partners.
    Mr. Waxman. Would the U.S. have known about this?
    Ms. Gordon. Of course.
    Mr. Waxman. And so the U.S. Government, as part of the 
Security Council committee 661, was aware that they were giving 
Saddam Hussein the power to do the kinds of things he had done 
in the past: provide corruption and kickbacks and such.
    Ms. Gordon. Of course. I mean----
    Mr. Waxman. Let me just settle with that, of course, 
because I wanted to pursue another matter with Mr. Smego, and 
maybe someone else will follow up on this. Mr. Smego, the 
committee asked you to review several documents from SOMO, the 
Iraqi State Oil Marketing Organization. And I'd like to ask you 
to review another SOMO document which was handed to you by my 
staff, if I may. First, could you please verify for the 
committee that this document is on or purports to be on SOMO 
letterhead and is signed by the General Manager of SOMO, 
Mohammad al Jabari?
    Mr. Smego. No, I cannot.
    Mr. Waxman. You cannot. In looking at it, does it appear to 
be on SOMO letterhead?
    Mr. Smego. I have never seen such letterhead.
    Mr. Waxman. Okay. Have you ever seen SOMO letterhead?
    Mr. Smego. Yes, I have.
    Mr. Waxman. And this is different letterhead than SOMO 
company letterhead?
    Mr. Smego. It is different from all of the other SOMO 
letterhead that I have seen.
    Mr. Waxman. It is different. Okay. Could you look at the 
highlighted text of this letter and verify that it says, SOMO 
purchased gasoline to import into Iraq for approximately $1 per 
gallon. I believe the text reads quote, ``U.S.D. 347 per metric 
ton delivered to Baghdad, which is about $0.98 per gallon,'' 
end quote.
    Mr. Smego. I can verify that it is not in Arabic nor that I 
have translated the document. It is the first time that I have 
ever seen it.
    Mr. Waxman. But you can verify that's what it says on this 
piece of paper.
    Mr. Smego. In English, I see that; yes, sir.
    Mr. Waxman. Okay. So SOMO, according to this document, was 
importing gasoline into Iraq for less than $1 per gallon. And, 
Mr. Chairman, I am going to ask that this letter be made part 
of the hearing record.
    Mr. Whitfield. I would ask the gentleman where did this 
letter come from?
    Mr. Waxman. Well, let me withdraw my request because I 
don't want to use up my time for questions.
    Ms. Gordon, let me turn to you. Suppose a French company 
had a separate contract to bring gasoline into Iraq, that this 
French company was being paid out of Oil-for-Food funds and 
that that French company charged not $1 per gallon but more 
than $2.50 per gallon. Would you agree that someone at least 
ought to examine that discrepancy and figure out why a French 
company was allowed to charge 250 percent higher than normal 
Iraqi price?
    Ms. Gordon. I'm sorry. A French company to import----
    Mr. Waxman. If we found out a French company was charging 
250 percent higher than normal Iraqi price, wouldn't that 
discrepancy call out for some examination?
    Ms. Gordon. I suppose so.
    Mr. Waxman. If I also told you this French company got this 
contract in secret and that no other companies were allowed to 
bid on it, wouldn't that be a factor for someone to look into? 
Wouldn't that raise suspicion?
    Ms. Gordon. I would expect so.
    Mr. Waxman . Well, Mr. Chairman, this is not a hypothetical 
example I invented. This is a real case. But it didn't happen 
under the Oil-for-Food program. It happened under the 
Development Fund for Iraq under the Bush administration. And it 
wasn't a French company, it was an American company; it was 
Halliburton. The administration gave Halliburton its contract 
in secret, in a no-bid process. It excluded all other 
companies. The Pentagon's own auditors have now determined that 
Halliburton overcharged by more than $212 million under this 
contract. And even though the administration paid Halliburton 
with Iraqi funds from the DFI, it intentionally concealed these 
overcharges from the United Nations.
    My point is not to detract from the Oil-for-Food 
investigation, but to demonstrate that if these actions had 
been committed by a French company or by the French Government 
under the Oil-for-Food program, we undoubtedly would have had 
dozens of hearings by now. But presumably because it is 
Halliburton and the Bush administration, we have had none. This 
hampers the legitimacy of all our efforts, and I hope the 
committee will remedy that disparity very soon.
    Dr. Gordon, how would you compare the transparency of the 
American handling of the Iraqi oil funds with the transparency 
of the U.N. handling or the Security Council handling the Iraqi 
oil funds?
    Ms. Gordon. Well, as I said earlier, there are seven levels 
of oversight just for import contracts, and another set of 
separate controls for oil sales. What is the case is that with 
the Oil-for-Food program, to the extent that there were 
improprieties, they happened not because of an absence of 
oversight or accountability, but, in fact as large as these 
numbers sound to us, they happened at a marginal level. They 
happened around the edges. They happened on isolated occasions 
and they happened despite an elaborate, consistently 
implemented system of oversight at least on the part of U.N. 
personnel.
    By contrast, if you look at Security Council Resolution 
1483, which is the resolution that recognized that the 
occupation authority systematically eliminates all of the forms 
of oversight that were in place under the Oil-for-Food program, 
it replaces them with certain other forms of transparency in 
some cases, and some forms of oversight are not replaced at 
all. And as I believe you mentioned earlier, we have already 
seen a huge spate of reports coming out from the inspector 
general of the CPA itself, from the Defense Contract Auditing 
Agency, and from KPMG Bahrain, which is the auditor retained by 
the International Advisory Monitoring Board, all of which 
indicate a level of corruption and mismanagement that quite 
frankly dwarfs the most extreme of the accusations against the 
Oil-for-Food program.
    Mr. Waxman. Thank you. Mr. Chairman, I want to renew my 
request to put the letter in. And you asked where I obtained 
the letter. The letter was----
    Chairman Barton. Mr. Chairman, I object.
    Mr. Waxman. I thought the chairman of the full committee 
indicated that we work on a bipartisan basis and take 
documents----
    Chairman Barton. I will do that. But I am objecting to this 
request because it has not been done on a bipartisan basis.
    Mr. Waxman. Well, we did furnish it to the majority staff. 
And if I might further tell you about this document, this was 
sent to the staff.
    Chairman Barton. You can tell me about it off the record. 
But I am going to object and I want to make a statement as soon 
as your time has expired.
    Mr. Waxman. Well, if you want to make a statement, then I 
want to make a statement; because I don't know what you are 
going to say, but it sounds to me like a pretty negative one 
about even trying to find out that SOMO has indicated to us 
through a document they sent to us, that they were angry about 
Halliburton getting so much more money than they were in 
providing gasoline to Iraq.
    Chairman Barton. Mr. Chairman, I think the gentleman's time 
has expired.
    Mr. Whitfield. I might also just add that on this document, 
in and of itself, I see no mention of Halliburton in here at 
all. I mean the name Halliburton does not appear anywhere in 
this document. And I guess because the chairman has objected, 
so----
    Mr. Waxman. Well, Mr. Chairman, the other audits we 
provided DCAA, the auditor for the Pentagon, has indicated that 
Halliburton was paid from Iraq funds run by the U.S. 
administration in Iraq, and they also indicated that there may 
be as much as $200 million that have been overpaid in excess of 
what the gasoline would have charged.
    Mr. Whitfield. The other reports have been entered into the 
record in their entirety and not by excerpt. But the 
gentleman's time has expired. And at this point I would call on 
the gentleman from Texas.
    Mr. Waxman. Point of order, Mr. Chairman.
    Mr. Whitfield. Yes.
    Mr. Waxman. The gentleman from Texas has had his time for 
questioning. If he is going to be recognized, and I certainly 
don't object to it----
    Mr. Whitfield. No, I was getting ready to recognize----
    Mr. Waxman. If he is going make a statement that pertains 
to anything that I have asked about, are you going to out of 
order allow me to----
    Chairman Barton. Parliamentary inquiry, Mr. Chairman. Does 
the Chair have the right of recognition?
    Mr. Whitfield. Yes.
    Chairman Barton. Has the Chair recognized the gentleman 
from Texas?
    Mr. Waxman. I asked a point of order, which is a higher 
form of parliamentary inquiry.
    Mr. Whitfield. Just a minute. I was getting ready to 
recognize Dr. Burgess of Texas for his question-and-answer 
period. So does anyone object? If not, I am going to call on 
Dr. Burgess for his 10 minutes.
    Chairman Barton. Well, Mr. Chairman I thought you had 
recognized me. Did you not recognize me?
    Mr. Whitfield. I was recognizing the gentleman from Texas 
for his questions. But I would be happy to recognize the 
chairman of the committee.
    Chairman Barton. Okay. And I will yield to Mr. Waxman. But 
I have a statement that I want to make and then I will be happy 
to yield to the gentleman from California.
    Mr. Whitfield. Okay.
    Chairman Barton. We have operated this subcommittee, as far 
as I know, for the last 20 years under both Democrat and 
Republican, in a bipartisan fashion when it came to document 
presentation. Now, I am told that the documents in the binder 
have been shared with the minority staff for at least a month. 
If that is in error, I need to be told that.
    The documents the gentleman from California has twice tried 
to get into the record have not been shared with anybody until 
they showed up at this hearing. Now, if the gentleman from 
California has documents that he wishes to be put into the 
record, if he would share them with the majority staff in an 
appropriate fashion, in all likelihood they would be entered 
into the record. But showing up at a hearing and having these 
surprise documents asked to be put into the record by unanimous 
consent is not going to be tolerated. If you have got 
documents, share them with the majority staff and we will work 
it out and we will put them in the record.
    That is what I am objecting to. I am not objecting that you 
have a document. And if it is a legitimate document, and is a 
part of the hearing record it will be put in. But this is the 
second time, Mr. Waxman, in one hearing that you have presented 
documents to go into the record that I am told we have not seen 
until hearing. That is what I am objecting to, and I will be 
happy to yield to my friend from California.
    Mr. Waxman. Well, Mr. Chairman, I have no knowledge when 
you provided our staff with this binder, but we are told it was 
last Thursday. But that is not the point for me. We, as part of 
the investigation on the Government Reform Committee, received 
the documents from SOMO--which is of two pages--before this 
hearing was ever called. The other documents----
    Chairman Barton. Reclaiming my time. When did you share it 
with the majority staff?
    Mr. Waxman. Well, when we walked into the hearing.
    Chairman Barton. Today?
    Mr. Waxman. Yes.
    Chairman Barton. Today. And how long have you had it?
    Mr. Waxman. Well, let me finish what I am saying to you, 
because I think you are misreading what we are doing here. I 
had some questions about the other documents that I put into 
the record which are already out, and I am sure each of these 
witnesses has heard about them. And that is the Special 
Inspector General Stuart Bowen's report of maybe $9 billion 
having been lost from the Iraq funds since the U.S. took over 
the Oil-for-Food funds. This is not a surprise I have pulled on 
the committee. These are documents that have been well reported 
in the press. And maybe if the chairman would permit----
    Chairman Barton. Well, reclaiming my time.
    Mr. Waxman. Let me finish my thought.
    Chairman Barton. I have the time. I have yielded to you 
because I believe in a full and fair debate.
    Mr. Waxman. And you have cut me at least two times.
    Chairman Barton. But it's my time.
    Mr. Waxman. You've cut me off two times.
    Chairman Barton. It's my time. Now, you have been a valued 
member of the full subcommittee since before I was even in the 
Congress, I think. Now I don't know how long you've been on the 
subcommittee, but you have been on the subcommittee a long 
time. You were a former subcommittee chairman of this committee 
when your party was in the majority. You, more than anybody, 
know that to have these investigations and these hearings, 
documents and materials need to be shared. You, more than 
anybody, should know that you don't walk into a hearing the day 
of the hearing, if you're trying to be cooperative, and spring 
documents.
    Now, if they are legitimate documents, they deserve to be a 
part of the record. My objection is not whether these documents 
are good, bad. My objection is that twice in one hearing, a 
senior member of the minority, who's a former subcommittee 
chairman when you were in the majority, has tried to put 
documents in the record without vetting them through the normal 
process. That's my objection. If you're willing to stipulate 
that you'll use the normal procedure with the minority staff 
and Mr. Stupak and his staff on this subcommittee, we won't 
have a problem.
    Mr. Waxman. Will the gentleman yield to me?
    Chairman Barton. I'll be happy to yield.
    Mr. Waxman. I want to point out the essential point that I 
made in the very beginning. This is the 13th hearing on the 
Oil-for-Food program from Iraq. And I am critical of the fact 
that we have had zero hearings on the U.S. use of the Iraqi oil 
funds. And therefore, I have raised the issue because it is an 
investigation that I and my staff have been pursuing without 
any cooperation from this committee.
    Now, I appreciate your berating me on an issue of whether I 
shared these documents in time, which are already in public 
record. But I am going to berate you because I think the 
Republican leadership should be looking into both issues, the 
Oil-for-Food mismanagement and the mismanagement by the U.S. 
Government of billions of dollars, $9 of which have been lost 
or laundered or absconded with under the direct jurisdiction of 
the U.S. Government.
    So I hope you would take it into your thought process that 
perhaps we ought to expand our investigation, and I'd be happy 
to work with you on that.
    Chairman Barton. Well, reclaiming my time. I am not aware 
of one instance the gentleman from California has come up to me 
and asked for my help or cooperation in anything you just said.
    Mr. Waxman. Well, consider yourself asked.
    Chairman Barton. Maybe you have and I've just got a bad 
memory, which is quite possible. But I don't recall it. Now, 
are you----
    Mr. Waxman. I recall that we have had another hearing of 
this committee on this issue, and at that time I raised the 
concern that we were looking at the Oil-for-Food program and 
not paying any attention to the U.S. administration of the Iraq 
oil funds. That was on the record and we can get the transcript 
for it. You maybe didn't pay attention to it because I am only 
a Democratic member of the committee. That may be true. But I 
think it's worth investigating.
    Chairman Barton. Reclaiming my time, this member of the 
majority is the person who, on the House floor during the 
energy bill, asked unanimous consent that you could offer your 
amendment, when you weren't on the floor to offer it. That is 
who this member is. That is who this member is who has tried to 
go above and beyond to make sure that regardless of the 
majority or minority, if you're a member of this committee, all 
your rights are adhered to. The gentleman well knows that.
    Mr. Waxman. And I appreciate that and thank the gentleman 
for it. But this is not a personal matter. This is a matter of 
public concern, and if we are going to look at the kickbacks 
and corruption and use of funds that should be directed to 
helping the Iraqi people, I think we are not only looking at 
one side of it, perhaps for political purposes, justifiably so, 
because I think it is worth pursuing, but we also ought to look 
at the $9 billion that have been lost or unaccounted for when 
the U.S. Government was in charge directly, and the failure of 
the U.S. Government to handle in a transparent manner, or even 
provide the U.N. the information about what was happening there 
when we were operating pursuant to a U.N. resolution.
