Testimony before the Committee on 

Agriculture, House of Representatives

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 10:00 a.m., EDT 

Wednesday, June 16, 2004 UNITED NATIONS 

Observations on the Oil for 

Food Program and Iraq’s 

Food Security 

Statement of Joseph A. Christoff, Director 

International Affairs and Trade 

GAO-04-880T 
www.gao.gov/cgi-bin/getrpt?GAO-04-880T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Joseph 

Christoff at (202) 512-8979 or 

christoffj@gao.gov. 

Highlights of GAO-04-880T, a testimony 

before the House Committee on 

Agriculture 

Wednesday, June 16, 2004

UNITED NATIONS

Observations on the Oil for Food 

Program and Iraq’s Food Security 

GAO estimates that from 1997- 2002, the former Iraqi regime acquired $10.1 

billion in illegal revenues, including $5.7 billion in oil smuggled out of Iraq 

and $4.4 billion through surcharges on oil sales and illicit commissions from 

suppliers exporting goods to Iraq through the Oil for Food program. This 

estimate includes oil revenue and contract amounts for 2002, updated letters 

of credit from prior years, and newer estimates of illicit commissions from 

commodity suppliers. 

The United Nations, through the Office of the Iraq Program (OIP) and the 

Security Council’s Iraq sanctions committee, were both responsible for 

overseeing the Oil for Food Program. However, the Security Council allowed 

the Iraq government, as a sovereign entity, to negotiate contracts directly 

with purchasers of Iraqi oil and suppliers of commodities. This structure 

was an important factor in allowing Iraq to levy illegal surcharges and 

commissions. OIP was responsible for examining Iraqi contracts for price 

and value, but it is unclear how it performed this function. The sanctions 

committee was responsible for monitoring oil smuggling, screening 

contracts for items that could have military uses, and approving oil and 

commodity contracts. The sanctions committee took action to stop illegal oil 

surcharges, but it is unclear what actions it took on contract commissions. 

U.N. external audit reports contained no findings of program fraud. 

Summaries of internal audit reports pointed to some concerns regarding 

procurement, coordination, monitoring, and oversight and concluded that 

OIP had generally responded to audit recommendations. Ongoing 

investigations of the Oil for Food program may wish to further examine how 

the structure of the program enabled the Iraqi government to obtain illegal 

revenues, the role of member states in monitoring and enforcing the 

sanctions, actions taken to reduce oil smuggling, and the responsibilities and 

procedures for assessing price reasonableness in commodity contracts. 

Evolving policy and implementation decisions on the food distribution 

system and the worsening security situation have affected the movement of 

food commodities within Iraq. As a result, as of June 2004, food warehouse 

stocks are low and Iraq has less than a month’s supply of essential food 

items, according to U.S. and World Food Program officials. In addition to 

these current food security challenges, the new government will have to 

balance the need to reform a costly food subsidy program with the need to 

maintain food stability and protect the poorest populations. Also, 

inadequate oversight and corruption in the Oil for Food program raise 

concerns about the Iraqi government’s ability to manage the food 

distribution system and absorb $32 billion in expected donor funds for 

reconstruction. The coalition authority has taken steps, such as appointing 

inspectors general, to build internal controls and accountability measures in 

Iraq’s ministries. 

The Oil for Food program was 

established by the United Nations 

and Iraq in 1996 to address 

concerns about the humanitarian 

situation after international 

sanctions were imposed in 1990. 

The program allowed the Iraqi 

government to use the proceeds of 

its oil sales to pay for food, 

medicine, and infrastructure 

maintenance. The program appears 

to have helped the Iraqi people. 

From 1996 through 2001, the 

average daily food intake increased 

from 1,300 to 2,300 calories. From 

1997-2002, Iraq sold more than $67 

billion of oil through the program 

and issued $38 billion in letters of 

credit to purchase commodities. 

However, over the years numerous 

allegations have surfaced 

concerning potential fraud and 

program mismanagement. 

GAO (1) reports on its estimates of 

the illegal revenue acquired by the 

former Iraqi regime in violation of 

U.N. sanctions, (2) provides 

observations on program 

administration; and (3) describes 

the current and future challenges in 

achieving food security. 
Page 1 GAO-04-880T 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss GAO’s review of the United 

Nations (U.N.) Oil for Food program and Iraq’s food security. 

