Oil-for-food programme: Powell gives cautious response to Annan probe decision

US Secretary of State Colin Powell said on Saturday he was "deeply concerned" about allegations of corruption in a defunct UN-run humanitarian programme for Iraq and welcomed UN Secretary-General Kofi Annan's proposed probe.
Annan has been under pressure from Iraqi leaders as well as Powell and other US officials to investigate accusations of kickbacks and the siphoning off of funds by former President Saddam Hussein from the multibillion-dollar UN oil-for-food programme.
"We are concerned, deeply concerned that money that was supposed to be going to help the Iraqi people was diverted by Saddam Hussein, once again demonstrating the nature of the regime," Powell told reporters during a stopover in Kuwait.
"That money was not used for food or health care or clean water. It was used for palaces and debauchery," Powell said.
The programme handled more than $65 billion in oil revenues for food, medicine and other civilian goods ordered by Iraq in an attempt to ease the impact of 1991 Gulf War sanctions. It was shut down last year after the US-led invasion of Iraq that toppled Saddam.
In a letter to the UN Security Council, which supervised the programme, Annan late on Friday sought backing but not authorisation from the 15-member body. He said he would give more details next week about the inquiry.
The United Nations had begun an in-house probe of its own staff. Annan said it was now necessary to establish an "independent high-level inquiry to investigate the allegations relating to the administration and management of the programme, including allegations of fraud and corruption."
Powell said Paul Bremer, the US administrator in Iraq and the 25-member Iraqi Governing Council, had frozen all records in Baghdad and would make them available to various inquiries.
Ahmed Chalabi, head of the Iraqi Governing Council's finance committee and a fierce critic of the United Nations, is heading the Iraqi probe.
A comprehensive probe, UN officials said, would need support from council members to investigate the middlemen who bought the oil, companies that supplied civilian goods and the French bank BNP-Paribas, which handled a UN-Iraqi account.
Since some of the firms and individuals charged with accepting bribes are nationals of the 15 council nations, members could set limits on their co-operation.
Powell said the United States was advising "as to how we can expand the scope" of the investigation.
Annan, in his letter to the council, said a significant role in running the programme was played not only by the former Iraqi government but by member states as well as the UN secretariat.
He said that allegations in the media, whether or not they were well-founded, "must be taken seriously and addressed forthrightly, in order to bring to light the truth and prevent an erosion of trust and hope that the international community has invested in the organisation." The US General Accounting Office, an interagency body headed by the Treasury Department, is trying to locate and seize at least $10 billion in estimated hidden Iraqi assets. Of that amount, the GAO in a report on Thursday charged that Saddam acquired $5.7 billion from the proceeds of oil smuggled through Syria, Jordan, Turkey and elsewhere.
Iraqi elites raised a further $4.4 billion by imposing illegal surcharges and commissions on oil sales and suppliers of goods to Iraq.
The Iraqi Governing Council has released a list of people it said received illicit payments.
One person on the list was Benon Sevan, head of the UN programme, who has vigorously denied the allegations.