[Congressional Record Volume 150, Number 61 (Wednesday, May 5, 2004)]
[Senate]
[Pages S4912-S4917]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. COLEMAN (for himself, Mr. Levin, Ms. Collins, and Mr.
Reed):
S. 2383. A bill to amend title 10, United States Code, to require the
registration of contractors' taxpayer identification numbers in the
Central Contractor Registry database of the Department of Defense, and
for other purposes; to the Committee on Armed Services.
Mr. COLEMAN. Mr. President, I rise today to introduce the Central
Contractor Registry Act of 2004 whose purpose is to establish a
centralized contractor database within the Department of Defense and to
require federal contractors who register in that database to provide
their taxpayer identification number and their consent to verifying
that number with the Internal Revenue Service as a condition that must
precede the awarding of a contract by the Department of Defense. This
bill will close a $3 billion tax loophole and will help to recover over
$100 million annually from federal contractors who have not filed
federal tax returns or who have not paid the taxes they owe the
government. I am joined by Senators Carl Levin, Susan Collins and Jack
Reed.
In a hearing before the Permanent Subcommittee on Investigations, the
General Accounting Office testified that over 27,000 contractors at the
Department of Defense owed over $3 billion in unpaid Federal taxes.
Normally, these taxes could be collected through the Federal Payment
Levy Program by levying fifteen percent of the contractors' payments.
In fiscal year 2002, the Financial Management Service should have
collected over $100 million from tax delinquent Department of Defense
contractors. However, actual collections for the year were less than
[[Page S4913]]
$500,000. Further, in 2001, the Department of Defense provided the
Internal Revenue Service with over 26,000 information returns that
could not be used to determine contractors' tax liability. One of the
principal reasons for this anemic state of collections and the large
volume of unusable information returns has been and remains the
inability of the Department of Defense and the Internal Revenue Service
to reach an accord on verifying the taxpayer identification numbers of
the contractors who have registered in the Department of Defenses's
Central Contractor Registration database.
Under current law, the Department of Defense's authority to verify
contractors' taxpayer identification numbers is limited to those
contractors who have contracts with the Department of Defense and for
whom the department is required to report miscellaneous income to the
Internal Revenue Service on a Form 1099 information return. However,
there are contractors who have registered in the Central Contractor
Registration for whom the Department of Defense lacks authority to
verify their taxpayer identification numbers including individuals and
companies who would like to contract with the federal government and
contractors who have contracts with agencies and departments other than
the Department of Defense. On the other hand, current law also allows a
taxpayer to consent to the verification of their taxpayer
identification number with the Internal Revenue Service and allows the
Internal Revenue Service to provide a validated taxpayer identification
number.
My bill will resolve the impasse between the Department of Defense
and the Internal Revenue Service by requesting contractors' consent to
the validation of their taxpayer identification number as part of the
registration process. Contractors will not be required to provide their
consent. But if they do not, they will not be awarded a contract by the
Department of Defense.
Further, my bill requires the Department of Defense to warn
contractors as part of the registration process that if they do not
provide a valid taxpayer identification number they may be subject to
backup withholding. This would apply to those contractors who list an
invalid taxpayer identification number, have a contract with the
Department of Defense, and will earn miscellaneous income that is
required to be reported to the Internal Revenue Service.
I would like to briefly summarize the major provisions of my bill. It
provides a statutory basis for the Central Contractor Registration and
renames the database as the Central Contractor Registry. It requires
that the registry contain contractor's taxpayer identification numbers,
their consent to verifying their numbers with the Internal Revenue
Service and for the Internal Revenue Service to provide a corrected
number if possible. It requires that registrants furnish this
information as a condition for registration, and requires the
Department of Defense to warn contractors who fail to provide a valid
taxpayer identification number that they may be subject to backup
withholding and requires implementation of backup withholding in cases
where it is required. It precludes awarding a contract to any
registrant who has not provided a valid taxpayer identification number
and excludes from coverage any registrant who is not required to have a
taxpayer identification number.
It directs the Secretary of Defense to apply to the Internal Revenue
Service for inclusion in the Taxpayer Identification Number Matching
Program and directs the Commissioner of Internal Revenue to provide
response to the Department of Defense. It directs the Secretary of
Defense to provide any registrant who is determined to have an invalid
taxpayer identification number with an opportunity to provide a valid
number. It further requires that the Central Contractor Registry
clearly indicate whether a registrant's taxpayer identification number
is valid, under review, invalid, or not required. Finally, it requires
that contractors taxpayer identification numbers be treated as
confidential by federal contract officers who have access to the
Central Contractor Registry.