In 1996, the United Nations and Iraq established the Oil for Food program 

to address growing concerns about the humanitarian situation after 

international sanctions were imposed in 1990. The program’s intent was to 

allow the Iraqi government to use the proceeds of its oil sales to pay for 

food, medicine, and infrastructure maintenance and, at the same time, 

prevent the regime from obtaining goods for military purposes. From 1997 

through 2002, Iraq sold more than $67 billion in oil through the program 

and issued $38 billion in letters of credit to purchase commodities.1

Today, we will (1) report on our estimates of the illegal revenue acquired 

by the former Iraqi regime in violation of U.N. sanctions, (2) provide our 

observations on the administration of the program, and (3) describe the 

current and future challenges in achieving food security. 

To address these objectives, we reviewed documents and statements from 

(1) the United Nations on its management and oversight responsibilities 

for the Oil for Food program; (2) the Coalition Provisional Authority 

(CPA), the Departments of Defense and State, and the United Nations and 

its World Food Program (WFP) on the current implementation of the 

program and challenges in ensuring a continued food supply; and (3) from 

the World Bank and Iraq’s 2004 budget regarding the effect of food 

subsidies on the Iraqi economy. We also reviewed all external audits to 

determine the use of Oil for Food funds prior to the transfer of the 

program to the CPA in November 2003. We did not have full access to the 

U.N. internal audits of the Oil for Food program, but we reviewed the 

summaries of 7 annual internal audits from 1996 to 2003 and had access to 

one report made publicly available in May 2004. We met with U.N. officials 

following the transfer of the program to the CPA and with numerous U.S. 

officials representing the CPA, the Departments of Defense and State, and 

the U.S. Agency for International Development, to examine current 

program management, the status of the food distribution system, and 

current and future food security challenges. 

 1

All references to Oil for Food estimates are in 2003 constant U.S. dollars. 
Page 2 GAO-04-880T 

We conducted our review from November 2003 through June 2004 in 

accordance with generally accepted government auditing standards. 

• From 1997 through 2002, we estimate that the former Iraqi regime 

acquired $10.1 billion in illegal revenues—$5.7 billion in oil smuggled 

out of Iraq and $4.4 billion in surcharges on oil sales and illicit charges 

from suppliers exporting goods to Iraq through the Oil for Food 

program. This estimate is higher than our May 2002 estimate of $6.6 

billion because it includes (1) oil revenue and contract amounts for 

2002, (2) updated letters of credit from prior years, and (3) newer 

estimates of illicit commissions from commodity suppliers. 

• The United Nations, through the Office of the Iraq Program (OIP) and 

the Security Council’s Iraq sanctions committee, were responsible for 

overseeing the Oil for Food Program. However, the Security Council 

allowed the Iraqi government, as a sovereign entity, to negotiate 

contracts directly with purchasers of Iraqi oil and suppliers of 

commodities. This structure was an important factor in enabling Iraq 

to levy illegal surcharges and commissions. OIP was responsible for 

examining Iraqi contracts for price and value, but it is unclear how it 

performed this function. The sanctions committee was responsible for 

monitoring oil smuggling, screening contracts for items that could have 

military uses, and approving oil and commodity contracts. The 

sanctions committee took action to stop illegal surcharges on oil, but it 

is unclear what actions it took on the commissions on commodity 

contracts. U.N. external audit reports contained no findings of program 

fraud. Summaries of internal audit reports provided to GAO pointed to 

some operational concerns in procurement, coordination, monitoring, 

and oversight. Ongoing investigations of the Oil for Food program may 

wish to further examine how the structure of the program enabled the 

Iraqi government to obtain illegal revenues, the role of member states 

in monitoring and enforcing the sanctions, actions taken to reduce oil 

smuggling, and the responsibilities and procedures for assessing price 

reasonableness in commodity contracts. 