    I thank the gentleman for allowing the further discussion 
of this matter. And if you still object for my document which I 
questioned the witness to be in the record, I will accept that 
fact. But the gentleman did have it before him and we will make 
it available to anyone.
    Chairman Barton. I just want the documents vetted by the 
majority staff. And if the staff says they are acceptable, I am 
not opposed at some point in time to them being in the record. 
But I do strenuously object to the process, and if we don't get 
agreement on the process, then there will be an objection every 
time on process.
    Mr. Stupak. Mr. Chairman, if I may.
    Mr. Whitfield. Yes, Mr. Stupak.
    Mr. Stupak. Mr. Chairman, if I may, I would request that, 
No. 1, we give Mr. Waxman some time to lay a foundation on 
where this document came from. If it's part of a public record, 
I don't know why it would not be admitted into the record. And 
I would ask that we give him 3 days or so to at least be 
allowed to submit this for the record, provided a foundation 
can be established.
    Mr. Whitfield. Well, I would ask that he vet it through our 
staff. And then I would also just like to reiterate what 
Chairman Barton said; and that is we do--have had a policy of 
sharing documents, maybe not months in advance, but I know that 
this binder on the Oil-for-Food program was provided 6, 7 days 
ago. And I do think that it is not fair to bring documents up 
here that day, that we have never seen, and start testifying 
from them. And particularly in this document, there is nothing 
on this document whatsoever relating to Halliburton. 
Halliburton is not in any way referenced.
    But at your request, I think that we will get the document 
and work with the staff and make some decision. But at this 
point, an objection has been made to admitting it into the 
record.
    Mr. Waxman. Mr. Chairman, might I just point out that we 
are talking about two pages? You have a binder of many other 
documents. I wonder what happens next. Are we supposed to 
submit our intended questions of the witnesses to the 
Republican staff as well, to see if those are going to be 
permitted to be asked? Because it seems to me that that is the 
direction in which this committee is going. And I certainly 
hope that is not the case.
    Mr. Whitfield. I don't think that's necessary.
    Mr. Waxman. But I had asked about it, this document. I 
would be pleased to write a letter to the chairman and he can 
include it in the record or not. But this is a document that we 
received from the State Oil Marketing Organization that works 
for the Iraqis in dealing with their oil, and they were getting 
paid a lot less than what we were paying Halliburton to bring 
in gasoline into Iraq at the same time, and that ought to be 
investigated. I wish the committee would investigate that as 
well.
    Mr. Whitfield. Okay. Mr. Waxman, thanks for your comments. 
Now, I want to call on the gentleman from Texas, Dr. Burgess, 
for his 10 minutes of questions.
    Mr. Burgess. Thank you, Mr. Chairman.
    Dr. Gordon, in reading through your testimony on paragraph 
1, the effectiveness of the program, you write, ``I think it is 
important to begin by recognizing that the Oil-for-Food program 
and the U.N. staff involved were in fact tremendously 
successful at raising the quality of life for the Iraqi 
population.'' I'm sorry, I just find that an incredible 
statement to make. I'm astonished by that. But you back it up 
with measurement and I guess what I would like to ask, if I 
could, is that you will provide us some documentation for the 
statements that then follow.
    Is this something that you have personal knowledge of, 
something that has been provided to you by the U.N. or UNICEF? 
Because it just doesn't square at all with what I saw myself 
when I was in the country of Iraq in August. You said the 
health care system was much better able to meet its 
population's needs. I was in Al Majar Hospital in August 2003. 
That place was physically decrepit. There was no reliable 
running water. The sewer system was just open into the 
courtyard . Flies were everywhere. The doctors complained that 
the medicine they had under Saddam were worthless, and, in 
fact, they'd have suffered greatly if Kuwait hadn't started a 
massive humanitarian influx of medication to the country of 
Iraq shortly after Saddam fell.
    I was in their NICU. There wasn't any piped-in medical gas 
nor was there any provision for any medical gas. There was an 
infant there, clearly a premature infant, probably small for 
gestational age as well, who clearly had what I would 
characterize as rather significant respiratory distress 
syndrome and had no oxygen on. I suspect that that child was 
probably dead before nightfall.
    I'm sorry, but I don't see that that is a good system that 
was brought to the people of Iraq under the Oil-for-Food 
program. And mind you, at the same time the palaces that we 
went into, granted there was some damage from the combat phase, 
but the palaces that we went into were absolutely spectacular, 
with marble overlays on everything, marble floors, certainly 
comparable to anything we have here in the United States 
Capitol. So can I ask you to just discuss that statement a 
little bit?
    Ms. Gordon. Well, sir, I would be happy to do you the 
dubious favor of giving you more than you would ever want to 
read on this. You could start, if you want to, by going to the 
Web site for the Office of Iraq Program. And you can at that 
spot download reports, more reports than I promise you will 
want to read by UNICEF----
    Mr. Burgess. Well, reclaiming my time, because I do have 
several things I want to get to. It certainly doesn't square 
with what I saw on the ground, and I'll believe my eyes before 
I'll believe a U.N. Report. Mr. Fawcett----
    Ms. Gordon. Sir, I wonder if I could answer your question 
with 1 minute, which is to say what happened between 1996 and 
2003 was that the situation, which was far far worse prior, was 
significantly improved. Remember, there had been a collapse 
from 90 to 96. From 96 to 2003 the level of food, nutrition, 
nearly doubled. The level of improvements in the health care 
system from 96 increased significantly. Electricity 
availability increased significantly. Availability of potable 
water increased significantly.
    I'm not saying it's a good system. I'm not claiming that at 
all. I am saying, by every measurement of every humanitarian 
agency there, between 96 and 2004, under the Oil-for-Food 
program, there were substantial improvements in the quality of 
life.
    Mr. Burgess. Reclaiming my time, probably those are 
Saddam's statistics. But I'll just tell you, what I saw in the 
palaces was a significant investment of capital. And if one-
tenth of that capital had been put into those hospitals, those 
children wouldn't be suffering.
    Mr. Fawcett, I'd like to ask you for your response to that.
    Mr. Fawcett. All of the statistics upon which these 
judgments are made are Iraqi Government statistics. The U.N. 
reports in the late- or the mid-1990's that were used to raise 
the public awareness of all the children dying and build the 
fear of the Security Council that allowed that, forced them to 
give in to Saddam on these, were later proved to be false. 
These U.N. reports were retracted because they were based upon 
phony Iraqi Government statistics. That continued up till the 
time Saddam left.
    Mr. Burgess. Well, Mr. Fawcett, when you were giving your 
testimony, you ran out of time. And I believe you made the 
statement that you would like to talk about what the U.N. could 
have done, and perhaps you could take a minute and just tell us 
that.
    Mr. Fawcett. I think the first thing they could have done 
was not to circulate bad standards, circulate the Iraqi 
Government statistics aggressively, using them in a PR campaign 
to ease sanctions. They knew the statistics were bad. Maybe 
they couldn't do anything about that, about the gathering of 
the statistics. But they did not have to actively disseminate 
them, knowing they were false. So that is No. 1.
    Second, the whole program should have had transparency. 
There was none. There's a lot of documents that were published, 
virtually all of them are useless if you're trying to look into 
who's making money here and how are they making it. It's--the 
U.N. is great at putting out reports. But there's no detail in 
that report. There's no company names. There's no pricing of 
the commodities, things that the U.N. could have published 
anytime they wished. They did not need Security Council 
approval to do so. They could have been very transparent. In 
fact, when the Security Council was obstructive to the United 
Nations, as they were, as I absolutely agree they were, the 
U.N. could have gotten around that by just publishing documents 
and saying this is wrong. This is wrong. They failed to do so. 
They kept saying this is proprietary information, when this was 
a humanitarian program in a country under sanctions. The normal 
business rules should not have applied as far as keeping data 
secret. They could have published documents at any time. And 
had they done so, they would not be in the bind they are now. 
All the allegations of corruption against the Secretary General 
would have been dealt with long ago.
    Mr. Burgess. I guess I do find it odd that the costs for 
baby formula could be inflated by 25 percent in an organization 
that has as its mission disseminating that product around the 
world. I mean, how do you miss a 25 percent overcharge for 
Similac?
    Mr. Fawcett. That one puts me through the roof. It 
absolutely does.
    Mr. Burgess. Well, let me just ask you a question that I 
know is on the minds of my folks back home. Did the Secretary 
General have no decisionmaking role in setting the terms of 
this program?
    Mr. Fawcett. I'm sorry. I didn't understand.
    Mr. Burgess. Did the Secretary of the United Nations have 
no role in setting the parameters for this program?
    Mr. Fawcett. The current Secretary General was the first 
one to begin negotiations. The Iraqis actually liked him. He 
was replaced in 92 with another series of people that took a 
little bit harder line, and the Iraqis didn't like them. The 
Secretary General at the time that the program came into play 
was clearly a friend of the Iraqis, and that is another of the 
problems that we have seen early in the program. They should 
have gone to a far more competitive bidding process for the 
monitors and the banking. And now as we see from the Volcker 
Commission, it was the Secretary General himself that was 
manipulating the system.
    Mr. Burgess. Well, can you estimate the percentage of the 
kickbacks that might have been prevented had more thorough 
price checking been performed?
    Mr. Fawcett. I think at least half; without too much 
problem, half of the kickbacks could have been prevented. And I 
base that upon the fact that most of the goods going in are 
commodities. We know that some of the most difficult ones, gas-
fired turbines from China, would be difficult to determine the 
price. Absolutely. But wheat from Australia, baby formula, 
milk, medicines from Pakistan or Switzerland, that's easy to 
do.
    Mr. Burgess. Well, besides just the dollars, were there any 
other warning signs that Saddam was charging kickbacks on the 
goods or contracts under the program?
    Mr. Fawcett. Shady operations. Companies with no backing, 
no background. While it's correct to say that it's the member 
states that put those companies forward, the U.N. Could have at 
any time said this one looks shady to us. But instead, they 
found themselves dealing with money launderers, with organized 
crime, and with terrorists.
    Mr. Burgess. And as my time is about expire, any other 
issues that the United Nations might have taken up to prevent 
this from going as far as it did?
    Mr. Fawcett. Courage, which they failed at.
    Mr. Burgess. Mr. Chairman, I'll yield back.
    Mr. Whitfield. Thank you, Dr. Burgess. At this time I will 
recognize Ms. Blackburn for 10 minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman.
    Dr. Gordon, I think I'd like to come to you first. I want 
to--you've talked a lot about the Oil-for-Food program and the 
comments and the responses that you have made. And so the 
question I would like to ask you is if you feel like, if I am 
understanding you right on this, do you feel like--do you 
think--is it your opinion that the Oil-for-Food program was 
adequately run, adequately and properly managed and given 
appropriate oversight? And if so, would you recommend that the 
United States participate in such programs in the future?
    Ms. Gordon. Again, I need to break it into which parts of 
the U.N. had responsibilities.
    Mrs. Blackburn. Go ahead. Very quickly.
    Ms. Gordon. So specifically the decision to allow Iraq to 
choose its trade partners. It was understood at the time that 
that would give Iraq considerable political leverage. If the 
Security Council members had not wanted to do that, it would 
have been easy enough to design the program without that.
    If you go to the other side of the fence, as it were, the 
U.N. staff, whose only responsibility under the Secretary 
General was to monitor, to provide information, to advise the 
661 committee, not to make substantive decisions and not to 
design the program itself, by every account I've seen they did 
their job and they did their job well. The program was not 
designed or created by the Secretary General. It was created 
pursuant to Chapter 7 of the charter, which puts it directly 
under the control of the Security Council.
    Mrs. Blackburn. Okay. So I'm going to interrupt here. In 
other words, what you're telling me, then, is with the 
monitoring and the advice mechanisms, it is your opinion that 
it was adequately run and adequately and properly managed.
    Ms. Gordon. I would say the flaws that we have identified 
have to do with----
    Mrs. Blackburn. Okay. And would it be your advice that we 
embark on such programs in the future?
    Ms. Gordon. Well, I think comprehensive sanctions on any 
country are destructive.
    Mrs. Blackburn. All right. Okay. What do you know of the 
Iraq steering committee and its administration of the Oil-for-
Food program?
    Ms. Gordon. By the Iraq steering committee you mean the 661 
committee? I am fairly familiar with how the 661 committee 
operates.
    Mrs. Blackburn. Do you think we ought to bring them before 
Congress? Do you think we should bring them before this 
committee to answer questions?
    Ms. Gordon. My understanding is that so far the State 
Department has declined to provide any of its participants on 
the 661 committee.
    Mrs. Blackburn. Okay. Let me ask you something else then. 
Do you think that there should be independent storage 
facilities to store U.N. documents in order to investigate 
further occurrences? Or, as we heard today, getting in behind 
this one might help lead us to others and other abuses and 
things. So do you think we need to set aside a facility to hold 
all of these documents?
    Ms. Gordon. I have no opinion on the mechanics of where you 
want to store documents.
    Mrs. Blackburn. All right, thank you. You know--and I 
appreciate your answers to my questions. I will have to tell 
you in my district in Tennessee, if you want to talk about 
something that gets the dander up of a lot of my constituents, 
it is talking about the waste, the fraud, the deceit, the 
despicable acts that took place with the formula program. That 
is, those are all things that really cause people to be 
incredibly, incredibly upset. And I appreciate your answering 
our questions.
    Mr. Fawcett I would like to come to you, if I may, please, 
sir. How extensive do you think the ties were between Sevan and 
Saddam at the time that all of this was beginning to take 
place, and how do you think it was that Sevan ended up being 
picked as the OIP director?
    Mr. Fawcett. That's a good question which I don't think we 
know the answers to.
    Mrs. Blackburn. Okay. Do you have insight that you can 
provide me?
    Mr. Fawcett. No further than what the Volcker Commission 
has come out with. However, I have encouraged the Volcker 
Commission to continue going down that path because I do not 
think we have gotten to the end of it. One of the trails that 
needs to be pursued is what is the money flow to Benon Savan, 
because I think if we start to peel that one back, we may end 
up shedding light again on longer-running money laundering 
structures of Saddam Hussein.
    Mrs. Blackburn. Okay. Let's go, at the same point, to Chief 
of Staff Riza and the relationship with Sevan. And do you think 
that they collaborated and worked together on much of this, and 
on some of the oil allocations?
    Mr. Fawcett. I haven't seen anything that shows that they 
collaborated. My understanding of the way Mr. Sevan ran his 
operation was that he was very insular and was not out going 
and collaborating with a lot of other senior U.N. officials.
    Mrs. Blackburn. What role do you think that Chief of Staff 
Riza might have played in the management of the program?
    Mr. Fawcett. I don't really know.