My overall objective in introducing this bill is to ensure that tax
cheats are not rewarded with federal contracts. If the Department of
Defense and the Internal Revenue Service do not have accurate and
reliable taxpayer identification numbers then we will not be able to
stop this practice. My bill takes the necessary first step toward
ensuring that the Department of Defense and the Internal Revenue
Service have valid taxpayer identification numbers in the Central
Contractor Registry database.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2383
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Central Contractor Registry
Act of 2004''.
SEC. 2. CENTRAL CONTRACTOR REGISTRY DATABASE.
(a) Authority.--Chapter 137 of title 10, United States
Code, is amended by inserting after section 2302d the
following new section:
``Sec. 2302e. Central contractor registry
``(a) Establishment.--The Secretary of Defense shall
maintain a centralized, electronic database for the
registration of sources of property and services who seek to
participate in contracts and other procurements entered into
by the various procurement officials of the United States.
The database shall be known as the `Central Contractor
Registry'.
``(b) Taxpayer Information.--(1) The Central Contractor
Registry shall include the following tax-related information
for each source registered in that registry:
``(A) Each of that source's taxpayer identification
numbers.
``(B) The source's authorization for the Secretary of
Defense to obtain from the Commissioner of Internal Revenue--
``(i) verification of the validity of each of that source's
taxpayer identification numbers; and
``(ii) in the case of any of such source's registered
taxpayer identification numbers that is determined invalid,
the correct taxpayer identification number (if any).
``(2)(A) The Secretary of Defense shall require each
source, as a condition for registration in the Central
Contractor Registry, to provide the Secretary with the
information and authorization described in paragraph (1).
``(B) The Secretary shall--
``(i) warn each source seeking to register in the Central
Contractor Registry that the source may be subject to backup
for a failure to submit each such number to the Secretary;
and
``(ii) take the actions necessary to initiate the backup
withholding in the case of a registrant who fails to register
each taxpayer identification number valid for the registrant
and is subject to the backup withholding requirement.
``(3) A source registered in the Central Contractor
Registry is not eligible for a contract entered into under
this chapter or title III of the Federal Property and
Administrative Services Act of 1949 (41 U.S.C. 251 et seq.)
if that source--
``(A) has failed to provide the authorization described in
paragraph (1)(B);
``(B) has failed to register in that registry all valid
taxpayer identification numbers for that source; or
``(C) has registered in that registry an invalid taxpayer
identification number and fails to correct that registration.
``(4)(A) The Secretary of Defense shall make arrangements
with the Commissioner of Internal Revenue for each head of an
agency within the Department of Defense to participate in the
taxpayer identification number matching program of the
Internal Revenue Service.
``(B) The Commissioner of Internal Revenue shall cooperate
with the Secretary of Defense to determine the validity of
taxpayer identification numbers registered in the Central
Contractor Registry. As part of the cooperation, the
Commissioner shall promptly respond to a request of the
Secretary of Defense or the head of an agency within the
Department of Defense for electronic validation of a taxpayer
identification number for a registrant by notifying the
Secretary or head of an agency, respectively, of--
``(i) the validity of that number; and
``(ii) in the case of an invalid taxpayer identification
number, any correct taxpayer identification number for such
registrant that the Commissioner can promptly and reasonably
determine.
``(C) The Secretary shall transmit to a registrant a
notification of each of the registrant's taxpayer
identification numbers, if any, that is determined invalid by
the Commissioner of Internal Revenue and shall provide the
registrant with an opportunity to substitute a valid taxpayer
identification number.
``(5) The Secretary of Defense shall require that, at the
place in the Central Contractor Registry where the taxpayer
identification numbers of a registrant are to be displayed,
the display bear (as applicable)--
``(A) for each taxpayer identification number of that
registrant, an indicator of whether such number has been
determined valid, is
[[Page S4914]]
being reviewed for validity, or has been determined invalid;
or
``(B) an indicator that no taxpayer identification number
is required for the registrant.
``(6) This subsection applies to each source who registers
any information regarding that source in the Central
Contractor Registry after December 31, 2004, except that
paragraphs (1), (2), and (3) do not apply to a source who
establishes to the satisfaction of the Secretary of Defense
that such source is not required to have a taxpayer
identification number.