• Evolving policy and implementation decisions on the food distribution 

system and the worsening security situation have affected the 

movement of food commodities within Iraq. As a result, according to 

U.S. and WFP officials, food warehouse stocks are low and the country 

has less than a month’s supply of essential food items, such as staple 

grains. In addition to these current food security challenges, the new 

government will have to balance the need to reform a costly food 

subsidy program with the need to maintain food stability and protect 

Summary 
Page 3 GAO-04-880T 

the poorest populations. Also, inadequate oversight and corruption in 

the Oil for Food program raise concerns about the Iraqi government’s 

ability to manage the food distribution system and absorb $32 billion in 

expected donor funds for reconstruction. The CPA has taken steps, 

such as appointing inspectors general, to build internal controls and 

accountability measures in Iraq’s ministries. 

In August 1990, Iraq invaded Kuwait, and the United Nations imposed 

sanctions against Iraq. Security Council resolution 661 of 1990 prohibited 

all nations from buying and selling Iraqi commodities, except for food and 

medicine. Security Council resolution 661 also prohibited all nations from 

exporting weapons or military equipment to Iraq and established a 

sanctions committee to monitor compliance and progress in implementing 

the sanctions. The members of the sanctions committee were members of 

the Security Council. Subsequent Security Council resolutions specifically 

prohibited nations from exporting to Iraq items that could be used to build 

chemical, biological, or nuclear weapons. In 1991, the Security Council 

offered to let Iraq sell oil under a U.N. program to meet its peoples’ basic 

needs. The Iraqi government rejected the offer, and over the next 5 years, 

the United Nations reported food shortages and a general deterioration in 

social services. 

In December 1996, the United Nations and Iraq agreed on the Oil for Food 

program, which permitted Iraq to sell up to $1 billion worth of oil every 90 

days to pay for food, medicine, and humanitarian goods. Subsequent U.N. 

resolutions increased the amount of oil that could be sold and expanded 

the humanitarian goods that could be imported. In 1999, the Security 

Council removed all restrictions on the amount of oil Iraq could sell to 

purchase civilian goods. The United Nations and the Security Council 

monitored and screened contracts that the Iraqi government signed with 

commodity suppliers and oil purchasers, and Iraq’s oil revenue was placed 

in a U.N.-controlled escrow account. In May 2003, U.N. resolution 1483 

requested the U.N. Secretary General to transfer the Oil for Food program 

to the CPA by November 2003. (Appendix I contains a detailed chronology 

of Oil for Food program and sanctions events.) The United Nations 

allocated 59 percent of the oil revenue for the 15 central and southern 

governorates, which were controlled by the central government; 13 

percent for the 3 northern Kurdish governorates; 25 percent for a war 

reparations fund for victims of the Iraq invasion of Kuwait in 1990; and 3 

percent for U.N. administrative costs, including the costs of weapons 

inspectors. 

Background 
Page 4 GAO-04-880T 

From 1997 to 2003, the Oil for Food program was responsible for more 

than $67 billion of Iraq's oil revenue. Through a large portion of this 

revenue, the United Nations provided food, medicine, and services to 24 

million people and helped the Iraqi government supply goods to 24 

economic sectors. Despite concerns that sanctions may have worsened the 

humanitarian situation, the Oil for Food program appears to have helped 

the Iraqi people. According to the United Nations, the average daily food 

intake increased from around 1,275 calories per person per day in 1996 to 

about 2,229 calories at the end of 2001. Malnutrition rates for children 

under 5 fell by more than half. In February 2002, the United Nations 

reported that the Oil for Food program had considerable success in 

several sectors such as agriculture, food, health, and nutrition by arresting 

the decline in living conditions and improving the nutritional status of the 

average Iraqi citizen. 

Since 1997, Iraq has imported almost 2.7 million metric tons of wheat 

annually. During the 1980s, Australia was Iraq’s primary wheat supplier 

with 38 percent of the market, and the United States was the second major 

supplier at 29 percent. By 1989, Iraq was the twelfth largest market for U.S. 

agricultural exports, including rice. Since 1997, however, Australia has 

dominated Iraq’s Oil for Food wheat trade with a 73 percent market share, 

and Vietnam has become a major supplier of rice to Iraq. The U.S. market 

share for wheat dropped to 6 percent during that time. U.S. wheat exports 

during the sanctions only occurred in 1997 and 1998. 