    Mrs. Blackburn. You don't know. Okay. Do you think Kofi 
Annan was aware of much of Sevan's activities?
    Mr. Fawcett. I wouldn't go as far as to say he was aware of 
the illicit activities that have been alleged. However, he was 
fully aware of the potential for that, fully aware that the 
Iraqis would attempt to do just what they did, attempt to bribe 
senior public officials around the world and in the U.N. . So I 
think he is culpable of not exerting executive authority over 
that program.
    Mrs. Blackburn. Okay. And then Boutrus Boutros-Ghali, what 
ties do you think exist between him and Saddam and 
administration of the Iraq escrow account; or do you think 
there were any?
    Mr. Fawcett. Certainly he had an awful lot of influence on 
the selection of the bank. That has become clear from the 
Volcker investigation, which showed no transparency process 
whatsoever. It was a manipulated process between the French and 
the Iraqis.
    Mrs. Blackburn. Do you think the French Government played a 
role in that?
    Mr. Fawcett. Yes, they did.
    Mrs. Blackburn. Let's see, I have got a couple of minutes. 
Mr. Chairman, I yield back. Thank you.
    Mr. Whitfield. You have no further questions?
    I call on Dr. Norwood for 10 minutes.
    Mr. Norwood. Thank you very much, Mr. Chairman.
    I would like to tell you something about this hearing. It 
is the most partisan one I've seen in a long time, and it is 
hard for grownups to understand and solve a problem when half 
the group is trying to change the subject. This is about the 
Oil-for-Food program, and we do need to understand it, and our 
people at home want to understand it.
    Dr. Gordon, you are an associate professor, are you not?
    Ms. Gordon. Correct.
    Mr. Norwood. Are you a lawyer?
    Ms. Gordon. I am both. I have a Ph.D. In philosophy and a 
J.D. In law.
    Mr. Norwood. How long have you been teaching?
    Ms. Gordon. In a faculty capacity since 1993. I taught as a 
graduate assistant prior to that.
    Mr. Norwood. Do you get up to the U.N. a lot, spend a lot 
of time up there?
    Ms. Gordon. I conduct some interviews from time to time.
    Mr. Norwood. Do you go up once a month or are you there 
annually? I am impressed with your knowledge of the U.N. It 
sounds like you are there every day.
    Ms. Gordon. I'm not there every day.
    Mr. Norwood. You are getting it from the Internet, I guess.
    Ms. Gordon. I get documents from all sorts of sources.
    Mr. Norwood. But you are having some pretty strong opinions 
on documents from all sources, and I'm sort of curious about 
that.
    Ms. Gordon. I'm also familiar with all of the scholarly 
literature in this area. I have conducted dozens of interviews 
with U.N. officials and diplomats.
    Mr. Norwood. Do you spend a lot of time up at the U.N. that 
led you to believe some of the things that you have been saying 
today? My understanding was you just decided to come testify 
Friday morning, is that about right?
    Ms. Gordon. I was called on Friday morning and invited to 
testify, and I accepted.
    Mr. Norwood. Do they offer to let you see these documents 
that have been translated?
    Ms. Gordon. No.
    Mr. Norwood. You haven't had an opportunity to read these?
    Mr. Norwood. I would love it if you would and report back 
if you have changes in attitude or thoughts about what your 
testimony is.
    Ms. Gordon. These are the documents that Mr. Smego 
translated in the binder?
    Mr. Norwood. Yes. The minority has that, and it would be 
helpful for you to read it. I would like to ask you if you 
think economic sanctions are a good thing anytime, anywhere.
    Ms. Gordon. In general, what the studies on economic 
sanctions demonstrate is the most optimistic, which is the 
Huffnauer-Shartenelli data base from the 1980's and more 
recently the 1990's, that in about a third of the cases they 
are a factor in changing and influencing the behavior of the 
target state.
    Mr. Norwood. Did that lead to the document, Using a Pick 
Axe for Brain Surgery, that you wrote?
    Ms. Gordon. The title, which was----
    Mr. Norwood. No, the subject.
    Ms. Gordon. The title is a little inflammatory. The subject 
of that particular paper is the notion that because economic 
sanctions necessarily impact the civilian population that there 
is no way of, let's say just in war doctrine, discriminating 
between civilians----
    Mr. Norwood. Let me ask you--I can't tell where you are on 
this exactly. It seems to me that you believe everything in the 
Oil-for-Food program worked perfectly and the U.N. acted 
correctly, or are you saying all of the things stated actually 
have happened, things that we are hearing today, things that 
none of us would be very much for, but all of that could have 
been stopped if only the United States would have stopped them? 
Where are you?
    Ms. Gordon. I think it is probably not either of those two 
positions.
    Mr. Norwood. Your testimony implies the first one. Your 
statements and some of the things you said imply the second 
one.
    Let me go to Mr. Fawcett.
    Ms. Gordon. I wonder if I could have a chance to answer 
that.
    Mr. Norwood. Hold it for a minute. I am watching the clock. 
I will get back to you. Let me----
    Some people--Dr. Gordon is a good example--claim that the 
Oil-for-Food program was tremendously successful in helping the 
Iraqi people. Do you agree with that assessment?
    Mr. Fawcett. I don't think we have any data to show how 
many people it has helped and to what degree and qualitatively 
it has. I would point out one survey that was done in the last 
year by the U.N. in which the amount of people that they claim 
are totally dependent upon their aid has dropped from 60 
percent of Iraq to 25 percent, which means 35 percent of Iraq, 
7 to 8 million people, are now far better off. So either this 
invasion was the greatest humanitarian act----
    Mr. Norwood. The Oil-for-Food program is what I am asking, 
though. Has that been successful?
    Mr. Fawcett. I don't think we have any data to show what 
success or failures it has had.
    Mr. Norwood. What you are saying is you believe nobody 
could actually determine that at this point?
    Mr. Fawcett. No one could determine it.
    What the U.N. has constantly said is 60 percent of the 
Iraqi people were totally dependent. In my experience in the 
humanitarian field for 10 to 15 years, I have not seen any 
population of which 60 percent will sit in their homes waiting 
for food to be delivered. It doesn't happen.
    Mr. Norwood. Dr. Gordon went on to state that the U.N. 
provided considerable information and data about the Oil-for-
Food program. Do you agree with that?
    Mr. Fawcett. The data that was essential to stop any of the 
corruption was not released. The only data that came out was 
inadvertently leaked from the U.N. on occasion. This is the 
data that mentions company names and mentions pricing. None of 
the other data is relevant to preventing corruption.
    Mr. Norwood. Well, it appears to me that we are not getting 
the information or at least Congress is not getting the 
information as required. Dr. Volcker would be a good example of 
that. So it couldn't very well be said that we are getting 
correct information, at least in my opinion, from the U.N. Is 
it true that the Secretary had no decisionmaking roles in 
setting the terms of the Oil-for-Food program?
    Mr. Fawcett. That is not true. The Secretariat had ongoing 
daily decisionmaking capacity. The oversight was by the 
Security Council, and they could step in at any time. But all 
the data that was being passed to the Security Council, the 
options for the program, how it would change, were being 
provided by the U.N. itself.
    Mr. Norwood. Is the Secretary a hands-on kind of fellow? 
Does he delegate and just sort of didn't know what was going on 
or do you think he knew what was going on?
    Mr. Fawcett. I think he knew what was going on, yes.
    Mr. Norwood. Do you think the oil voucher system was mostly 
a benign recordkeeping system of Saddam's regime?
    Mr. Fawcett. Absolutely not. The recordkeeping system of 
graft, of corruption and political slush fund, I don't believe 
all members of the Security Council knew of the existence or 
the details of the voucher regime. I believe that only came out 
after the toppling of Saddam.
    Mr. Norwood. Do you think we can prove that today? Do we 
have enough information out and documentation out that we could 
prove that?
    Mr. Fawcett. The existence of the voucher system or that--
--
    Mr. Norwood. The voucher system actually worked and was 
honest.
    Mr. Fawcett. When it first came out, there was skepticism 
because it came out in the Iraqi newspaper and maybe was pushed 
by some of the Iraqi political factions. But the fact that the 
Duelfer or ISG report came out and looked at that in some depth 
gave me more confidence to believe it is correct. We are now 
seeing many investigations around the world, not just here in 
Washington, that are starting to prove that this original 
document was correct.
    Mr. Norwood. I will ask you one last one and perhaps a few 
in writing, but this one is important to me. Did the 
retroactive pricing of oil contracts cause oil exports to 
collapse as suggested by Dr. Gordon and ultimately harm the 
Iraqi people?
    Mr. Fawcett. No.
    Mr. Norwood. I am interested in that.
    Mr. Fawcett. You have to look at the time line. Iraqi 
smuggling was ongoing at that period. It was really taking off. 
Iraq was not as interested in exporting through the Oil-for-
Food program as they were making far more money from the 
smuggling through the pipeline. So the retroactive pricing, 
they could afford to stall, hedge and wait. So I don't think 
that that had a negative impact upon the Iraqi populous; and, 
once again, if it did, we have no data, reliable data to show 
it.
    Mr. Norwood. Why did we do retroactive pricing?
    Mr. Fawcett. In order to cut out the cutback or the premium 
on the oil sales.
    Mr. Norwood. Explain that.
    Mr. Fawcett. The manipulation of pricing--oil was 
underpriced. So if oil was supposed to be at $20 a barrel, the 
Iraqis and the oil overseers would agree to $19.50 a barrel, 
which would be another $.50 to fiddle around. Doesn't sound 
like much, but on a tanker load that is a million dollars. 
Retroactive pricing meant that the buyer didn't know what they 
were going to pay for it until after they delivered it or at 
least after they lifted the oil. So it eliminated that 
maneuvering of pricing.
    Mr. Norwood. Do you think that was a proper thing to do to 
stop that kickback scheme?
    Mr. Fawcett. I think that was one of the options they had 
and had to go with it.
    I want to point out that for 2 years under this program the 
oil overseers were a French expert and a Russian expert and for 
1 year only the Russian was the oil overseer. When the new oil 
overseers were appointed, a Danish man and a Dutch, within 1 
month was when the Iraqis insisted upon having an overt 
premium.
    Mr. Norwood. Thank you, Mr. Chairman.
    Mr. Whitfield. Thank you.
    First panel has been here a couple of hours. I have about 
two or three more questions to complete the record from my 
perspective, and I will recognize Mr. Stupak. He has a few 
additional questions as well.
    First, Mr. Fawcett, under the voucher system, what the 661 
Committee would see, it is my understanding, was a contract 
between SOMO and the oil company that did the lifting, but they 
would not see or be aware of the underlying grant of oil to the 
individual that Iraq wished to influence?
    Mr. Fawcett. That is correct. Not only would the 661 
Committee not see it but most likely U.N. officials would also 
not see it.
    Mr. Whitfield. Now, Mr. Smego, originally I was talking to 
you about Exhibits 6 and 7 and Saddam's efforts to influence 
the French. One of the individuals that was identified was 
Roselyn Bachelot. Did you find any documents that purportedly 
chronicled meetings between the Iraqi intelligence service and 
Mrs. Bachelot?
    Mr. Smego. Yes, Ms. Bachelot was noted in Exhibit 9, for 
example.
    Mr. Whitfield. What does it state in there?
    Mr. Smego. In April 2002, a representative in Paris World 
wrote a memo regarding his meeting with the French parliament 
member, Ms. Bachelot.
    Mr. Whitfield. What was her title or position?
    Mr. Smego. Her position was the--she was the national 
assembly deputy and spokeswoman for Chirac's 2002 Presidential 
campaign. The documents state as such, and the committee staff 
confirmed that as well.
    Mr. Whitfield. Exhibit 12, would you walk us through that 
quickly.
    Mr. Smego. Exhibit 12 was a memorandum from May 2002 
regarding the meeting of the French representative in Paris 
with Ms. Bachelot stating that, number 2--point 2, she assured 
that the French position opposed any American tax on the 
nation, and France used the right of opposition. In parentheses 
following that was a veto within the Security Council against 
any American decision regarding the attack on Iraq and that 
Iraq issued its statement that it is prepared to offer 
financial support to Chirac for his election campaign. The 
message was passed on to the financial official of the election 
campaign.
    But I do want to make clear that the offer of campaign 
contribution was declined by the----
    Mr. Whitfield. No record of the campaign contribution?
    Mr. Smego. There is no record within that document, but it 
says the official declined it.
    Mr. Whitfield. And then one other question. Vladimir 
Zhirinovsky, I know there is some documentation of him. He is a 
member of the Russian duma. From your translations, did he 
receive any oil vouchers?
    Mr. Smego. Yes, Mr. Zhirinovsky received quite a few oil 
allocations. Specifically, Exhibits 23 through 30 specify the 
majority of the Russian oil allocations to Mr. Zhirinovsky, who 
was the head of the Russian liberal democratic party.
    Mr. Whitfield. Thank you very much.
    At this time, I recognize Mr. Stupak.
    Mr. Stupak. Thank you, Mr. Chairman.
    Mr. Fawcett, are you the author of this Exhibit Number 42 
in our book, Sources of Revenue for Saddam and Sons: A Primer 
of the Financial Underpinnings of the Regime in Baghdad?
    Mr. Fawcett. Yes.
    Mr. Stupak. Are you the sole author?
    Mr. Fawcett. There are two of us.
    Mr. Stupak. Have you done subsequent writing since then?
    Mr. Fawcett. I haven't done much writing but a lot of 
research.
    Mr. Stupak. On this?
    Mr. Fawcett. On the Oil-for-Food.
    Mr. Stupak. Because I'm looking at some of these statements 
in here, and what you are testifying to really looks a little 
different. Like on page 13 when we talked about the overseers 
and Russia was in control and sort of insinuated that they had 
complete control, but the Dutch in the fall of 2000 were the 
overseers?
    Mr. Fawcett. By the fall of 2000, there were three.
    Mr. Stupak. Are you alleging that the oil overseers were in 
on the oil surcharges?
    Mr. Fawcett. I am alleging--certainly not by the fall of 
2000. I don't believe they were. Earlier than that, under the 
French and Russian watch, I think there was an awful lot of 
underpricing of oil. It had not yet gone out into the public. I 
do not have any documentation to show that the French or 
Russian oil overseers were taking money.
    Mr. Stupak. You didn't state that in the report. You talked 
about the three overseers, one being the United States in there 
for awhile, and then they resigned.
    Mr. Fawcett. When the U.S. oil overseer resigned after 
about 18 months of the program, it was the next month that the 
first fight began on oil pricing between the Security Council 
and Iraq.
    Mr. Stupak. You didn't say that in your report, and that's 
what we relied upon, and now your testimony is a lot different 
here today.
    Mr. Fawcett. The report is 3 years old.
    Mr. Stupak. About 2 years old. Just over 2 years. That is 
why I asked you if you have any subsequent writings to try to 
clarify what you are saying.