``(c) Confidentiality of Information.--The Secretary of
Defense shall ensure that taxpayer identification numbers in
the Central Contractor Registry are not made available to the
public. The Secretary shall prescribe a requirement for
procurement officials of the United States having access to
such numbers in that registry to maintain the confidentiality
of those numbers.''.
(b) Clerical Amendment.--The table of sections at the
beginning of such chapter is amended by inserting after the
item relating to section 2302d the following new item:
``2302e. Central Contractor Registry.''.
Mr. LEVIN. Mr. President, I rise today to join my colleagues,
Senators Norm Coleman, Susan Collins and Jack Reed, in introducing the
Central Contractor Registry Act of 2004. The purpose of this bipartisan
bill is to strengthen the ability of the Federal Government to stop tax
cheats from obtaining Federal contracts or use a portion of their
contract payments to repay their tax debts.
In February, the Permanent Subcommittee on Investigations, on which
Senator Coleman and I sit, held a hearing on a report by the General
Accounting Office which disclosed that over 27,000 contractors at the
Department of Defense owe $3 billion in unpaid taxes, mostly from
failing to transmit payroll taxes to the IRS. Think about that for a
minute--27,000 DOD contractors--more than one in every ten DOD
contractors--had outstanding tax debts at the same time they were
holding out their hands for taxpayer dollars.
Allowing tax cheats to bid on federal contracts is a disservice to
all of the honest taxpayers out there who manage to meet their tax
obligations. It is a disservice to all of the military men and women
who put their lives on the line for us every day. It is a disservice to
all of the honest companies that compete for the same DOD contracts,
since companies that do not pay their taxes have lower costs and a
competitive advantage over the companies that do.
Under current law, DOD has an obligation to identify any DOD
contractor with unpaid taxes, to withhold up to 15 percent of their
contract payments, and to forward that money to the IRS to be applied
to the contractor's tax debt. The official title of the DOD program to
carry out this obligation is the Federal Payment Levy Program, also
sometimes referred to as the DOD tax levy program.
The first step in the program is for DOD to identify tax delinquent
DOD contractors who are scheduled to get a contract payment in the near
future. To identify these contractors, DOD participates in a computer
matching program administered by the Treasury Department that cross-
checks DOD lists of upcoming contractor payments with IRS lists of
delinquent taxpayers. If a match occurs, DOD is supposed to withhold
money from the identified contractor's upcoming contract payments.
The problem is that the DOD-IRS computer matching program has so far
produced relatively few matches. In 2003, for example, DOD collected
only about $680,000 of back taxes through its tax levy program instead
of the $100 million that GAO estimates should have been collected. That
means DOD collected less than 1 percent of the back taxes it should
have.
On major impediment to the computer matching program has been that it
depends upon DOD's providing the correct taxpayer identification number
or TIN for each of its contractors, when many DOD contractors have
either failed to submit a TIN or supplied an incorrect number.
When a TIN is incorrect or missing, the computer matching program is
unable to determine whether the relevant DOD contractor is on the IRS
list of delinquent taxpayers. Data indicates that, in one year, DOD
sent the IRS over 26,000 invalid TINs that could not be used.
To increase the efficiency of the computer matching program, DOD and
the IRS have tried to improve the accuracy of the TINs in DOD's
contractor data. The IRS has, for example, set up a computer-based TIN
validation system that can electronically verify a TIN number in
seconds. This electronic system is available for use by DOD and all
other Federal agencies. Unfortunately, the IRS has also interpreted
certain tax laws as prohibiting DOD from obtaining TIN validations for
many types of contracts. In addition, in the case of TIN numbers with
clerical errors, the IRS has interpreted current taxpayer
confidentiality laws as prohibiting it from supplying DOD with a
corrected number.
The bill we are introducing today would eliminate this bureaucratic
red tape and significantly increase the effectiveness of the tax levy
program by increasing the accuracy of the TINs used by DOD.
The bill would strengthen TIN accuracy by focusing primarily on the
TINs in the Central Contractor Registry, a government-wide database of
persons wishing to bid on federal contracts. This registry is currently
administered by DOD, and current Federal regulations require potential
bidders to self-register in the system by supplying specified
information. As part of the process, registrants are currently supposed
to supply a TIN, but many either do not or supply an incorrect number.