We estimate that, from 1997 through 2002, the former Iraqi regime 

acquired $10.1 billion in illegal revenues—$5.7 billion through oil smuggled 

out of Iraq and $4.4 billion through surcharges against oil sales and illicit 

commissions from commodity suppliers. This estimate is higher than the 

$6.6 billion in illegal revenues we reported in May 2002.2

 We updated our 

estimate to include (1) oil revenue and contract amounts for 2002, (2) 

updated letters of credit from prior years, and (3) newer estimates of illicit 

commissions from commodity suppliers. Appendix II describes our 

methodology for determining illegal revenues gained by the former Iraqi 

regime. 

 2

U.S. General Accounting Office, Weapons of Mass Destruction: U.N. Confronts 

Significant Challenges in implementing Sanctions Against Iraq, GAO-02-625

(Washington, D.C.: May 23, 2002). 

Former Iraqi Regime 

Acquired an 

Estimated $10.1 

Billion in Illicit 

Revenue 
Page 5 GAO-04-880T 

Oil was smuggled out through several routes, according to U.S. 

government officials and oil industry experts. Oil entered Syria by 

pipeline, crossed the borders of Jordan and Turkey by truck, and was 

smuggled through the Persian Gulf by ship. Jordan maintained trade 

protocols with Iraq that allowed it to purchase heavily discounted oil in 

exchange for up to $300 million in Jordanian goods. Syria received up to 

200,000 barrels of Iraqi oil a day in violation of the sanctions. Oil 

smuggling also occurred through Turkey and Iran. 

In addition to revenues from oil smuggling, the Iraqi government levied 

surcharges against oil purchasers and commissions against commodity 

suppliers participating in the Oil for Food program. According to some 

Security Council members, the surcharge was up to 50 cents per barrel of 

oil and the commission was 5 to 15 percent of the commodity contract. 

In our 2002 report, we estimated that the Iraqi regime received a 5-percent 

illicit commission on commodity contracts. However, a September 2003 

Department of Defense review found that at least 48 percent of 759 Oil for 

Food contracts that it reviewed were potentially overpriced by an average 

of 21 percent.3

 Food commodity contracts were the most consistently 

overpriced, with potential overpricing identified in 87 percent of the 

contracts by an average of 22 percent. The review also found that the use 

of middlemen companies potentially increased contract prices by 20 

percent or more. Defense officials found 5 contracts that included “aftersales service charges” of between 10 and 20 percent. 

In addition, interviews by U.S. investigators with high-ranking Iraqi regime 

officials, including the former oil and finance ministers, confirmed that the 

former regime received a 10-percent commission from commodity 

suppliers. According to the former oil minister, the regime instituted a 

fixed 10-percent commission in early 2001 to address a prior “compliance” 

problem with junior officials. These junior officials had been reporting 

lower commissions than what they had negotiated with suppliers and 

pocketing the difference. 

 3

The Defense Contract Audit Agency and the Defense Contract Management Agency, 

Report on the Pricing Evaluation of Contracts Awarded under the Iraq Oil for Food 

Program (Washington, D.C.: Sept. 12, 2003). 
Page 6 GAO-04-880T 

Both OIP, as an office within the U.N. Secretariat, and the Security 

Council’s sanctions committee were responsible for overseeing the Oil for 

Food Program. However, the Iraqi government negotiated contracts 

directly with purchasers of Iraqi oil and suppliers of commodities. While 

OIP was to examine each contract for price and value, it is unclear how it 

performed this function. The sanctions committee was responsible for 

monitoring oil smuggling, screening contracts for items that could have 

military uses, and approving oil and commodity contracts. The sanctions 

committee responded to illegal surcharges on oil purchases, but it is 

unclear what actions it took to respond to commissions on commodity 

contracts. Ongoing investigations of the Oil for Food program may wish to 

consider further examining how the structure of the program enabled the 

Iraqi government to obtain illegal revenues, the role of member states in 

monitoring and enforcing the sanctions, actions taken to reduce oil 

smuggling, and the responsibilities and procedures for assessing price 

reasonableness in commodity contracts. 

U.N. Security Council resolutions and procedures recognized the 

sovereignty of Iraq and gave the Iraqi government authority to negotiate 

contracts and decide on contractors. Security Council resolution 986 of 

1995 authorized states to import petroleum products from Iraq, subject to 

the Iraqi government’s endorsement of transactions. Resolution 986 also 

stated that each export of goods would be at the request of the 

government of Iraq. Security Council procedures for implementing 

resolution 986 further stated that the Iraqi government or the United 

Nations Inter-Agency Humanitarian Program would contract directly with 

suppliers and conclude the appropriate contractual arrangements. Iraqi 

control over contract negotiations was an important factor in allowing Iraq 

to levy illegal surcharges and commissions. 