    Mr. Fawcett. No. I think the oil overseers when they came--
the new oil overseers came in in the fall of 2000 is exactly 
the same period of time when two other things were happening, 
the opening of the Syrian pipeline and the Iraqis demanding an 
overt kickback.
    Mr. Stupak. On page 23 of your report, you said the second 
half of 2000. Because France only went so far in advocating 
reform of U.N. sanctions, rather than Iraq's preferred option 
of lifting them entirely, the French company saw their market 
share slashed dramatically.
    Mr. Fawcett. That is right.
    Mr. Stupak. The Oil-for-Food program, Saddam Hussein 
leveraged it for political gain and also for trying to lift 
sanctions?
    Mr. Fawcett. Correct. And he would try to leverage the 
French, and one way of leveraging them was to pull away the 
support he was giving them.
    Mr. Stupak. In this report, you talked a lot about the U.N. 
oversight and the lack of oversight and the 661 Committee or 
the standing committee. Nowhere did you mention the Secretary 
General, but you talked a lot about him today.
    Mr. Fawcett. Right. This was a portion of the report that 
we did not--or a topic we did not go into.
    Mr. Stupak. The stuff you said about the Secretary General, 
do you have documents to back that up?
    Mr. Fawcett. Most of the allegations against the Secretary 
General have come out in the last year, the allegation about 
the improprieties of his son.
    Mr. Stupak. To make allegations is one thing, but to be 
able to factually back them up is another thing. Do you have 
any documents to back them up?
    Mr. Fawcett. The documents against the Secretary General in 
the Volcker Commission are the worst. I have gone back in the 
history and the public record and found the activities of the 
Secretary General vis-a-vis Iraq. Did not do it in 2002.
    Mr. Stupak. Do you have any documents?
    Mr. Fawcett. Plenty of documents.
    Mr. Stupak. We will ask you to produce those for the 
committee.
    Since you are the author of this report, can you explain 
this to me? The first year the Oil-for-Food program is found, 
page 17. 1997, U.S. Only took 13 percent of the Oil-for-Food 
program of the oil, still the largest end user. By 1999, the 
U.S. portion had climbed to 35 percent; and since September 11 
the U.S. has been purchasing well over 50 percent of all the 
Iraqi oil sold under the Oil-for-Food program.
    And you go on to say, and I am not clear either, not clear 
why the U.S. purchased such large quantities of Iraqi oil in 
the wake of September 11 and amid the heightened threats toward 
the Baghdad regime emanating from Washington and this 
administration. If we know the program isn't working at solving 
what it is supposed to solve and give humanitarian aid to Iraq 
and we are threatening war against them and trying to blame 
them for September 11, even though they had nothing to do with 
September 11, why would we continue to buy oil to fill the 
coffers of Saddam Hussein? That are the questions my 
constituents ask me, not this other stuff about the U.N.
    Mr. Fawcett. We could not explain it. We had no explanation 
for why we were doing it, which is why we reported that.
    Mr. Stupak. Dr. Gordon, I only have a few minutes left, but 
every time you tried to answer a question, you got cutoff. Any 
of those questions you want to explain from Dr. Burgess, Mr. 
Norwood or Ms. Blackburn? And you didn't ask this committee to 
testify? You were invited to testify.
    Ms. Gordon. Yes, sir.
    Mr. Stupak. You were asked by this committee to testify. 
You didn't ask us to testify?
    Ms. Gordon. I certainly didn't do that.
    If I could address a few points very briefly, and if I 
could address a couple of statements Mr. Fawcett made for 
clarification.
    When Mr. Fawcett and maybe someone else was talking about 
the oil overseers after the American and Norwegian left and 
there was only the French and Russian and there was implication 
there that then they were being self-serving, that is 
incorrect. That's not how that committee worked. The way it 
worked for the oil overseers is that two oil overseers had to 
sign off on every contract, and no oil overseer could sign off 
on any contract of his own nation.
    Mr. Stupak. Russia has their own oil and basically bought 
this oil for food and sold it back to the United States?
    Ms. Gordon. I am not familiar with that.
    When it was down to two or when it was even at three or 
when it was at two, then any time that a French contract came 
up or a Russian contract came up, since there were not two oil 
overseers from non-French or non-Russian countries to sign off 
on that, then that was circulated to the entire 661 Committee. 
That is what happened when that occurred. There was a control 
in place. It's incorrect to suggest that there wasn't, which 
specifically prevented self-dealing in that form.
    Second, I would like to comment on the representative from 
Tennessee's comment about the baby formula. With all due 
respect, an increase in baby formula is not a major factor in 
child death in Iraq. I will tell you what is a major factor, a 
lack of potable water. That's what spikes child mortality.
    If you want to know what was responsible for the lack of 
potable water, it was the absence of sewage and water treatment 
equipment and, specifically, electricity to generate them. If 
you want to look at what particular goods the United States 
blocked systematically throughout the sanctions regime 
including the Oil-for-Food program, it was the electricity 
sector, communications sector, transportation.
    If you want examples of what, in fact, caused large-scale 
child mortality in Iraq, it was such things as the U.S. 
blocking $200 million of child vaccines. It was the U.S. 
blocking water tankers during a period of drought in a country 
with high mortality from water-borne diseases. It was the U.S. 
agreeing to approve a sewage treatment plant in Iraq and 
blocking the generator to run it.
    If I could address the issue of data, Mr. Fawcett has said 
there was no reliable data on either the humanitarian situation 
or the severity of it prior to the Oil-for-Food program. That 
is incorrect. If you look at the scholarship of the leading 
medical demographers and public health experts from Harvard, 
Columbia, and Johns Hopkins, published in the leading public 
health and medical journals, you will see something very 
different. You will see measurements, fresh data,not based on 
the Iraqi government, not based on the Iraqi government's data, 
which demonstrates both the severity of the humanitarian 
situation as of 1996 and substantial improvements that happened 
in the humanitarian situation under the Oil-for-Food program.
    And, last, I would like to address the claim that the 
Secretary General had an ongoing daily decisionmaking process 
in the Oil-for-Food program. That is incorrect. At every point 
the structure of the program was determined by Security Council 
resolutions and decisions made by the 661 Committee. The 
Secretary General had no decisionmaking role in that. That was 
something because it was a program under the auspices of 
Chapter 7 of the U.N. charter that was entirely the creation 
and under the supervision and monitoring of the Security 
Council.
    Thank you for giving me the opportunity.
    Mr. Stupak. Mr. Fawcett, smart sanctions, which was U.N. 
Resolution 1409, that sort of lifted any kind of control that 
was left in this whole program, right, that was implemented May 
14 to the smart sanctions? Can you explain how that sort of 
lifted any international control?
    Mr. Fawcett. No. I am not up to speed on the smart 
sanctions approach.
    Mr. Stupak. It's found on page 20 of your report. Because 
you said here, the new sanctions regime will actually weaken 
international control and facilitate increased hard currency 
opportunities for the Hussein regime in two ways. First, all 
efforts to increase international monitoring or oversight of 
sanctions busting trade with Iraq were abandoned in the course 
of negotiations leading to the passage of the resolution; and, 
second, the streamlined procedures will make it much easier for 
Iraqi officials to insist upon kickbacks, on contracts 
supplying goods to the Oil-for-Food program.
    Mr. Fawcett. I am with you now. That was a process by which 
the oversight from the Security Council was lessened and more 
responsibility was actually put onto the Secretariat, upon the 
U.N. officials, to approve contracts without having them go 
through the Security Council. So whatever limited oversight the 
Security Council had been providing previously, which was 
limited, was decreased.
    Mr. Stupak. No way in the Security Council or any form in 
the U.N. does the Secretary General have a vote on the Security 
Council or anything?
    Mr. Fawcett. No.
    Mr. Whitfield. Gentleman's time has expired.
    Mr. Stupak and I had two opportunities. If there is anyone 
else who wants to ask a question, then we will terminate this 
panel. Mr. Burgess was recognized first. Mrs. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. I did have just a 
couple more questions that I wanted to come back to now that we 
are through this, and I know we are all ready to hear from Mr. 
Anderson.
    Dr. Gordon, I would like to come back to you. You have a 
great deal of knowledge of the inner workings of the U.N. and 
seem very supportive of what you saw carried out in this 
program. It had been reported and we had heard that Chief of 
Staff Riza had shredded some documents that were related to the 
program. Do you know if he had the authority to shred those 
documents and who may have given him that authority? Do you 
know anything about that situation?
    Ms. Gordon. The only small amount I know about is the 
documents were redundant. They were a second set. Other than 
that, I don't know anything about that event.
    Mrs. Blackburn. And then talking again about Mr. Sevan, my 
question--and since you have knowledge of the workings of the 
U.N. in this program, my question to you would be, how did he 
manage to seemingly disobey U.N. rules and not really raise any 
suspicions, just kind of work, you know, on his own framework 
or maybe on his own timetable or maybe under his own direction, 
if you will? Do you have any insight you could offer to that?
    Ms. Gordon. Your question is----
    Mrs. Blackburn. How is he able to do it without raising 
suspicions within the U.N. Organization?
    Ms. Gordon. You are referring specifically to the claim 
that he received an oil voucher?
    Mrs. Blackburn. Uh-huh.
    Ms. Gordon. I assume in the same process as has been 
described before. The way the Security Council designed this 
program is that the company names were registered and the 
company names, as long as they were sold--as long as those 
companies corresponded to the contracts and the contracts 
conformed to the formulas approved by the 661 Committee, that's 
what took place. What happened with the vouchers was entirely 
outside that system. None of the vouchers at any point would 
have come through that system.
    Mrs. Blackburn. So then what you are saying is you don't 
think there was oversight of his activities in that regard and 
that would not have been abnormal for there not to have been 
oversight of his activities?
    Ms. Gordon. There is enormous oversight of his activities. 
If you look at the reports he presented----
    Mrs. Blackburn. Within a certain framework.
    Ms. Gordon. If you want to know whether the voucher came 
through, obviously, it did not.
    Mrs. Blackburn. Mr. Chairman, I yield back.
    Mr. Whitfield. Mr. Burgess.
    Mr. Burgess. Thank you, Mr. Chairman.
    Just a couple of additional questions for Mr. Smego.
    On the documents that have been provided to us in the 
binder, I believe it is document number 7, in that your 
translation work showed you that there was opportunity to 
discuss the political fortunes of Mr. Chirac of France and Mr. 
Putin of Russia, is that correct?
    Mr. Smego. Yes, specifically the people through whom the 
French President Jacques Chirac and Russian President Vladimir 
Putin could be approached by the Iraqi intelligence service.
    Mr. Burgess. Are there other documents then that show that 
Russian political figures received oil allocations from Saddam 
Hussein?
    Mr. Smego. Certainly. There were some documents from the 
Russian Asbecht. For example, Exhibit 30, which is a 
spreadsheet, handwritten, that outlines the different oil 
allocations during phase 7, specifically, the second 
handwritten point at the bottom for Mr. Zhirinovsky and the 
third for Ms. Sazhi in the political Science Committee. Ms. 
Sazhi was identified as the head of the peace and unity party 
of Russia.
    Mr. Burgess. I know Mr. Waxman has pointed out this is our 
13th hearing, but bear with me because this is my first. Who is 
Vladimir Zhirinovsky?
    Mr. Smego. Vladimir Zhirinovsky was the head of the Russian 
liberal democratic party.
    Mr. Burgess. And could you walk us through the documents 
that show that Mr. Zhirinovsky received oil allocations from 
Saddam Hussein?
    Mr. Smego. I believe starting off at 26--starting off at 
Exhibit 23, Mr. Zhirinovsky requested some cooperation in 
contracting.
    Exhibit 24 discusses the subject of the special quantity of 
crude oil to Mr. Vladimir Zhirinovsky, and the company 
belonging to Mr. Zhirinovsky has not registered itself in the 
United Nations until now.
    Exhibit 26 would be a memorandum from Tariq Aziz to the 
minister of oil regarding a Russian delegation that was going 
to arrive in October 1997 to complete the special contracts 
regarding the Oil-for-Food products and that the Saddamco 
company is registered in Iraq and the United Nations to 
purchase oil on behalf of that Russian liberal democratic 
party.
    Subsequent Exhibit 27 mentions 1.8 barrel contract during 
phase 2 for Saddamco. That is on October 7, approximately 2 
days after that delegation was to arrive.
    Mr. Burgess. Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. Thank you, Dr. Burgess.
    I thank this panel for their testimony today, and at this 
time you are dismissed.
    We will call our second panel: Mr. Gerald C. Anderson, who 
is the Director of the Office of Peacekeeping, Sanctions and 
Counterterrorism, U.S. Department of State. Mr. Anderson, good 
afternoon. You are aware that the committee is holding an 
investigative hearing and when doing so we have had the 
practice of taking testimony under oath. Do you have any 
objection to taking testimony under oath or giving it under 
oath?
    Mr. Anderson. No objection.
    Mr. Whitfield. The Chair then advises you that under the 
rule of the House and the rules of the committee you are 
entitled to be advised by counsel. Do you desire to be advised 
by counsel during your testimony today?
    Mr. Anderson. No, thank you.
    Mr. Whitfield. If you would please rise and raise your 
right hand, I will swear you in.
    [Witness sworn.]
    Mr. Whitfield. You are now under oath.
    Mr. Anderson, you may give your 5-minute opening statement. 
I didn't want Mr. Stupak----
    Mr. Stupak. I am listening.

     TESTIMONY OF GERALD C. ANDERSON, DIRECTOR, OFFICE OF 
 PEACEKEEPING, SANCTIONS AND COUNTERTERRORISM, U.S. DEPARTMENT 
                            OF STATE

    Mr. Anderson. Mr. Chairman and distinguished members of the 
committee, I welcome the opportunity to appear before you to 
discuss the U.N. Oil-for-Food program and to answer your 
questions on various aspects of the management and execution of 
the program.
    The Oil-for-Food program was adopted in 1995 to alleviate 
the serious humanitarian crisis while maintaining comprehensive 
restrictive measures on items that Saddam Hussein could use to 
then pose a threat to his neighbors in the region and this at a 
time when many were calling for an end to those restrictions. 
The 661 Committee monitored the implementation of the Oil-for-
Food program and through each of its members was also 
responsible for reviewing humanitarian contracts, oil spare 
parts contracts and oil pricing submitted on a regular basis by 
Iraq to the U.N. for approval. The U.S. delegation was an 
active participant in all such reviews.
    However, the 661 Committee operated on a consensus basis as 
a subsidiary body of the Security Council. The efforts of the 
U.S. and the United Kingdom to counter or address noncompliance 
were often negated by other members' desires to ease sanctions 
on Iraq, often exacerbated by the actions of certain key member 
states in advancing self-serving national economic objectives.