The bill would, for the first time, impose a legal requirement on
registrants to supply a valid TIN and would also bar contracts from
being awarded to contractors who fail to supply a valid TIN.
In addition, the bill would require registrants to authorize DOD to
validate their TINs with the IRS and obtain a corrected TIN from the
IRS, if needed and possible. This requirement would apply to all
registrants in the Central Contractor Registry, no matter what type of
contract is involved and whether the contract is with DOD or another
Federal agency. It would also allow the IRS to supply corrected TINs
where it can promptly and reasonably do so.
If, by chance, a registrant managed to obtain a DOD contract without
having supplied a valid TIN, the bill would direct DOD to withhold a
portion of their contract payments to satisfy their tax debt as
specified under existing law. Although this backup holding requirement
has been on the books for years, DOD has not implemented it. The bill
would require DOD to start doing so.
Finally, the bill would provide a number of protections. It would
require DOD and other federal procurement officials not to make TIN
numbers available to the public, so that this information is kept
confidential within the procurement community using the Central
Contractor Registry. It would explicitly exempt from the TIN
requirements any contractor, such as a foreign business, not required
by U.S. law to have a taxpayer identification number. The bill would
also require DOD to show in the registry database whether a particular
TIN has been validated, is awaiting validation, has been found invalid,
or is not required, so that procurement officials using the database
will know the status of a contractor's TIN. If the IRS were to
determine that a particular TIN was invalid, the bill would require DOD
to give the relevant contractor an opportunity to correct the number.
DOD would also be required to warn all registrants in the Central
Contractor Registry of the possibility of backup withholding in the
event they fail to provide a valid TIN.
It is common business sense for the Federal Government to require
contractors who want to be paid with Federal taxpayer dollars to allow
the United States to determine whether they owe any taxes and, if so,
to offset a portion of their contract payments to reduce their tax
debts. To accomplish that objective, the Federal Government has to do a
better job in identifying federal contractors with unpaid taxes. Our
bill, by improving the accuracy of taxpayer identification numbers in
the Central Contractor Registry, will strengthen DOD's ability to
identify tax delinquent contractors and either deny them new contracts
or reduce their tax debts.
I hope all my colleagues will join us in supporting this
legislation's enactment during this Congress.
______
By Mr. BOND (for himself, Ms. Snowe, and Mr. Kennedy):
[[Page S4915]]
S. 2384. A bill to amend the Small Business Act to permit business
concerns that are owned by venture capital operating companies or
pension plans to participate in the Small Business Innovation Research
Program; to the Committee on Small Business and Entrepreneurship.
Mr. BOND. Mr. President, the United States biotechnology industry is
the world leader in innovation. This is due, in large part, to the
Federal Government's partnership with the private sector to foster
growth and commercialization in the hope that one day we will uncover a
cure for unmet medical needs such as cystic fibrosis, heart disease,
various cancers, multiple sclerosis, and AIDS.
However, the industry was dealt a major set-back when the Small
Business Administration (SBA) determined that venture-backed
biotechnology companies can no longer participate in the Small Business
Innovation Research (SBIR) program. Until recently, the SBIR program
was an example of a highly successful Federal initiative to encourage
economic growth and innovation in the biotechnology industry by funding
the critical start-up and development stages of a company.
Traditionally, to qualify for an SBIR grant a small-business
applicant had to meet two requirements; one, that the company have less
than 500 employees; and two, that the business be 51 percent owned by
one or more individuals. Recently, however, the SBA determined that the
term ``individuals'' only means natural persons, whereas for the past
20 years the term ``individual'' has included venture-capital
companies. As a result, biotech companies backed by venture-capital
funding in Missouri and throughout our Nation, who are on the cutting
edge of science, can no longer participate in the program.
The biotech industry is like no other in the world because it takes
such a long span of time and intense capital expenditures to bring a
successful product to market. In fact, according to a recent study
completed by the Tufts Center for the Study of Drug Development, it
takes roughly 10-15 years and $800 million dollars for a company to
bring just one product to market. As you can imagine, the industry's
entrepreneurs are seeking financial assistance wherever they can find
it.
For the past 20 years, the SBIR program has been a catalyst for
developing our Nation's most successful biotechnology companies. In
addition to these important government grants, venture-capital funding
plays a vital role in the financial support of these same companies.
The strength of our biotechnology industry is a direct result of
government grants and venture-capital working together.