When the United Nations first proposed the Oil for Food program in 1991, 

it recognized this vulnerability. At that time, the Secretary General 

proposed that the United Nations, an independent agent, or the 

government of Iraq be given the responsibility to negotiate contracts with 

oil purchasers and commodity suppliers. The Secretary General concluded 

that it would be highly unusual or impractical for the United Nations or an 

independent agent to trade Iraq’s oil or purchase commodities. He 

recommended that Iraq negotiate the contracts and select the contractors. 

However, he stated that the United Nations and Security Council would 

have to ensure that Iraq’s contracting did not circumvent the sanctions and 

was not fraudulent. The Security Council further proposed that U.N. 

United Nations and 

Security Council Had 

Responsibility for 

Oversight of Program, 

but Iraq Contracted 

Directly with 

Purchasers and 

Suppliers 

Iraq Negotiated Directly 

with Oil Purchasers and 

Suppliers 
Page 7 GAO-04-880T 

agents review contracts and compliance at Iraq’s oil ministry, but Iraq 

refused these conditions. 

OIP administered the Oil for Food program from December 1996 to 

November 2003. Under Security Council resolution 986 of 1995 and a 

memorandum of understanding between the United Nations and the Iraqi 

government, OIP monitored the sale of Iraq’s oil, monitoring Iraq’s 

purchase of commodities and the delivery of goods, and accounting for the 

program’s finances. The United Nations received 3 percent of Iraq’s oil 

export proceeds for its administrative and operational costs, which 

included the cost of U.N. weapons inspections. 

The sanctions committee’s procedures for implementing resolution 986 

stated that independent U.N. inspection agents were responsible for 

monitoring the quality and quantity of the oil shipped. The agents were 

authorized to stop shipments if they found irregularities. OIP hired a 

private firm to monitor Iraqi oil sales at exit points. However, the 

monitoring measures contained weaknesses. According to U.N. reports 

and a statement from the monitoring firm, the major offshore terminal at 

Mina al-Basra4

 did not have a meter to measure the oil pumped nor could 

onshore storage capacity be measured. Therefore, the U.N. monitors could 

not confirm the volume of oil loaded onto vessels. Also, in 2001, the oil 

tanker Essex took a large quantity of unauthorized oil from the platform 

when the monitors were off duty. In December 2001, the Security Council 

required OIP to improve the monitoring at the offshore terminal. As part 

of its strategy to repair Iraq’s oil infrastructure, the CPA plans to install 

reliable metering at Mina al-Basra and other terminals, but no contracts 

have been let.

OIP also was responsible for monitoring Iraq’s purchase of commodities 

and the delivery of goods. Security Council resolution 986, paragraph 

8a(ii) required Iraq to submit a plan, approved by the Secretary General, to 

ensure equitable distribution of Iraq’s commodity purchases. The initial 

distribution plans focused on food and medicines while subsequent plans 

were expansive and covered 24 economic sectors, including electricity, oil, 

and telecommunications. 

 4

Previously called Mina al-Bakar. 

OIP Was Responsible for 

Key Oversight Aspects of 

the Program 
Page 8 GAO-04-880T 

The sanctions committee’s procedures for implementing Security Council 

resolution 986 stated that experts in the Secretariat were to examine each 

proposed Iraqi commodity contract, in particular the details of price and 

value, and to determine whether the contract items were on the 

distribution plan. OIP officials told the Defense Contract Audit Agency 

they performed very limited, if any, pricing review. They stated that no 

U.N. resolution tasked them with assessing the price reasonableness of the 

contracts and no contracts were rejected solely on the basis of price. 

However, OIP officials stated that, in a number of instances, they reported 

to the sanctions committee that commodity prices appeared high, but the 

committee did not cite pricing as a reason to place holds on the contracts. 