    Clearly, the sanctions failed to force the regime of Saddam 
Hussein to comply with international obligations, but they did 
succeed in limiting Iraqi efforts to rebuild their military 
capabilities. The major shortcomings of the OFF program have 
been widely documented in recent months, but the program did 
succeed in its basic humanitarian objective of ensuring that 
the Iraqi people were adequately fed.
    Much of what the U.S. Government could and could not 
achieve with regard to monitoring the program was directly 
related to the politics surrounding Iraq and the Security 
Council. U.S. efforts to keep the comprehensive sanctions 
regime in place were repeatedly challenged by Council members 
whose national firms would derive economic benefit from the 
lifting of sanctions.
    Indeed, starting in the mid 1990's and continuing to 2001, 
these pressures to lift sanctions grew. Violations with respect 
to the Oil-for-Food program manifested themselves in a whole 
pull-down menu of manipulative mechanisms in order to 
circumvent the sanctions, including surcharges, topping off, 
influence peddling, product substitution, product diversion, 
phony service contracts, phantom spare parts, shell 
corporations, illusory performance bonds, hidden bank accounts 
and plain old-fashioned bribery and kickbacks to the tune of 
several billion dollars.
    Mr. Chairman, some members of the Security Council did not 
take their international obligations seriously and either 
directly or indirectly facilitated sanctions busting activities 
by the Saddam regime. The 661 Committee was mired in a 
political debate with regard to Iraq that often impeded it from 
taking action against violators of the embargo; and, as the 
recent Volcker Committee reports indicate, there are serious 
charges that U.N. officials may have allowed Saddam to further 
undermine their system.
    When in late 2000 the U.N. Oil overseers reported excessive 
premiums on oil experts, the 661 Committee, led by the U.S. and 
the U.K., agreed to a statement on December 15, 2000, making 
clear that additional fees above the selling price approved by 
the 661 Committee were not acceptable. Despite circulation of 
this message to all oil companies approved to lift Iraqi oil, 
evidence of the illicit surcharges continued during the spring 
of 2001.
    The U.S., working in close coordination with the British 
delegation, raised the issue of excessive oil price premiums in 
a series of more than 40 formal and informal 661 Committee and 
Security Council meetings during that period. After months of 
stalemate, the U.S. and British experts made creative use of 
the consensus rule governing decisions in the 661 Committee by 
withholding support until the end of the month on oil pricing 
proposals submitted at the beginning of the month by the 
Iraqis. As a result, by the spring of 2002, the oil price 
variation or surcharge for market levels had been reduced from 
as much as $.50 per barrel to an accepted industry variation of 
$0.03 to $.05 per barrel.
    Allegations of kickbacks to the Oil-for-Food program began 
to surface in late 2000. The U.S. and British experts raised 
this issue with the 661 Committee experts and the Office of 
Iraq Programs representatives in 2000 and early 2001 and 
formally submitted proposals to address this issue during a 661 
Committee meeting in March 2001. However, no documentary 
evidence was available at the time to support the allegations, 
and other committee members claimed that, without this 
evidence, no action can be taken.
    The United States frequently provided members of the 661 
Committee and the Security Council with information and 
evidence of sanctions violations by the Saddam regime, 
including on Saddam's diverting funds to benefit Iraq's elite 
and on his attempts to procure WMD-related materials.
    In March 2002, a U.S. interagency team briefed the 661 
Committee on the regime's diversion of trucks.
    U.S. commanders of the multi-lateral interception force in 
the Gulf briefed the committee each year starting in 1996 on 
illegal smuggling of Iraqi crude oil, including through the 
unauthorized use of ferry services from neighboring states.
    An equally noteworthy source of oil smuggling was through 
Iraq's pipeline with Syria which restarted in late November 
2000. The U.S., in coordination with the U.K., repeatedly 
raised concerns over this blatant noncompliance only to be told 
by Syria that the pipeline was, quote, being tested.
    Mr. Chairman, thank you for this opportunity to appear 
before the committee. I now stand ready to answer whatever 
questions you and your fellow committee members may have.
    [The prepared statement of Gerald Anderson follows:]

     Prepared Statement of Gerald C. Anderson, Director, Office of 
Peacekeeping, Sanctions and Counter-Terrorism, Bureau of International 
             Organization Affairs, U.S. Department of State

    Mr. Chairman, distinguished members of the Committee, I welcome the 
opportunity to appear before you to discuss the U.N. oil-for-food 
program and to answer your questions on various aspects of the 
management and execution of the program.
    Mr. Chairman, let me start by discussing why the Iraq sanctions 
were imposed and why the Oil-for-Food Program was established. Four 
days after Iraq invaded Kuwait in 1990, the Security Council adopted 
Resolution 661, which imposed comprehensive trade and financial 
sanctions against the former Iraqi regime. The United States government 
supported this measure as part of a larger strategy to force Iraq to 
cease hostilities and to withdraw its forces from Kuwait.
    At the end of the Gulf War in 1991, the Security Council adopted 
Resolution 687 that extended comprehensive sanctions on Iraq to ensure 
that Saddam Hussein complied with the major provisions of the 
ceasefire. By retaining the sanctions, the Council also sought to deny 
Iraq the capability of rearming or constituting its weapons of mass 
destruction and other military programs.
    The sanctions were not anticipated to remain in place for more than 
a year or two before Saddam complied. We now know that Saddam chose not 
to comply. By 1995 in the wake of deteriorating humanitarian conditions 
in Iraq, many in the international community called for an end to the 
restrictions, reflecting concern that the impact of the sanctions was 
being borne primarily by the innocent Iraqi civilian population.
    In April 1995 the Security Council adopted Resolution 986, 
establishing the Oil-for-Food Program to alleviate the serious 
humanitarian crisis while maintaining comprehensive restrictive 
measures to deny Saddam access to items that he could use to again pose 
a threat to his neighbors in the region.
    The sanctions committee that was established under Resolution 661 
in 1991, the 661 Committee, monitored the implementation of the overall 
sanctions regime on Iraq, and after the adoption of Resolution 986, it 
also monitored the implementation of the Oil-for-Food Program.
    The 661 Committee, like all sanctions committees, operated as a 
subsidiary body of the Security Council. Unlike the Council, decisions 
were made on a consensus basis requiring the agreement of all parties 
and members. In addition to providing general oversight of the Oil-for-
Food Program and to monitoring member state compliance with the 
sanctions, the committee, through each of its members, was also 
responsible for reviewing humanitarian contracts, oil spare parts 
contracts and oil pricing submitted on a regular basis by Iraq to the 
U.N. for approval.
    The U.S. delegation was an active participant in all such reviews. 
The efforts of the U.S. and the United Kingdom to counter or address 
non-compliance were often negated by other members' desires to ease 
sanctions on Iraq. The atmosphere in the committee, particularly as the 
program evolved during the late 1990s, became increasingly contentious.
    The fundamental political disagreement between members over the 
Council's imposition of comprehensive sanctions was often exacerbated 
by the actions of certain key member states in advancing self-serving 
national economic objectives. In retrospect, although the consensus 
rule often stymied progress in the committee, that same consensus rule 
helped the U.S. achieve its objectives in a number of critical ways.
    The imposition of a retroactive pricing mechanism and our ability 
to place holds on humanitarian contracts that contained potential dual-
use items were both made possible by the use of the consensus rule.
    Judging the success or failure of the Iraq sanctions depends on the 
view of their objectives. Clearly they failed to force the regime of 
Saddam Hussein to comply with its international obligations. But they 
did succeed in limiting Iraqi efforts to rebuild their military 
capabilities after the Gulf War. As regards the Oil-for-Food Program, 
similar considerations apply. The major shortcomings of the program 
have been widely documented in recent months, but the Oil-for-Food 
Program did succeed in its humanitarian objective of ensuring that the 
Iraqi people were adequately fed, thus limiting the impact of sanctions 
on them.
    Much of what the U.S. Government could and could not achieve with 
regard to monitoring the program and implementation of the sanctions 
was directly related to the political situation surrounding the 
contentious issue of Iraq in the Security Council and in the 661 
Committee. U.S. efforts to keep the comprehensive sanctions regime in 
place repeatedly were challenged by Council members who complained 
about the humanitarian impact of sanctions on the Iraqi people, and 
whose national firms would derive economic benefit from the lifting of 
sanctions. Indeed, starting in the mid-1990s and continuing into 2001, 
these pressures to lift sanctions grew.
    Violations with respect to the oil-for-food program manifested 
themselves in a whole pull-down menu of manipulative mechanisms in 
order to circumvent the sanctions, including surcharges, topping off, 
influence pedaling, product substitution, product diversion, phony 
service contracts, phantom spare parts, shell corporations, illusory 
performance bonds, hidden bank accounts and then plain old fashioned 
bribery and kick backs to the tune of several billion dollars.
    Let me provide examples in two key areas: manipulation of oil 
pricing and kickbacks on the oil-for-food program.
    The first regards oil flowing out of Iraq. The former Iraqi regime, 
through the State Oil Marketing Organization, proposed prices for 
various markets and grades of crude for review by the U.N. Oil 
Overseers, and for approval by the 661 Committee. The U.N. Oil 
Overseers and committee members verified that the purchase price of the 
petroleum and the petroleum products were reasonable in light of 
prevailing market conditions. Evidence that the Iraqis were attempting 
to impose excessive price premiums on oil exports to exploit 
differences between oil prices approved by the 661 Committee and 
subsequent fluctuations in global oil prices surfaced as early as the 
fall of 2000, when the UN oil overseers informed the 661 Committee of 
instances in which the GOI was requesting imposition of an additional 
fee on the sale of Iraqi crude.
    My second example involves goods coming into Iraq. Again, there was 
a clear division of responsibility. While Iraqis retained the authority 
to contract with specific suppliers under the oil-for-food program, the 
661 Committee was tasked with ensuring that the contracted goods were 
appropriate for export to Iraq under the conditions set out in Security 
Council Resolution 986. Once a contract was approved by the committee 
and the goods shipped, the U.N. inspections agent, Lloyds Register, and 
later Cotecna, were responsible for authenticating the arrival of these 
goods into Iraq. Separately, it was the responsibility of member states 
to prevent sanctioned goods from entering into Iraq.
    Mr. Chairman, I offer these examples to illustrate exactly where 
responsibility lay. There were, in hindsight, substantial problems 
related to all of these areas of responsibility. Some members did not 
take their international obligations seriously and either directly or 
indirectly facilitated sanctions-busting activities by the Saddam 
regime. The 661 Committee was mired in a political debate with regard 
to Iraq that often impeded it from taking action against violators of 
the embargo. And as the recent Volcker Independent Inquiry Committee 
reports indicate, there are serious charges that U.N. officials may 
have allowed Saddam to further undermine their system.
    I stated earlier that the United States has made every effort to 
address violations within the 661 Committee, even though we were often 
impeded by other committee members.
    In late 2000, U.N. Oil Overseers reported that Iraqis were 
attempting to impose excessive premiums on oil exports. The 661 
Committee, led by the United States and the United Kingdom, agreed to a 
statement on December 15, 2000, making clear that additional fees above 
the selling price approved by the 661 Committee were not acceptable. 
Despite circulation of this message to all companies approved to lift 
Iraqi oil, evidence of the illicit surcharges continued during the 
spring of 2001. The United States, working in close coordination with 
the British delegation, raised the issue of excessive oil price 
premiums in a series of more than 40 formal and informal 661 Committee 
and Security Council meetings during that period.
    After months of stalemate within the committee, the U.S. and 
British experts made creative use of the consensus rule governing 
decisions in the 661 Committee by withholding support until the end of 
the month on oil pricing proposals submitted at the beginning of the 
month by the Iraqis. This retroactive price analysis gave the U.S. and 
British experts the opportunity to compare oil prices sought to the 
actual market price of similar crude oils to determine if SOMO's prices 
reflected fair market value--a requirement under Resolution 986. 
Beginning in October 2001, the United States and United Kingdom 
regularly employed the retroactive pricing mechanism to evaluate SOMO's 
prices until the suspension of the oil-for-food program in 2003.
    The retroactive oil pricing we imposed had the intended effect. By 
the spring of 2002, the U.N. Oil Overseers reported that the oil price 
variation from market levels had been reduced from as much as 50 cents 
per barrel to an accepted industry variation of 3 to 5 cents.
    Separately, allegation of kickbacks to the oil-for-food program 
began to surface in late 2000. U.S. and British experts raised this 
issue with the 661 Committee experts and the Office of the Iraq 
Program's representatives in 2002 and early 2001 and formally submitted 
proposals to address this issue during a 661 Committee meeting in March 
2001. However, no documentary evidence was available at the time to 
support these allegations. Consequently, our proposals received no 
support. Committee members claimed that, absent evidence indicating 
that such kickbacks existed, no action could be taken.
    Important measures taken to address this issue occurred after the 
fall of Saddam's regime, when the United States, through the Coalition 
Provisional Authority, was informed of the kickback scheme by Iraqi 
ministry representatives in Baghdad. With the fall of the Hussein 
regime in the spring of 2003, and with the subsequent authorities 
granted under U.N. Security Council Resolution 1483, CPA officials, in 
coordination with U.N. officials and Iraqis, took steps to eliminate 
surcharges in the remaining oil-for-food contracts.
    In addition to eliminating and countering surcharges and kickbacks, 
the United States also took initiatives to provide members of the 661 
Committee and the Security Council with information and evidence of 
violations by the Saddam regime, during various briefings. The United 
States briefed Security Council members in 2000 on the various ways the 
Saddam regime was diverting funds to benefit Iraq's elite, including 
through the use of diverted funds to build and furnish Saddam's 
palaces. The U.S. again briefed Security Council ambassadors in the 
spring of 2002 on Saddam's noncompliance with U.N. Security Council 
resolutions, and Saddam's attempts to procure WMD-related materials.
    In March of 2002, a U.S. interagency team briefed the 661 Committee 
on the regime's diversion of trucks. U.S. commanders of the 
Multilateral Interception Force, or MIF, in the Gulf also briefed the 
committee each year starting in 1996 on the MIF's activities in 
combating the illegal smuggling of Iraqi crude oil. MIF Commanders in 
2001 and 2002 briefed the 661 Committee and highlighted the continued 
attempts by Saddam Hussein to circumvent sanctions by illegally 
exporting oil and illicitly importing materials into Iraq through the 
unauthorized use of ferry services from neighboring states.
    The MIF operating in the Persian Gulf enjoyed success from 2000-
2001 in significantly reducing the number of small vessels operating 
out of Shatt al-Arab that were smuggling Iraqi oil along Iran's 
southern coast. An equally noteworthy source of oil smuggling prior to 
the 2003 Iraq war was the illegal flow of oil through Iraq's pipeline 
with Syria, which restarted operations in late November 2000. The 
United States, in coordination with the UK, repeatedly raised concerns 
over such blatant non-compliance, only to be told by Syrian 
representatives that the Iraq-Syria pipeline was ``being tested,'' but 
was not operational.