However, some have argued that a biotech firm with a majority of
venture-capital backing is a large business. This is simply a bogus
conclusion. Venture-capital firms solely invest in biotech start-ups
for the possibility of a future innovation and financial return and
generally do not seek to take control over the management functions or
day-to-day operations of the company. Venture-capital firms that seek
to invest in small biotech businesses do not, simply by their
investment, turn a small business into a large business. These are
legitimate, small, start-up businesses. Let's not punish them.
Instead, we must work together to avoid stifling innovation. Let me
be clear. Our impact today will foster cures and medicines tomorrow
that were once thought to be inconceivable. However, the industry
cannot do it alone. We must nurture biotechnology and help the industry
grow for the future of our economy and for our well-being.
This bill that I am introducing today will do just that. It will
ensure that the biotechnology industry has access to SBIR grants, as it
has had for 20 years. It will level the playing field to ensure that
SBIR grants are given to small businesses based on fruitful science and
nothing else. This is still a young and fragile industry, and we are on
the cusp of great scientific advances. However, there will be profound
consequences if biotechnology companies continue to be excluded from
the SBIR program.
I ask unanimous consent that the full text of the bill be printed in
the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2384
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SBIR AWARDS TO BUSINESS CONCERNS OWNED BY VENTURE
CAPITAL OPERATING COMPANIES OR EMPLOYEE BENEFIT
OR PENSION PLANS.
(a) In General.--Section 9(f) of the Small Business Act (15
U.S.C. 638(f)) is amended by adding at the end the following:
``(4) Eligibility.--A business concern shall not be
prevented from participating in the Small Business Innovation
Research Program solely because such business concern is
owned in part by--
``(A) a venture capital operating company that is managed
and controlled by 1 or more United States citizens or
permanent resident aliens; or
``(B) an employee benefit or pension plan.''.
(b) Rulemaking Authority.--Not later than 180 days after
the date of enactment of this Act, the Administrator of the
Small Business Administration shall issue regulations to--
(1) carry out the amendment made by subsection (a);
(2) ensure that a Small Business Innovation Research award
is not given to a business concern that is majority owned
by--
(A) another business concern that is ineligible to
participate in the Small Business Innovation Research
Program; or
(B) a venture capital operating company or an employee
benefit or pension plan that is the alter ego,
instrumentality, or identity of another business concern that
is ineligible to participate in the Small Business Innovation
Research Program.
By Mr. BINGAMAN:
S. 2385. A bill to designate the United States courthouse at South
Federal Place in Santa Fe, New Mexico, as the ``Santiago E. Campos
United States Courthouse''; to the Committee on Environment and Public
Works.
Mr. BINGAMAN. Mr. President, I rise today with my colleague Senator
Domenici to introduce a bill to designate the United States Courthouse
in Santa Fe, NM as the ``Honorable Santiago E. Campos United States
Courthouse.'' Santiago Campos was appointed to the Federal Bench in
1978 by President Jimmy Carter and was the first Hispanic Federal judge
in New Mexico. He held the title of Chief U.S. District Judge from
February 5, 1987 to December 31, 1989 and took senior status in 1992.
Judge Campos was a dedicated and passionate public servant who spent
most of his life committed to working for the people of New Mexico and
our Nation. He served as a seaman first class in the United States Navy
from 1944 to 1946, as the Assistant Attorney General and then First
Assistant Attorney General of New Mexico from 1954 to 1957, and as a
district court judge from 1971 to 1978 in the First Judicial District
in the state of New Mexico. He was the prime mover in reestablishing
Federal court judicial activity in Santa Fe and had his chambers in the
courthouse there for over 22 years. For his dedication to the State,
Judge Campos received distinguished achievement awards in 1993 from
both the State Bar of New Mexico and the University of New Mexico.
Sadly, Judge Campos passed away January 20, 2001 after a long battle
with cancer. Judge Campos was an extraordinary jurist and served as a
role model and mentor to others in New Mexico. He was admired and
respected by all that knew him. I believe that it would be an
appropriate tribute to Judge Campos to have the courthouse in Santa Fe
bear his name.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2385
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. DESIGNATION OF SANTIAGO E. CAMPOS UNITED STATES
COURTHOUSE.
The United States courthouse at South Federal Place in
Santa Fe, New Mexico, shall be known and designated as the
``Santiago E. Campos United States Courthouse''.