For example, in October 2001, OIP experts reported to the sanctions 

committee that the prices in a proposed contract between Iraq and the AlWasel and Babel Trading Company appeared high. However, the sanctions 

committee reviewed the data and approved the contract. Subsequently, 

the Treasury Department identified this company as a front company for 

the former regime in April 2004. The United Nations also required all 

countries to freeze the assets of this company and transfer them to the 

Development Fund for Iraq in accordance with Security Council resolution 

1483.5

 

The sanctions committee’s procedures for implementing resolution 986 

stated that independent inspection agents will confirm the arrival of 

supplies in Iraq. OIP deployed about 78 U.N. contract monitors to verify 

shipments and authenticate the supplies for payment. OIP employees were 

able to visually inspect 7 to 10 percent of the approved deliveries. 

Security Council resolution 986 also requested the Secretary General to 

establish an escrow account for the Oil for Food Program and to appoint 

independent and certified public accountants to audit the account. The 

Secretary General established an escrow account at BNP Paribas for the 

deposit of Iraqi oil revenues and the issue of letters of credit to suppliers 

with approved contracts. The U.N. Board of Audit, a body of external 

public auditors, audited the account.6

 The external audits focused on 

 5

U.N. Security Council Res. 1483 (May 22, 2003). Paragraph 19 states that a Security 

Council committee will identify individuals and entities whose financial assets should be 

transferred to the Development Fund for Iraq. 

6

The U.N. Board of Auditors is comprised of the Auditors General of three member 

countries and their staff. Board members are appointed by the General Assembly for 6-year 

terms and one member rotates every 2 years. During the period of the Oil for Food program 

(1996-2003), France, Ghana, India, the Philippines, South Africa, and the United Kingdom 

served on the Board of Auditors. 

Audits Identified Some 

Operational Concerns 

but No Fraud 
Page 9 GAO-04-880T 

management issues related to the Oil for Food program and the financial 

condition of the Iraq account. U.N. auditors generally concluded that the 

Iraq account was fairly presented in accordance with U.N. financial 

standards. The reports stated that OIP was generally responsive to 

external audit recommendations. The external audits determined that oil 

prices were mostly in accordance with the fair market value of oil 

products to be shipped and checked to confirm that pricing was properly 

and consistently applied. They also determined that humanitarian and 

essential services supplies procured with oil funds generally met contract 

terms with some exceptions. U.N. external audit reports contained no 

findings of fraud during the program.

The U.N. Office of Internal Oversight Services (OIOS) conducted internal 

audits of the Oil for Food program and reported the results to OIP’s 

executive director. OIOS officials stated that they have completed 55 

audits and have 4 ongoing audits of the Oil for Food program. Overall, 

OIOS reported that OIP had made satisfactory progress in implementing 

most of its recommendations. We did not have access to individual OIOS 

audit reports except for an April 2003 report made publicly available in 

May 2004 that assessed the activities of the company contracted by the 

United Nations to authenticate goods coming into Iraq. It found that the 

contractor did not perform all required duties and did not adequately 

monitor goods coming into the northern areas of Iraq. We also reviewed 

7 brief summaries of OIOS reports covering the Oil for Food program from 

July 1, 1996, through June 30, 2003. These summaries identified a variety of 

operational concerns involving procurement, inflated pricing and 

inventory controls, coordination, monitoring, and oversight. In one case, 

OIOS cited purchase prices for winter items for displaced persons in 

northern Iraq that were on average 61 percent higher than local vendor 

quotes obtained by OIOS. In another case, an OIOS review found that there 

was only limited coordination of program planning and insufficient review 

and independent assessment of project implementation activities. 

The sanctions committee was responsible for three key elements of the Oil 

for Food Program: (1) monitoring implementation of the sanctions, 

(2) screening contracts to prevent the purchase of items that could have 

military uses, and (3) approving Iraq’s oil and commodity contracts. 

U.N. Security Council resolution 661 of 1990 directed all states to prevent 

Iraq from exporting products, including petroleum, into their territories. 

Paragraph 6 of resolution 661 established a sanctions committee to report 

to the Security Council on states’ compliance with the sanctions and to 

The Sanctions Committee 

Had a Key Role in 

Enforcing Sanctions and 

Approving Contracts 
Page 10 GAO-04-880T 

recommend actions regarding effective implementation. As early as June 

1996, the Maritime Interception Force, a naval force of coalition partners 

including the United States and Great Britain, informed the sanctions 

committee that oil was being smuggled out of Iraq through Iranian 

territorial waters. In December 1996, Iran acknowledged the smuggling 

and reported that it had taken action. In October 1997, the sanctions 

committee was again informed about smuggling through Iranian waters. 