    The oil-for-food program was a unique endeavor, and although it was 
essential to the Iraqi people, it was also manipulated by Saddam 
Hussein and his cronies to undermine the sanctions.
    Mr. Chairman, thank you for this opportunity to appear before the 
committee, I now stand ready to answer whatever questions you and your 
fellow committee members may wish to pose.

    Mr. Whitfield. Thank you, Mr. Anderson.
    How long have you been with the State Department?
    Mr. Anderson. I joined the State Department in August 1980.
    Mr. Whitfield. How long have you been involved in this oil-
for-food issue?
    Mr. Anderson. I became director of this office in July 
2004.
    Mr. Whitfield. Who was the U.S. representative on the 661 
Committee?
    Mr. Anderson. The 661 Committee was a committee of the 
Security Council; and, therefore, our mission was represented 
and our permanent representative was the senior representative. 
But most committee sessions were attended by our sanctions unit 
chief at the U.S. mission to the United Nations in New York.
    Mr. Whitfield. Now, in your testimony, you talk about that 
self-serving national economic objectives often worsened 
fundamental political disagreements between members of the 
Security Council. Can you provide a specific example of this?
    Mr. Anderson. The reference there was, by looking at the 
members of the Security Council and the 661 Committee with whom 
we debated measures to deal with noncompliance, with sanctions 
and with these various manipulative devices that I listed in my 
statement, it was clear that countries that had an interest in 
selling more of their products, their companies' products to 
Iraq, tended to take positions more favorable to Iraq.
    Mr. Whitfield. The oil surcharge would be one example?
    Mr. Anderson. That would be one example.
    Mr. Whitfield. When did the U.S. become aware that Saddam 
was demanding an oil surcharge?
    Mr. Anderson. The oil overseers first informed the 661 
Committee in December 2000 about the blatant attempts to impose 
the surcharges of up to $0.50.
    Mr. Whitfield. Did the U.S. raise concerns about this with 
the 661 Committee?
    Mr. Anderson. Yes.
    Mr. Whitfield. How many times did they attempt to address 
the issue of oil surcharges with the 661 Committee?
    Mr. Anderson. As I mentioned, over 40 times. I have a list 
of a number of particular dates when those issues were raised, 
and I would characterize it as an iterative process where we 
sought to find a solution that would be acceptable to the 
committee through a consensus of the committee and would also 
be effective in ending the oil surcharges.
    Mr. Whitfield. And the U.S--I assume you made written 
requests about this or sent written documents to the committee 
expressing their concern?
    Mr. Anderson. We did submit a number of written documents 
accompanying our various proposals on this issue over time.
    Mr. Whitfield. And which states resisted American efforts 
to eliminate the surcharge?
    Mr. Anderson. Generally speaking, the U.S. and the U.K. 
Were like-minded in general. Occasionally, we had some 
differences of opinion on tactics, but we were generally with 
them and the other permanent members of the Security Council 
and some of the nonpermanent members of the Security Council 
such as, for example, Syria who, during part of the program, 
during one 2-year period was a member of the Council and a 
member of the Committee.
    Mr. Whitfield. Basically, France, Russia and China were 
those----
    Mr. Anderson. Those were the other three permanent members.
    Mr. Whitfield. What were their stated reasons for objecting 
to removing the surcharges?
    Mr. Anderson. In general, the first type of reaction to 
proposals to deal with the surcharges was challenging the 
evidence that was available for the surcharges. Another common 
argument was to claim that action on the surcharges would 
affect the humanitarian situation in Iraq negatively or would 
cause the net revenue coming into the program to decline, which 
would therefore reduce the amount of funds under the program 
available to procure humanitarian supplies.
    Mr. Whitfield. And yet the surcharges themselves were 
definitely reducing the amount of money, humanitarian aid going 
to Iraq?
    Mr. Anderson. That was clearly our argument, Mr. Chairman.
    Mr. Whitfield. But you were never successful in getting 
them to correct that, is that correct?
    Mr. Anderson. That's correct. We did, however, de facto 
implement a system of retroactive pricing that was referred to 
in the first panel, which we implemented not by consensus in 
the committee, because we never obtained a consensus, but 
through the system of holds on oil prices. In other words, we 
exercised our right under the consensus system to place a hold 
on any oil contracts until the end of the month when it was 
known what the market price for that oil was during that month. 
And that was the mechanism that we used to implement 
retroactive pricing. It was over the objections of other 
members of the committee.
    Mr. Whitfield. In some of our testimony, Dr. Gordon--my 
impression was that everything decided at the 661 Committee had 
to be unanimous and the fact that the U.S. was not objecting 
seemed to indicate that the U.S. was going along with 
everything that was happening. But what you have just described 
is a little bit different than that.
    Mr. Anderson. Mr. Chairman, I'm not sure which issue your 
reference to objecting is, but I would just reiterate there 
were many disputes within the committee over policy decisions 
and the----
    Mr. Whitfield. There were a lot of disputes, I take it?
    Mr. Anderson. Yes.
    Mr. Whitfield. In Exhibit 46, I notice that the U.S. was 
willing to consider other alternatives to retroactive pricing 
in order to get rid of the surcharges, is that correct?
    Mr. Anderson. Yes, Mr. Chairman. Exhibit 46 is a document 
that analyzes various responses from various members of the 661 
Committee to the problem of surcharges. This is a matrix that 
was drawn up at one point during the 6 months of debate within 
the committee on how to deal with this problem, and it 
illustrates the range of ideas that were under discussion. When 
you add up the various positions, you can see why we were not 
able to reach a consensus that we felt would be effective.
    Mr. Whitfield. Why did the U.S. and Great Britain desire 
proactive pricing to be conditioned on a mandatory lifting 
requirement?
    Mr. Stupak. This document number 46, could you tell us the 
source of that document?
    Mr. Whitfield. Came from the State Department.
    Mr. Stupak. Does Mr. Anderson have that in front of him?
    Mr. Anderson. Yes, I do.
    Mr. Stupak. Do you recognize that as a State Department 
document?
    Mr. Anderson. I know from conversations with colleagues at 
our mission to the United Nations that it is a United States 
document. It was prepared in New York by our mission.
    Mr. Whitfield. Can you explain why the U.S. and Great 
Britain desired proactive pricing to be conditioned on 
mandatory lifting requirements?
    Mr. Anderson. Mr. Chairman, I'm not an expert by any means 
on the oil market, but I understand from others who were--whose 
reasoning was behind that decision that that method would be 
more effective in eliminating the surcharges. Because, as I 
believe we heard described in the first panel, if a company 
that was going to lift oil was not aware at the time they 
agreed to lift what the price would be, it would not be 
possible to make an agreement with the Iraqi side for a 
surcharge. And if they were able to get out of that lifting 
obligation, then that arrangement would no longer apply.
    Mr. Whitfield. Now you mention in your testimony that 
members of the 661 Committee did not take their international 
obligations seriously. Could you be more specific in terms of 
particular countries and examples?
    For example, with respect to holds placed on humanitarian 
contracts, can you estimate what percentage of holds were 
placed by the U.S. and British due to concerns over potential 
dual-use capabilities?
    Mr. Anderson. I would say the vast majority of holds placed 
by the U.S. and U.K--over 99 percent of those holds were placed 
because of concerns about potential dual uses. There were a 
very small number of cases where some participants in the 
interagency review process that took place in Washington of the 
oil contracts signaled a concern about the pricing of the 
contract as potential evidence of a kickback taking place. But 
in almost every case, even contracts that had a pricing concern 
were placed on hold officially because of concerns about dual 
use.
    Mr. Whitfield. So if--you are saying over 90 percent by 
U.S. and Great Britain and 10 percent or less was for holds 
placed by the countries only?
    Mr. Anderson. If I understand the question, it goes to the 
percentage of all holds placed by the committee and how many of 
those were placed by the U.S. and U.K. And my understanding is 
that, indeed, over 90 percent were placed by the U.S. and U.K; 
and, therefore, all other members--the other 13 members of the 
committee were only responsible for 10 percent of those holds.
    Mr. Whitfield. I have no further questions at this time. I 
recognize Mr. Stupak.
    Mr. Stupak. Thank you.
    Mr. Anderson, do you agree that there was a serious 
humanitarian crisis in Iraq in 1995?
    Mr. Anderson. I would say, sir, and all the evidence that I 
have seen indicates that there was, indeed.
    Mr. Stupak. I'm looking at page 3 of your testimony, first 
main paragraph there. It says, the Oil-for-Food program did 
succeed in its humanitarian objective of ensuring that the 
Iraqi people were adequately fed, thus limiting the impact of 
the sanctions on them. Is that correct?
    Mr. Anderson. Yes, I think that's correct. And I would call 
your attention to the precise wording. Adequately fed does not 
mean luxuriously fed or any situation that we would all wish, 
but adequate, yes.
    Mr. Stupak. The illegal profits or sales of this oil and 
commodities--let's just say oil--where Saddam Hussein received 
these kickbacks or money to do what he wished outside the Oil-
for-Food program, it's been estimated that half of this illegal 
money came from sales to countries like Jordan, Syria, Turkey, 
is that correct?
    Mr. Anderson. As I understand from studies that have been 
done of the oil market from that period, for example, the GAO 
study that I think you're familiar with, that is the case, yes.
    Mr. Stupak. If the United States was pushing in the U.N. to 
make sure that the Oil-for-Food program was properly followed, 
as they should have, then why would the U.S. allow Saddam to 
receive about half of his money through these illegal sales? 
These sales were in violation of the sanctions against Iraq?
    Mr. Anderson. Yes, sir. That's correct. That's the reason 
that the U.S. Government under the Foreign Assistance Act 
certified to the Congress that assistance to Jordan every year 
starting in 1991 and to Turkey every year starting in 1996 was 
in the national interest despite their violations of U.N. 
Sanctions.
    Mr. Stupak. Doesn't that send a mixed signal to everybody 
else? Like the sales to Jordan and Turkey, we will say that is 
in violation of the sanctions, but we'll look the other way. 
But if anyone else comes up with anything where they receive 
something that would be in violation of sanctions, we are going 
to put a hold on it or we're going to try to enforce them in 
the 661 Committee? Isn't that sort of a--how do you put 
credibility into a program when you look the other way when 
it's in your political interest and then yet you admonish 
others for doing the same thing you are doing?
    Mr. Anderson. Jordan came to the 661 Committee in 1991 with 
a request for relief from the sanctions, alleging that the 
enforcement of the sanctions and a ban on oil trade with Iraq 
would cause severe economic hardship to Jordan. Turkey also 
submitted a similar request for relief. The judgment of the 
U.S. Government as reflected in those certifications to 
Congress was that indeed there was--it was in the U.S. interest 
to take that approach.
    Within the U.N. system, the Jordanian request was never 
granted officially, but the committee ``took note,'' was the 
terminology that they used, of the trade between Jordan and 
Iraq. And the U.S. in many bilateral diplomatic exchanges with 
Jordan suggested that the trade with Iraq in the other 
direction, in other words, the compensation that Jordan paid to 
Iraq, should only be in barter terms with humanitarian goods. 
In the case of Turkey, the 661 Committee never acknowledged the 
request; and the U.S. also had many diplomatic exchanges with 
Turkey about attempting to limit those purchases from Iraq.
    Mr. Stupak. As I said in my opening, it's a geopolitical 
decision, but I think we lose credibility when we start talking 
about sanctions and what other countries can do. Even though 
Jordan and Turkey did go to the standing committee, it sounds 
like the standing committee did not approve it, but yet the 
U.S. did as a matter of policy. We're supposed to be the big 
enforcer, us and the United Kingdom, to say these sanctions 
have to work; and if they work, we have to play by the same 
rules. When it was to our interest, we forget the rules, 
correct?
    Mr. Anderson. What Jordan and Turkey were doing was not a 
secret. It was known to the committee and made clear to the 
world and U.S. Congress and it is of a fundamentally different 
character than this list of under-the-table, secretive, 
manipulative means of gaining illegal revenue that the Saddam 
Hussein regime engaged in.
    Mr. Stupak. There are numerous allegations that prohibited 
items also went to Iraq through Jordan. What kind of controls 
did the Security Council have over this trade?
    Mr. Anderson. For a period of time, Jordan had an 
inspection system at its port in Aqaba of goods that were 
entering Iraq that was run by a private contractor. And the 
Jordanians assured us--and again, we had many diplomatic 
exchanges with them to make sure that they would police that 
trade to make sure that only those humanitarian goods were 
traded back to Iraq in exchange for the oil.
    Mr. Stupak. But we know that wasn't the case now, right?
    Mr. Anderson. Every regime has exceptions, it has 
violations, including in this case.
    Mr. Stupak. Did the U.S. relieve its inspector of those 
duties--that was supposed to be doing these inspections along 
the border there in Jordan? Did Jordan have an inspector that 
was supposed to be looking at these commodities to make sure 
they didn't violate the understanding that only certain 
humanitarian things could move from Jordan to Iraq? Did Jordan 
remove its inspector who was supposed to be head of this 
program and make sure that only the proper commodities went 
into--or humanitarian products went into Iraq.
    Mr. Anderson. I am not familiar with the details of that. I 
can get an answer back to you.
    [The following was received for the record:]

    This question should be directed to the Government of Jordan, which 
had responsibility for its side of the border.

    Mr. Stupak. If you would, please. Thanks. In June 1997, the 
United States and the United Kingdom told the sanctions 
committee that it was, ``beyond the committee's competence to 
approve exports of Iraqi oil,'' to Jordan. Such approval raised 
all sorts of questions which had been put aside over the past 
few years, the U.S. stated. Is this your understanding of the 
situation concerning illegal trade between Iraq and Jordan? Is 
this your understanding?
    Mr. Anderson. As I said earlier, the 661 Committee took 
note of the trade, but the 661 Committee did not authorize it. 
And the U.S. participated in that decision.
    Mr. Stupak. You know, when we opened up the pipeline, and I 
think it was you that said that, that it was supposed to be an 
experiment at first just to make sure that it worked. But that 
was their pipeline going up to Syria there.
    Mr. Anderson. Yes, sir.
    Mr. Stupak. After that, that pipeline never really shut 
down. And that's where a lot of these illegal sales took place, 
was through Turkey, and really outside the Oil-for-Food 
program. Were any attempts made by the State Department to shut 
that down?
    Mr. Anderson. Many, many attempts, both by raising this 
issue within the 661 Committee and also directly with Syria.
    Mr. Stupak. And nothing ever happened. Right?
    Mr. Anderson. That's correct.
    Mr. Stupak. Okay. Was the State Department aware of all the 
end use of all this oil that was being sold illegally, that the 
end use was here in the United States?