SEC. 2. REFERENCES.
Any reference in a law, map, regulation, document, paper,
or other record of the United States to the United States
courthouse referred to in section 1 shall be deemed to be a
reference to the ``Santiago E. Campos United States
Courthouse''.
______
By Mr. CONRAD (for himself and Mr. Dorgan):
[[Page S4916]]
S. 2387. A bill to amend the Water Resources Development Act of 1999
to direct the Secretary of the Army to provide assistance to design and
construct a project to provide a continued safe and reliable municipal
water supply system for Devils Lake, North Dakota; to the Committee on
Environment and Public Works.
Mr. CONRAD. Mr. President, I rise today to introduce legislation to
authorize the U.S. Army Corps of Engineers to construct a new municipal
water supply system for the city of Devils Lake, ND. This project is
very important to the reliability of the water supply for the residents
of Devils Lake and is needed to mitigate long-term consequences from
the rising flood waters of Devils Lake.
As many of my colleagues know, the Devils Lake region has been
plagued by a flooding disaster since 1993. During that time, Devils
Lake, a closed basin lake, has risen 25 feet, consuming land,
destroying homes, and impacting vital infrastructure. As a result of
this disaster, the city of Devils Lake faces a significant risk of
losing its water supply. Currently, six miles or approximately one-
third of the city's 40-year-old water transmission line is covered by
the rising waters of Devils Lake. The submerged section of the water
line includes numerous gate valves, air relief valves, and blow-off
discharges.
All of the water for the city's residents and businesses must flow
through this single transmission line. It is also the only link between
the water source and the city's water distribution system. Since the
transmission line is operated under relatively low pressures and is
under considerable depths of water, a minor leak could cause
significant problems. If a failure in the line were to occur, it would
be almost impossible to identify the leak and make necessary repairs,
and the city would be left without a water supply.
The city is in the process of accessing a new water source due both
to the threat of a transmission line failure and the fact that its
current water source exceeds the new arsenic standard that will take
effect in 2006. The city has worked closely with the North Dakota State
Water Commission in identifying a new water source that will not be
affected by the rising flood waters and will provide the city with
adequate water to meet its current and future needs.
The bill I am introducing today will authorize the Corps to construct
a new water supply system for the city. I believe the Federal
Government has a responsibility to assist communities mitigate the
adverse consequences resulting from this ongoing flooding disaster. In
my view, the Corps should be responsible for addressing the unintended
consequences of this flood and mitigate its long-term consequences.
This bill will help the Federal Government live up to its
responsibility and ensure that the residents of Devils Lake have a safe
and reliable water supply. I urge my colleagues to review this
legislation quickly so we can pass it this year.
______
By Mr. ENSIGN (for himself, Mr. Miller, Mr. Smith, Mr. Graham of
South Carolina, Mr. Sessions, Mr. Kyl, Mr. Brownback, Mr.
Thomas, Mr. Burns, Mr. Lott, Mr. Coleman, Mr. Santorum, Mr.
Cornyn, Mr. Craig, and Mr. Allard):
S. 2389. A bill to require the withholding of United States
contributions to the United Nations until the President certifies that
the United Nations is cooperating in the investigation of the United
Nations Oil-for-Food Program; to the Committee on Foreign Relations.
Mr. ENSIGN. Mr. President, I rise today to introduce legislation in
the hopes that it will correct a grave injustice committed against the
people of Iraq as well as the honest and law-abiding citizens of the
world community.
We now believe that Saddam Hussein, corrupt U.N. officials, and
corrupt well-connected countries were the real benefactors of the Oil-
for-Food Program. Their benefits came from illegal oil shipments,
financial transactions, kickbacks, and surcharges and allowed Saddam
Hussein to build up his armed forces and live in the lap of luxury.
The evidence in this far-reaching scandal tells an unbelievable
story. In January of this year, the Iraqi Governing Council (IGC)
released a list of 270 former government officials, businessmen,
political parties, and foreign cronies of Hussein from more than 46
countries suspected of profiting from illegal oil sales that were part
of the U.N.'s Oil-for-Food Program.
Our own U.S. General Accounting Office estimates that Saddam Hussein
siphoned off $4.4 billion through oil sale surcharges. Saddam Hussein
also demanded kickbacks on the humanitarian relief side from suppliers
which amounted to 10-20 percent on many contracts.