According to multiple sources, oil smuggling also occurred through 

Jordan, Turkey, Syria, and the Gulf. Smuggling was a major source of illicit 

revenue for the former Iraqi regime through 2002. 

A primary function of the members of the sanctions committee was to 

review and approve contracts for items that could be used for military 

purposes. The United States conducted the most thorough review; about 

60 U.S. government technical experts assessed each item in a contract to 

determine its potential military application. According to U.N. Secretariat 

data in 2002, the United States was responsible for about 90 percent of the 

holds placed on goods to be exported to Iraq. As of April 2002, about $5.1 

billion worth of goods were being held for shipment to Iraq. According to 

OIP, no contracts were held solely on the basis of price. 

Under Security Council resolution 986 of 1995 and its implementing 

procedures, the sanctions committee was responsible for approving Iraq’s 

oil contracts, particularly to ensure that the contract price was fair, and for 

approving Iraq’s commodity contracts. The U.N.’s oil overseers reported in 

November 2000 that the oil prices proposed by Iraq appeared low and did 

not reflect the fair market value.7

 According to a senior OIP official, the 

independent oil overseers also reported in December 2000 that purchasers 

of Iraqi oil had been asked to pay surcharges. In March 2001, the United 

States informed the sanctions committee about allegations that Iraqi 

government officials were receiving illegal surcharges on oil contracts and 

illicit commissions on commodity contracts. The sanctions committee 

attempted to address these allegations by implementing retroactive pricing 

for oil contracts in 2001.8

 

 7

The sanctions committee received reports from the independent oil experts appointed by 

the Secretary General to determine whether there was fraud or deception in the oil 

contracting process. 

8

Under retroactive pricing, the Security Council did not approve a price per barrel until the 

oil was delivered to the refinery. The Iraq government signed contracts with suppliers 

without knowing the price it would have to pay until delivery. 
Page 11 GAO-04-880T 

It is unclear what actions the sanctions committee took to respond to 

illicit commissions on commodity contracts. Due to increasing concern 

about the humanitarian situation in Iraq and pressure to expedite the 

review process, the Security Council passed resolution 1284 in December 

1999 to direct the sanctions committee to accelerate the review process. 

Under fast-track procedures, the sanctions committee allowed OIP to 

approve contracts for food, medical supplies, and agricultural equipment 

(beginning in March 2000), water treatment and sanitation (August 2000), 

housing (February 2001), and electricity supplies (May 2001). 

Several investigations into the Oil for Food program are planned or under 

way. A U.N. inquiry officially began on April 21, 2004, with a Security 

Council resolution supporting the inquiry9

 and the appointment of three 

high-level officials to oversee the investigation. This investigation will 

examine allegations of corruption and misconduct within the United 

Nations Oil for Food program and its overall management of the 

humanitarian program. In addition, Iraq’s Board of Supreme Audit 

contracted with the accounting firm Ernst and Young to conduct an 

investigation of the program. Several U.S. congressional committees have 

also begun inquiries into U.N. management of the Oil for Food program 

and U.S. oversight through its role on the sanctions committee. 

These investigations of the Oil for Food program provide an opportunity to 

better quantify the extent of corruption, determine the adequacy of 

internal controls, and identify ways to improve future humanitarian 

assistance programs conducted within an economic sanctions framework. 

Based on our work, we have identified several questions that should be 

addressed: 

• How did the size and structure of the Oil for Food program enable the 

Iraqi government to obtain illegal revenues through illicit surcharges 

and commissions? 

• What was the role of U.N. member states in monitoring and enforcing 

the sanctions? What were the criteria used to certify national 

purchasers of oil and suppliers of commodities? 

• What actions, if any, were taken to reduce the smuggling of Iraqi oil? 

What precluded the sanctions committee from taking action? 

 9

U.N. Security Council Res. 1538 (April 21, 2004). 