    Mr. Anderson. I believe the State Department received the 
same kind of statistical reports on the oil industry that are 
widely available to the industry. So I assume so. Yes, sir.
    Mr. Stupak. I asked a question earlier that has been 
bothering me. Maybe you can shed some light on it. I had asked 
of the other witness, Mr. Fawcett, because he sort of raised it 
in his report, that when we started in 1997, the first year of 
the program, the United States was the biggest user of the 
oil--Iraqi oil at 13 percent. By 1999, it rose to 35 percent. 
And since September 11, the U.S. had been purchasing well over 
50 percent of all Iraqi oil sold underneath the Oil-for-Food 
program. And every year, it kept going up. And it's just not 
clear why the U.S. would purchase such large quantities of 
Iraqi oil under this program in the wake of September 11 and 
the thoughts of going to war. Can you explain that? Was there 
any State Department rationale why they would continue to buy 
that oil?
    Mr. Anderson. As far as I know, it wasn't a State 
Department decision one way or the other on whether that oil 
should be purchased. Those are transactions done by private 
companies on the oil market within the framework of U.S. Law 
and international law.
    Mr. Stupak. Yeah, but still ended up here. Wouldn't you do 
an investigation to try to enforce this so it did not end up on 
the U.S. market? And if we are trying to be true to the spirit 
of the sanctions, I would think you would not want Iraqi oil 
coming in here since we have these sanctions against them.
    Mr. Anderson. I think the simple answer to that is the oil 
market is one big pool, and at one end, oil is put in. 
Obviously, there are some limits on the particular qualities 
that are for particular purposes. But if the oil is going into 
that market from Iraq and the U.S. is purchasing oil, it really 
doesn't matter whether a specific oil from Iraq ends up in the 
U.S. or some other--it goes somewhere else and the U.S. 
substitutes; it's one big pool.
    Mr. Stupak. Thank you.
    Mr. Whitfield. The gentleman's time has expired. At this 
point, I will recognize Dr. Burgess for 10 minutes.
    Mr. Burgess. Thank you. And thank you, Mr. Anderson, for 
taking time to be with us here today. In your testimony, you 
stated that, besides the surcharges and kickbacks, the United 
States also brought to the 661 Committee evidence and 
information concerning additional violations of the program, 
the Oil-for-Food program. And we have got in our binder that 
was provided to us Exhibit 45. And I guess, just like Mr. 
Stupak, this is a document that is known to you. Correct?
    Mr. Anderson. Yes, sir.
    Mr. Burgess. Okay. Exhibit 45, an e-mail dated March 5, 
2002, on truck briefing points. And this document describes a 
situation where the United States apparently learned that Iraq 
was diverting trucks imported under the program for military 
purposes. Are you familiar with this?
    Mr. Anderson. Yes, sir.
    Mr. Burgess. Was this matter addressed within the 661 
Committee?
    Mr. Anderson. Yes, it was.
    Mr. Burgess. And what was their feeling about this?
    Mr. Anderson. This e-mail is dated 1 day before an 
interagency group from the U.S. Government briefed the 
committee on what we knew about the diversion of trucks that 
were brought into Iraq ostensibly for humanitarian purposes and 
were then diverted to military use. And this is precisely the 
kind of concern that was uppermost in our mind within the 
committee, in making sure that goods were not diverted to 
military use. And that's why we went to the trouble of 
presenting that briefing. And the result of that was a change 
in the judgments of the committee on what types of trucks would 
be considered humanitarian.
    Mr. Burgess. Well, clearly, the United States and the State 
Department were concerned. Were other members of the committee, 
did they express concern or surprise that this diversion was 
occurring?
    Mr. Anderson. This is, sir, a rather typical exchange. 
Typically, if someone presented information on a sanctions 
violation of this sort, it was usually either the United States 
or the United Kingdom. Typically, depending on the nature of 
the evidence, if the evidence was very clear and compelling, 
there wasn't too much that other committee members could say 
about it. If the evidence was circumstantial, as sometimes was 
the case when there would only be a newspaper article from the 
press somewhere without any corroborating evidence, other 
members of the committee would challenge that newspaper article 
and would say that no action could be taken until there was 
more substantial evidence. But in this particular case, the 
evidence was quite compelling, and there was action taken.
    Mr. Burgess. So the diversion of these trucks to military 
use, I mean, what did France think was eventually going to 
happen?
    Mr. Anderson. Well, I think the position of other countries 
on the committee typically was to react to the information that 
was presented to them. And we've heard earlier described the 
contract process, where contract documents would come to the 
committee. They would look at that and approve the contract or 
put the contract on hold. And then, if the--in this case, say a 
truck contract said that it was going to be used for a hospital 
or to transport food or just some civilian use, no one in the 
committee would challenge that, they would accept that. But 
then if you then subsequently showed them evidence that in fact 
these trucks were going right from the port to the military 
base being used by the Iraqi military and you have compelling 
evidence of that, they then react to that and say, oh, well, of 
course that's in violation of the sanctions, and that's not 
acceptable.
    Mr. Burgess. Well, then there's another--if we just skip 
ahead to Exhibit 47 and let me ask the same question. Is this 
an exhibit that is known to you? Is this an e-mail, internal e-
mail from the State Department as well?
    Mr. Anderson. Yes, sir.
    Mr. Burgess. This one describes the diversion of Ventolin 
inhalers. Are you familiar with this incident?
    Mr. Anderson. I'm familiar with the document, and I've also 
had some conversations with colleagues who were involved in 
dealing with it. Yes, sir.
    Mr. Burgess. Now, did we, the United States, ever confirm 
whether this medicine that was found in Syria actually came 
from an Oil-for-Food shipment diverted from Iraq?
    Mr. Anderson. We have initiated--since the staff of the 
committee brought this particular document to our attention, 
our mission in New York has been searching their records to 
see, to get the answer to that question. As of today, they have 
not found any indication that we did confirm that or that any 
particular action was taken within the 661 Committee with 
regard to this. But I would say, sir, that this is an example 
of a fragmentary information on a possible sanctions violation. 
We very frequently got such fragmentary information. It would 
basically be a tip from a source, and we would take that 
information as far as we could take it, and sometimes, it would 
involve calling it to the attention of the U.N. Office of the 
Iraq program and asking that they take particular care in 
following such matters. In other cases, if it involved a 
country that was a member of the Security Council on the 
committee, raising--the fact of raising it in the committee 
would mean that it was highlighted that it was going on, and we 
would do that with the hope that that country would then 
subsequently refrain from that type of behavior.
    Mr. Burgess. But, of course, I mean, as you know, and we 
have heard in this room this afternoon the United States has 
taken a great deal of criticism from the United Nations and 
from outside the United Nations from blocking the flow of 
humanitarian goods into Iraq. Is it fair to conclude that the 
Iraqi regime may have actually been cashing in on medicines 
intended for its own people? And this is Ventolin; it's an 
inhaler used for asthmatic children. And they were taking 
this--it looks like they were taking this across the border, 
turning it into cash for some other purpose. Do you think 
that's a possibility?
    Mr. Anderson. Absolutely.
    Mr. Burgess. Well, given the obstacles for reform within 
the United Nations, why didn't the United States, as Mr. 
Fawcett has suggested, put public pressure on France, Russia 
and others to eliminate this type of abuse? I mean, again, here 
we have got a medicine to go to asthmatic Iraqi children we are 
selling in the pharmacy of Damascus for whatever purpose, who 
knows, and the money is coming back to the Saddam regime. Why 
didn't--why wasn't more pressure put on France, Russia to--
Germany to stop this?
    Mr. Anderson. I would say we certainly put tremendous 
pressure on France and Russia, and then Germany of course 
during the period that Germany is a member of the Security 
Council, but certainly on France and Russia within the 
framework of the council. And as far as public pressure, I 
think, on the general issue of dealing with Iraq, there was a 
tremendous amount of public pressure on France and Russia on 
the overall issue of dealing with Saddam Hussein. With regard 
to these specific violations, it would depend on the issue. I 
mean, different countries could be involved at different times. 
But certainly within the framework of the committee, it was 
very clear that there was a struggle under way between the U.S. 
and the U.K. On the one hand and the other three permanent 
members, Russia, France and China, on the other, on a whole 
range of issues. During the period before the smart sanctions 
that were addressed earlier when we were reviewing every single 
contract there was a lot of discussion about contract holds 
that the U.S. and the U.K. placed because of weapons of mass 
destruction or dual-use concerns. Many of those contracts were 
from--were submitted by companies in Russia and France or 
China. And we were under tremendous pressure from those 
governments to release the holds. So it was very clear that 
there was a lot of tension over those.
    Mr. Burgess. And I'm certain there was. But, golly, this 
looks pretty blatant. I mean, you have got a medicine that's 
used for asthmatic children in the country of Iraq, and you are 
selling it in Damascus on the black market. I mean, I fail to 
see why that's--you know, just like the other stuff we heard 
about, about the infant formula, paying 25 percent more than 
you know you should be paying for it. It's almost as if there 
was--well, I'm not going to say it. But it looks like this was 
a premeditated act at so many levels that I just simply can't 
shake that thought.
    Mr. Chairman, I will yield back my time.
    Mr. Whitfield. Thank you, Dr. Burgess. At this time, I will 
recognize Mrs. Blackburn for 10 minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman. And I want to 
thank Mr. Anderson, and two of our other witnesses are still in 
the room. I want to thank them for their time today. This is 
something that is of tremendous interest not only to us but to 
our constituents. And I also want to thank the chairman and the 
ranking member for their work on getting everything ready for 
the hearing today.
    Mr. Anderson, let me just ask you this as a matter of 
background, and I think as we look at this and as our 
constituents, I know we have many who are watching the hearing 
and listening to the things that are going on here. Were you at 
the State Department in 1991 when Resolution 661 was passed?
    Mr. Anderson. I was at that time on assignment overseas, 
and I was not dealing directly with Iraq or the United Nations 
at that time.
    Mrs. Blackburn. Okay. And then when Resolution 986, in the 
mid 1990's, were you there at that point?
    Mr. Anderson. No.
    Mrs. Blackburn. You were not. Okay. And then for the 
record, let's just go ahead. In 1991, who was our Secretary of 
State and our U.N. Ambassador?
    Mr. Anderson. 1991, that was the late Bush period. So that 
would have been Mr. Baker as our Secretary of State at that 
time.
    Mrs. Blackburn. All right.
    Mr. Anderson. And our U.N. Ambassador, I would have to 
check the list. It was probably the period of Ambassador 
Pickering, I believe.
    Mrs. Blackburn. And then in the mid 1990's?
    Mr. Anderson. Mid 1990's, I guess it depends which year, 
whether it would be in the Clinton administration, or are you 
referring to the----
    Mrs. Blackburn. That would have been?
    Mr. Anderson. Madam Albright was our representative, our 
permanent representative at the U.N. And then Mr. Holbrook.
    Mrs. Blackburn. All right. Okay. And so what I wanted to do 
was be certain that we realize who was at the State Department 
and who was our U.N. Ambassador during that period of time and 
who was in charge of overseeing, and then as I said, for 
clarification, I felt like it was important to notice to 
whether you were there or you were involved. Because I think 
it's important for people to realize, you know, we talk a lot 
about--we use a lot of acronyms and a lot of numbers in DC, and 
sometimes, it allows us to gloss over the importance of the 
Iraq steering committee. And this group that was put in place 
by Resolution 661 just simply by using numbers, you know, it 
does not speak specifically to the mission that these folks 
were given in looking at sanctions and looking at the oil and 
the commodities and the proper use of those items and of the 
proceeds from the sale of that oil.
    And I think that, many times, as we go back and we are 
looking hindsight, using the advantage of hindsight in looking 
at this, we have a tendency to say, how did the wheels come off 
of this? And how did it get to be so seemingly out of control? 
And that is hard for us to get our arms around, what appears to 
be just a blatant disregard for humanitarian aid and for the 
welfare and well-being of people, not to mention respect for 
the law.
    You have mentioned in your testimony a couple of different 
places on page 2 and 3 about the political debate and impeding 
action against violators of the program. And you mentioned 
earlier in your remarks, the U.K. Was generally with us.
    Mr. Anderson. Yes.
    Mrs. Blackburn. And then to Dr. Burgess' response you 
mentioned against the French and Germans. And how much of the 
pressure to turn a blind eye, if you will, to any actions 
against the violators, how much of that came from the French 
and Russian governments?
    Mr. Anderson. I would say, ma'am, that I would turn that 
image around.
    Mrs. Blackburn. Okay.
    Mr. Anderson. And I would say that the pressure from the 
U.S. and U.K. To look into violations was quite strong. And we 
got similar pressure back from countries that were most 
interested.
    Mrs. Blackburn. You got the push back from the French and 
the Russians.
    Mr. Anderson. Yes. That's correct.
    Mrs. Blackburn. Considerable?
    Mr. Anderson. Considerable pushback? In particular with 
regard to contracts that involved companies from those 
countries.
    Mrs. Blackburn. Okay. During this period of time, the mid 
1990's, do you know if there was a relationship between Kofi 
Annan and Cotecna?
    Mr. Anderson. I don't have any familiarity with that beyond 
what I read in the second report of the Volcker Commission.
    Mrs. Blackburn. Do you know if Kojo Annan was involved in 
any way at that point? Are you aware of anything from there?
    Mr. Anderson. I would refer you to the report. That's the 
source of what I know. He was employed by Cotecna, and the 
dates of his employment and the conditions are detailed in the 
Volcker Commission's report.
    Mrs. Blackburn. You also mentioned in your testimony that 
there were regular briefings on the program that were given to 
the Security Council Ambassadors.
    Mr. Anderson. Yes.
    Mrs. Blackburn. And what feedback did they give and how 
receptive did they seem to be to negative information?
    Mr. Anderson. The--if I understand, ma'am, you are 
referring to briefings by the United States on knowledge that 
we had.
    Mrs. Blackburn. Right.
    Mr. Anderson. And I would say the reaction was typically 
negative from members of the Council, other than the U.K. It 
was typically--pushback was a good word, challenging the 
veracity of our information, challenging whether or not there 
was evidence to support the assertions that we were making. 
There was a tendency to question the information the U.S. was 
presenting.
    Mrs. Blackburn. Did they give you as much resistance on 
accepting negative information as they did to any type of 
action against the violators of the program?
    Mr. Anderson. I just want to see if I understand the 
question, ma'am. The violators, are you referring to companies 
or----
    Mrs. Blackburn. Correct. You know, as we have talked about 
the violators on the aid, and you mentioned in your testimony 
some of the disagreements that were there, the fundamental 
disagreement over dealing with some of these folks. My--and 
what I'm trying to get to, Mr. Anderson, is how strongly they 
would resist, the negative information, and then turn around 
and deal--how strongly they would resist dealing with anybody 
who was trying to impede what they saw as a benefit to the 
French and Russian governments.
