U.N. report: 2,392 :rms gave Iraq kickbacks

Volvo, Siemens, Daimler cited in Volcker inquiry

UNITED NATIONS — Volvo, Siemens and DaimlerChrysler were among 2,392 companies that paid kickbacks to Iraq in an aid program designed to allow Saddam Hussein to sell oil to buy food, medicine and other goods, former U.S. Federal Reserve chairman Paul Volcker said in a report Thursday. The European companies sold vehicles and electricutility equipment to Iraq, according to the report. “ Iraq’s largest source of income from the program came from kickbacks paid by companies it selected to receive contracts for humanitarian goods,” Volcker’s D nal report on the oil- for- food program said. Corruption in the Iraq aid effort has prompted a planned overhaul of U.N. management practices and threats from U.S. lawmakers to reduce American funding of the world body unless changes are carried out to improve accountability. France’s BNP Paribas, the bank chosen by the U.N. to handle payments under the program, didn’t scrutinize money L ows that investigators found were part of the corruption. The bank “ failed to implement an adequate system to identify such payments,” Volcker’s report said. Investigation of the oil- for- food program has so far produced U.S. indictments against two Russian citizens, a Texas oilman, a Bulgarian living in the USA and a London oil trader. DaimlerChrysler, the world’s D fth- largest carmaker, paid $ 7,134 to Iraq in the process of ful D lling four contracts for vehicles valued at $ 5.2 million, Volcker said. DaimlerChrysler said the payments were made by an “ area manager” without the knowledge or approval of the company’s executives, according to the report. Volvo, Europe’s largest truckmaker, paid $535,000 in kickbacks in the process of selling 35 vehicles valued at $ 11.8 million, the report said. It said the company declined requests for information about i ts dealing s with Iraq. Siemens, Europe’s largest engineering company, paid $87,276 in kickbacks in its sale of turbine equipment to Iraq in 2000, the report said. Siemens told the Volcker panel it “ cannot con D rm the committee’s allegations” and called the payment accusation “ premature and unjusti D ed,” according to the report. The Volcker investigation presented detailed information on payment that passed through BNP. The probe found that BNP branches, subsidiaries and af D liates transferred about $10 million in surcharge payments to Iraqi-controlled accounts in Jordan, Lebanon and the United Arab Emirates. Volcker has described the oil- for- food program as L awed from the start because it was a “ compact with the devil,” referring to Hussein. Mismanagement and corruption by U.N. of D cials “ weakened” the world body, he said in his D nal report Sept. 7 on its performance. U.N. Secretary-General Ko D Annan knew about Hussein’s corruption of the program and did little to stop the illegal activity, the Sept. 7 report said.