Saddam used this revenue to rebuild Iraq's military capabilities, to
maintain lavish palaces, buy loyalty, oppress his people and
financially support terrorism. And as Claude Hankes-Drielsma, an IGC
consultant investigating the scandal testified, the secret payments
``provided Saddam Hussein and his corrupt regime with a convenient
vehicle through which he bought support internationally by bribing
political parties, companies and journalists . . . This secured the
cooperation and support of countries that included members of the
Security Council of the United Nations.''
The United Nations should be embarrassed.
What resulted from the goodwill gesture was international scandal,
corruption at the highest levels, and suffering Iraqi citizens. Not
exactly a model U.N. program.
Contrary to its protestations, the United Nations Secretariat had a
critical role in the implementation and management of the program. It
kept the contract records. It controlled the bank accounts and was the
only entity allowed to release Saddam Hussein's oil earnings. And it
arranged for the audits. As Secretary General Kofi Annan noted, ``under
the program, the [U.N.] Secretary General was required to supervise the
sale of Iraqi oil, and to monitor the spending of the proceeds on
specific goods and services for the benefit of the Iraqi people.''
Well, he did a lousy job.
Tasked by the international community to deny Saddam Hussein the
ability to rebuild his military apparatus while providing humanitarian
needs, the United Nations allowed the corrupt to become richer and
innocent Iraqis to be oppressed.
Today we have a chance to rectify that injustice. We must demand that
the United Nations cooperate completely with efforts to extrapolate the
truth from this scandal and punish the guilty. We know that the Volker
panel does not have subpoena power.
And we've now learned that officials acting on behalf of Benon Sevan,
the Executive Director of the Oil-for-Food Program, who is personally
implicated in the scandal, are asking contractors not to release
documents relating to the program to congressional investigators
without getting U.N. authorization. An April 2, 2004, U.N. letter to a
Swiss firm Cotecna reminded the firm that according to its contract all
documents: ``shall be property of the United Nations, shall be treated
as confidential and shall be delivered only to United Nations
authorized officials.'' Cotecna, was in charge of inspecting the
humanitarian goods shipped to Iraq under Oil-for-Food. It had Kofi
Annan's son Kojo on its payroll until the month it won its U.N.
contract. And an April 14 letter reminded a Dutch company called
Saybolt of its confidentiality agreements with the U.N., demanding
``that Saybolt address any further requests for documentation or
information concerning these matters to us.'' Saybolt was in charge of
making sure oil invoices matched shipments.
The United Nations should be more interested in bringing the truth to
light then trying to protect its tattered reputation and its corrupt
officials.
The legislation I am introducing today will hold the United Nations'
feet to the fire on this scandal. It calls for transparency and
accountability. Under this bill, the United Nations must allow GAO and
law enforcement agencies access to its Oil-for-Food records. U.N.
officials must waive their immunity for any crimes committed on United
States soil and repay their ill-gotten gains.
If not, 10 percent of our assessed U.N. regular budget contributions
will be withheld the first year and 20 percent the second year.
Granted, the withholding of $36 million in the first year is no where
near the more than $1 billion that the United Nations skimmed
[[Page S4917]]
off the top of Iraqi oil sales for administrative costs or the billions
that were stolen from the Iraqi people through corruption and
mismanagement. But the 10 percent withholding worked in the past when
the 103rd Congress used it to compel the United Nations to create an
inspector general. And I believe it can work again.
But we have to make an important choice first. We can do nothing and
allow the word ``humanitarianism'' to be the new code word for
corruption scandal from here on out. Or we can stand up and make the
United Nations rightfully accountable for the corruption that harmed
innocent Iraqis. The answer is clear. We must act.
The U.N. is broken. This scandal revealed that the U.N. Security
Council is unable to do its job when some members are more interested
in lining their pockets than preserving security. I contend that there
was no way that the U.S. could get France and Russia to enforce
Security Council resolutions on Iraq and go to war when so many of
their politically connected individuals, companies, and institutions
received Iraqi oil contracts. Victory brought their corruption to
light. And I am deeply worried that the ability of the United Nations
to convey ``legitimacy'' to the new Iraqi government and assist in
postwar Iraq is hampered by its history of corruption and mismanagement
in the Oil-for-Food program.
The U.N. needs to come clean and start over. The first step toward
doing that is to accept the terms and conditions of the Oil-for-Food
Accountability Act.
____________________