    Mr. Anderson. Well, I think in general everybody on the 661 
Committee accepted that violations of the sanctions regime 
should not occur, in principle. But when it came down to 
specific cases of violators, there tended to be a lot of debate 
about the evidence, whether an actual violation had occurred 
and whether one could be sure, based on the available evidence, 
that it had occurred.
    Mrs. Blackburn. Okay. You know, in the last panel, one of 
the questions that I asked was if members of this committee, 
the 661 Committee, the Iraq steering committee, whatever we are 
going to call it, if they should come in and testify before 
this committee, if we should have them there. And I would be 
interested to hear from you if the State Department, what the 
State Department's opinion would be on having those members 
come in. Because I find it very interesting that it seems as if 
there was a denial, an awareness of what was probably 
happening, but then a choice to possibly not take action. So I 
would be interested in what the State Department's opinion is 
on that.
    Mr. Anderson. Well, the members of the 661 Committee of 
course were the 15 countries who were members of the Security 
Council. And the individuals who were sitting in that committee 
were all diplomats just as I am. So if I served--you asked, 
ma'am, where I was in 1991. I was in Poland, for example, and I 
dealt with the parliament of Poland. And occasionally they 
requested that a U.S. diplomat would come and talk to them in a 
committee setting like this. And our response to that was 
always that we are always happy to talk to a committee, but we 
are not happy to be subpoenaed by a committee because we have 
diplomatic immunity. And I would guess that most diplomats from 
the 15 countries who were on the 661 Committee, on the Iraq 
sanctions committee, would probably react in a similar way; 
that you might get people to talk to you, but I'm not sure that 
you would get them to testify under oath.
    Mrs. Blackburn. You are probably correct. And I thank you 
so much for your answers.
    Mr. Chairman, I will yield back.
    Mr. Whitfield. Thank you.
    I will recognize the gentleman from Florida for 10 minutes.
    Mr. Stearns. Thank you, Mr. Chairman. I don't have a full 
length of questions here, but I just wanted to ask Mr. 
Anderson: Has your career pretty much been at the State 
Department?
    Mr. Anderson. Yes, sir.
    Mr. Stearns. From when you got out of school, college?
    Mr. Anderson. I was in West Africa as a Peace Corps 
volunteer for 2 years after college. And then I came back to 
Washington, and I completed my graduate studies before I joined 
the Foreign Service and also worked at the Commerce Department 
for a period of time during those graduate studies.
    Mr. Stearns. So you have been at the State Department how 
many years, would you say?
    Mr. Anderson. 25 years.
    Mr. Stearns. In your 25 years of being there, have you seen 
anything like this occur? Generally, you find these type of 
arrangements, that Saddam Hussein used oil allocations to 
undermine the sanctions. It's not brand-new. In your 
experience, have you seen other cases where this paradigm, this 
model has occurred in all of your experience? Is this unique in 
all of your professional history?
    Mr. Anderson. Well, sir, I would say this particular 
program, the structure of the program, the breadth of it, is 
certainly unique. But since you referred to my career, I will 
permit myself to refer to my experience in the Middle East. I 
served 5 years altogether in the Palestinian areas and in 
Israel. And I must say that, in the kind of approach to dealing 
with the rule of law that we observed in this procedure was--is 
something that one can see in other areas in the Middle East 
also. Not on this scale, but the idea that business 
transactions are not transparent, that there may be double-
dealing or triple-dealing is certainly not unknown in that 
region of the world.
    Mr. Stearns. That is what I am trying to get at. It seems 
to me we have oil here, but you could have food. You could have 
housing. You could have health. I mean, you could have a whole 
series of commodities that could be used like oil. And in the 
Middle East, there is a climate of quid pro quo, whether it's 
money or other things. So what I'm trying to establish, in your 
professional opinion, is this unique and egregious and 
something that people couldn't say, Well, this is just how the 
Middle East is and this is how everybody does it there. So this 
program is no different than they have done for eons. And so 
for Mr. Volcker to come here and try and do a report, he might 
have a difficult time because he can't separate what is the 
custom and culture. And so I need to hear from your 
professional experience whether we are talking about something 
here that is totally separate from the argument, that's part of 
the culture.
    Mr. Anderson. I would respond, sir, that this program is 
different from what is typically the case in the Middle East in 
several aspects. One, the size, because, we were talking 
about----
    Mr. Stearns. Billions of dollars.
    Mr. Anderson. Billions of dollars and comprehensive 
sanctions on an entire national economy.
    Mr. Stearns. Over a long period of time.
    Mr. Anderson. Over a long period of time. There's nothing 
on that scale.
    Mr. Stearns. So the scale of it, with the amount of money. 
And, two----
    Mr. Anderson. Complexity.
    Mr. Stearns. Complexity. And, three, that it is over a long 
period of time. It wasn't just a one-time transaction.
    Mr. Anderson. That's correct.
    Mr. Stearns. Do you have--now, just I'm asking in your 
professional opinion here. And you can also give me a personal 
opinion. Do you think Volcker is going to be successful in 
trying to get to all the nooks and crannies here and get to the 
bottom of this, considering the extensive amount of 
relationships between nations and third parties? How do you get 
to the bottom of this? And do you feel confident that you can? 
What is your professional opinion?
    Mr. Anderson. Sir, I would refer you to the mandate for 
Volcker's committee. We were quite careful in approving the 
U.N. Resolution that accepted the creation of the committee to 
make sure that the mandate of the committee was limited. And, 
indeed, if you look at it, it is limited to investigating 
wrongdoing by U.N. Officials in violations of the rules that 
were established by the sanctions committee. And that means 
that other bad things that happened that were outside the 
functioning of that--the Oil-for-Food program and the 
procedures are certainly bad, but they may not be within the 
mandate of the Volcker committee. So when you ask me, do I 
think whether he will succeed, in answering that, I try to look 
at what it is, what the task that he was assigned to.
    Mr. Stearns. The question is, can he succeed on the task 
given to him?
    Mr. Anderson. I think it is always a question in any 
investigation on whether he can get evidence for any 
assertions. I think that he is--if you look at his first two 
reports, I think you will see that he has uncovered a range of 
assertions. Some of them have been better documented; others 
have been less well documented. But he has included in his 
report even things that are less well documented, and he might 
presumably be continuing to investigate as that investigation 
proceeds.
    So I would say, since the Volcker committee is not a 
judicial institution, it's an investigative committee, and the 
results of that committee's work could be and may be forwarded 
to national authorities in the appropriate countries.
    Mr. Stearns. Where would that go, to the international 
court?
    Mr. Anderson. No. I don't think so. I think it would go to 
national judicial authorities in appropriate countries for 
prosecution if----
    Mr. Stearns. Because, see, when you do an investigative 
report, you really don't have this subpoena under oath, and you 
are just asking questions and people can say what they want. 
And so my concern is the range of answers and range of 
interpretations, and this whole thing gets so murky. And it 
seems to me we need more of a judicial investigation where you 
have subpoena powers that he can put them under oath and there 
is a case where we could, if they suborned perjury, that we 
could actually put them in jail, even minor people. But I just 
don't have the feeling that he has that kind of authority. Is 
that true?
    Mr. Anderson. That's correct. He does not have that 
authority.
    Mr. Stearns. So how can you investigate if you don't have 
the authority to extirpate the truth?
    Mr. Anderson. Well, I think what Mr. Volcker stated is that 
he is preparing the best information that he can based on the 
access he has, granted by the United Nations, and that this 
information will be made available to member states including 
the United States and our judicial authorities who do have 
subpoena power and investigatory authority, who can 
investigate, if they deem it appropriate, any of the cases that 
might be described in the report of the Volcker committee.
    Mr. Stearns. Just as an outside observer, we see that the 
implication of some high Russian officials that has been in the 
paper this week. Now, how much confidence--and I am just 
rhetorically putting this question out--do we think Russia is 
going to institute judicial prosecution against these high 
Russian political officials?
    Mr. Anderson. That's obviously up to Russia to decide. And 
I won't comment----
    Mr. Stearns. But by opening up that, they open up a can of 
worms for their own policy positions at their government at the 
highest level.
    Mr. Whitfield. If I could interrupt. They informed us that 
they are not going to do anything.
    Mr. Stearns. So we've already heard from Russia that, even 
if their highest officials are implicated, they are not going 
to do anything. So, you know, it's a little frustrating I think 
for us to look at the Volcker Commission and think that we are 
going to get some solid answers, and, more importantly, there 
are going to be results from it.
    So, Mr. Chairman, with that, I just appreciate your having 
the hearing and want to encourage this continued investigation. 
But I think Mr. Anderson pointed out some problems with the 
ultimate jurisdiction of Volcker and getting the member country 
to prosecute the individuals that are guilty.
    Mr. Whitfield. Thank you, Mr. Stearns.
    At this time, I will recognize Mr. Inslee for 10 minutes.
    Mr. Inslee. Thank you. Mr. Anderson, I do have a question, 
but I need to say something before I start. So if you can just 
bear with me for a couple minutes.
    Yesterday, in preparation for the Democratic-Republican 
baseball game, I pressed into service a young man who is a 
neighbor of ours to play catch. And this young fellow, I 
haven't seen for a couple of years, he's been in the Army and 
he is scheduled for deployment in Iraq here probably early next 
year I think. And the reason I mention that is that, with all 
due respect to this hearing, I really would rather be 
investigating how we can make sure that young man has the tools 
available to keep him safe and how we can make sure that our 
taxpayer money is not being wasted on contracts that have been 
squandered, and how we can make sure that $80 million gets 
accounted for so that we can put that into armored HMMVWs 
instead of some rat's nest of profiteering in Iraq. And I've 
been very disturbed that our institution, the U.S. House of 
Representatives, is not getting to the bottom of why 
contractors are disposing of millions of dollars of taxpayers' 
money instead of having armored HMMVWs for our soldiers like my 
neighbor who is going there early next year. I really think 
that is a fitting subject of inquiry that I would hope that our 
committee at some time can get to. We have made numerous 
attempts on the floor of the House to do that. We need a Truman 
commission in this regard, which, frankly, is a lot more 
important than this subject.
    I would also like to see an investigation of some of the 
things coming out now about why my neighbor has to go to war 
and how that takes place--how that took place. I read a note 
from a London paper the other day from a July 23, 2002, 
memorandum that said, ``In high-level meetings between the Bush 
administration and the British saying military action is now 
inevitable, Bush wanted to remove Saddam through military 
action justified by the conjunction of terrorism and WMDs, but 
the intelligence and facts were being fixed around the policy. 
The case was thin. Saddam was not threatening his neighbors, 
and his WMD capability was less than that of Libya, North Korea 
or Iran.''
    This is a smoking gun about what happened, why my neighbor 
has to go to Iraq and be subject to hostility when a war 
started based on false, fraudulent information. And that's what 
I would like to see the U.S. Congress investigating so that my 
neighbor doesn't get in harm's way in Iraq. Instead, we are 
fooling around with the history of some oil effort that, 
frankly, I don't think is going to keep him safe. And I hope at 
some point the U.S. House of Representatives does its duty, 
which is to have a Truman commission to investigate the 
fraudulent use of taxpayer money and how this war started based 
on false information. That's an investigation worthy of this 
Congress.
    But I want to ask you a question about this regard now, 
turning to the subject of this hearing. I was looking at some 
of the language, earlier witnesses have talked about, on 
kickbacks. And they submitted a document that said that while, 
``While the practice has usually been associated with weapons 
procurement, it was also a regular feature of the Reagan 
administration's agricultural support program to Iraq as 
administered by the U.S. Department of Agriculture's commodity 
credit corporation.'' In this guise, it was known as, ``after-
sales service.''
    Do you know how that happened and what was going on there?
    Mr. Anderson. I believe that program was administered by 
the Agriculture Department, and I would have to get you an 
answer from them or refer you to them. I'm not familiar with 
that.

    This question should be directed to the Department of Agriculture, 
which administered that program.

    Mr. Inslee. Thank you. I'll appreciate it if you can do 
that. Now, you're in the office--you're the director of the 
Office of Peacekeeping Sanctions and Counterterrorism. That's 
your current title?
    Mr. Anderson. Yes, sir.
    Mr. Inslee. And what were you doing back in July 2002?
    Mr. Anderson. July 2002, I was the counselor to the U.S. 
embassy in Warsaw, Poland.
    Mr. Inslee. Okay. So could you give us any information 
about this British memorandum that suggests that the Bush 
administration had made a decision to take military action in 
July 2002 based on flimsy evidence, on thin evidence based on 
assertions that WMD had less capability in Iraq that Libya, 
North Korea or Iran? Do you know anything about that?
    Mr. Anderson. No, I don't.
    Mr. Inslee. I wish you did, because that's the thing I 
would like to see the U.S. Congress finally figure out, how 
this war started based on false information. Thank you.
    Mr. Whitfield. I will recognize the gentleman from Michigan 
for a brief remark.
    Mr. Stupak. Thank you, Mr. Chairman. And I just want--you 
know, today's hearing got off a little bit there on the wrong 
foot with some documents coming into the--or wanted to be 
admitted into the record. And, you know, we have always worked 
well on this committee in a bipartisan manner; I hope we can 
keep that up. In my opening statement I indicated to you that I 
thought that we should do further investigation along these 
lines, especially some of the U.S. interests in some of the 
U.S. oil companies that may or may not have benefited from this 
Oil-for-Food program. So I would hope in the weeks ahead that 
we can take another look at that. We have a couple subpoena 
requests that we had asked and documents we wanted from certain 
documents; hopefully, the majority would honor that and sign 
the subpoenas so we can get the documents front and center.
    I think what the committee has done today is sort of tip of 
the iceberg, but you can sort of see the frustration on this. 
We all have strong feelings on this, even the last questioner 
there, my friend from Washington, there, mentioned the impact 
of this. It's more than just Food-for-Oil program; it's the 
whole Iraq war and everything else, which sort of gets energy 
levels up around here. And no disrespect meant to the Chair or 
anything like that, but we do have some strong feelings on this 
side as I'm sure you do on your side, and we'd like to use this 
committee as being as bipartisan as we are and that, that we 
continue to work on this issue, but hopefully, we can have a 
full investigation including the areas that the minority would 
like to explore through subpoena or interviews of companies. 
And we would hope you would join with us in that request.
    Mr. Whitfield. Thank you, Mr. Stupak.
    And, Mr. Anderson, thank you for your testimony today. As 
we all know, the chairman of the full committee has a real 
interest in this whole subject matter, and I know that there 
will be additional discussions as we move forward in trying to 
make some determinations about which ways to go in further 
hearings on this subject. So, with that, this hearing is 
adjourned. And I appreciate your testimony.
    [Whereupon, at 5:42 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

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