As you all will recall, the UN Secretary-General - Mr. Kofi Annan - appointed an independent commission to investigate the allegations.  This panel was chaired by the previous Chairman of the Federal Reserve under Jimmy Carter and Ronald Reagan.

Today, I came across this article, which basically covers all the issues I would have raised myself.

Where Volcker Got It Wrong

Volcker's investigation places much of the onus for this troubling event on the UN Secretariat's office. However, a fair reading of Volcker's conclusions is that Kofi Annan not only did not have a central role in this lamentable affair but bore scant responsibility from the onset. Instead the one nation which shoved the inquiry forward from the beginning was most culpable - the United States.          

Let's review the facts. Washington was complicit in two ways for what happened.

First, starting shortly after the end of the first Gulf War in 1991, it secretly allowed oil to be smuggled from Iraq to two US allies, Jordan and Turkey. Under this arrangement, Saddam Hussein managed to illegally rake in $11 billion of the $12.8 billion which he is estimated to have received overall unlawfully in the 1990s and early 2000 from oil-related transactions.

Then, under the separate oil-for-food program which Washington helped to initiate in the Security Council in 1996, Hussein skimmed off the last $1.8 billion or so (far below original estimates of $4.4 billion) from various contractors.

Critics, however, have hammered Kofi Annan for allowing both operations to go ahead without tight supervision. One must remember, nonetheless, that, for the Jordan/Turkey undertaking, Washington controlled the venture exclusively and would not permit any outsider to oversee its activities, so Annan could do nothing about the smuggling.

On the second matter - the oil-for-food program - commentators have assailed Annan for 1) appointing a smarmy official as head of the UN unit carrying out, on behalf of the Security Council, operations on the ground in Iraq; 2) permitting Saddam Hussein to select his own trading partners; and 3) not arranging internal audits on the program's transactions.

In all three instances, Annan was essentially blameless.

(my bold)

The author's arguments fully support what I observed for myself.

On the smuggling he is absolutely correct.  The Iraqis had American tacid approval to export oil to important allies - Jordan and Turkey - as their economies were suffering badly because of the sanctions. But in direct violation of the UN sanctions so eagerly pushed by the US.  I saw this for myself in Iraq, both on the road to the border with Jordan as well as with Turkey.  Tanker trucks literally bumper-to-bumper all the way to the border, thousands of them.  Why it is called smuggling is a mystery to me - it was all in the open for all to see (not to mention satellites), but the strongest member of the Security Council made sure that these smuggling operations - I mean sanction violations - were not cause for further sanctions against Iraq or the recipients.

This operation accounted for $11 billion of the $12.8 billion that flowed back to Saddam during the sanctions/OFF.

About $1.5 billion of the remaining $1.8 billion were kick-backs from the contractors that were awarded contracts for supply of humanitarian goods.  All contracts issued by the Iraqi Government were subject to scrutiny by the Sanctions Committee, also known as the 661-committee after Security Council Resolution 661 (1990) (which established the sanctions).  All the 5 permanent members of the Security Council (SC) were also members of this committee - hence, the US Mission to the UN had access to each and every contract issued.

Staff of the OFF alerted the committee over 70 times of suspected price irregularities - leading only to SC adoption of some revised procedures.

But the American government, in the end, never heeded any of its particulars on kickbacks.

Here is a pdf-summary (600KB) of the final Volcker report.

With the above in mind, it is utterly unfair to place the main blame on Annan.

There is still the problem of two UN employees accused of corrupt practices.  The head of the OFF, Mr, Benon Sevan is accused of illegally receiving oil allocations, as well as cash.  Mr. Alexander Yakovlev was not in the OFF - he was an official in the UN procurement division, now cooperating in the investigation that he solicited a bribe to influence the award of an inspection contract.  These are serious issues and major human failures.

However, it is a sad fact of human nature and at the end of the day, considering the thousands of UN staff passing through the OFF over the years and the enormous monetary sums involved - the level of corruption was extremely low by staff involved.

When comparing with the major fiasco that the occupation authorities has handled all aspects of reconstruction and humanitarian intervention - and all the moneys involved, it totally pales.  This could be subject for a separate diary entry, but you all know what I am talking about.  Hundreds of millions carried around in bags and sacks with paperwork missing; corrupt billion dollar no-bid contracts to administration cronies.  Extreme over-billing for shoddy work.  The list goes on.

But the UN 'scandal' is useful deflection from scrutiny of own failures.  And the MSM continue as the same useless tools, not checking, just reciting the administration's agenda.