Issues for Further 

Investigation 
Page 12 GAO-04-880T 

• Who assessed the reasonableness of prices for commodity contracts 

negotiated between the Iraqi government and suppliers and what 

actions were taken? How were prices for commodities assessed for 

reasonableness under fast-track procedures? 

Much of the information on surcharges on oil sales and illicit commissions 

on commodity contracts is with the Iraqi ministries in Baghdad and 

national purchasers and suppliers. We did not have access to this data to 

verify the various allegations of corruption associated with these 

transactions. Subsequent investigations of the Oil for Food program 

should include a statistical sampling of these transactions to more 

accurately document the extent of corruption and the identities of 

companies and countries that engaged in illicit transactions. This 

information would provide a basis for restoring those assets to the Iraqi 

government. 

Subsequent evaluations and audits should also consider an analysis of the 

lessons learned from the Oil for Food program and how future 

humanitarian programs of this nature should be structured to ensure that 

funds are spent on intended beneficiaries and projects. For example, 

analysts may wish to review the codes of conduct developed for the CPA’s 

Oil for Food coordination center and suppliers. In addition, U.N. 

specialized agencies implemented the program in the northern 

governorates while the program in central and southern Iraq was run by 

the central government in Baghdad. A comparison of these two 

approaches could provide insight on the extent to which the operations 

were transparent and the program delivered goods and services to the 

Iraqi people. 

Evolving policy and implementation decisions on the food distribution 

system and the worsening security situation have affected the movement 

of food commodities within Iraq. As a result, warehouse stocks are low, 

and Iraq has less than a month’s supply of several food items, including 

staple grains, and no buffer stock. The food distribution system created a 

dependency on food subsidies that disrupted private food markets. The 

government will have to decide whether to continue, reform, or eliminate 

the current system. In addition, inadequate oversight and corruption in the 

Oil for Food program raise concerns about the Iraqi government’s ability 

to manage the food distribution system and absorb donor reconstruction 

funds under existing structures. The CPA has taken steps, such as 

appointing inspectors general, to strengthen accountability measures in 

Iraq’s ministries. 

Challenges in 

Addressing Iraq’s 

Food Security 
Page 13 GAO-04-880T 

The CPA’s failed plans to privatize the food ration system and delayed 

negotiations with WFP on food procurement and distribution resulted in 

diminished stocks of food commodities and localized shortages in early 

2004. The CPA administrator discussed eliminating Iraq’s food distribution 

system and providing recipients with cash payments based on plans 

submitted to the CPA in summer 2003 that asserted that the system was 

expensive and depressed the agricultural sector. As a result, the Ministry 

of Trade began drawing down existing inventories of food. In December 

2003, as the security environment worsened, the administrator decided not 

to reform the ration system. In January 2004, the CPA negotiated a 

memorandum of understanding (MOU) with WFP and the Ministry of 

Trade that committed WFP to procuring a 3-month buffer food stock by 

March 31, 2004, and assuming the delivery of food to hub warehouses 

inside Iraq through June 2004. The MOU was delayed due to disagreements 

about emergency food procurement, contract terms, and the terms of 

WFP’s involvement. No additional food was procured during the 

negotiations, and food stocks diminished and localized shortages 

occurred in early 2004. WFP completed its buffer stock procurement by 

March 31, 2004. The Ministry of Trade assumed responsibility for food 

procurement on April 1, 2004, and will implement the distribution system 

after June 30, 2004. 

A U.S. official stated in early March 2004 that coordination between WFP 

and the Ministry of Trade had been deteriorating. The Ministry had not 

provided WFP with complete and timely information on monthly food 

allocation plans, weekly stock reports, or information on cargo arrivals, as 

the MOU required. WFP staff reported that the Ministry’s data were 

subject to sudden, large, and unexplained stock adjustments, thereby 

making it difficult to plan deliveries. A State Department official noted in 

April 2004 that coordination between WFP and the Ministry was 

improving. However, according to early June 2004 discussions with other 

U.S. officials, these coordination problems are continuing. 

The security environment in Iraq has affected the movement of Oil for 

Food goods since the fall of 2003. A September 2003 U.N. report found that 

the evacuation of U.N. personnel from Baghdad, following the bombing of 

the U.N. office in August 2003, affected the timetable and procedures for 

the transfer of the Oil for Food program to the CPA and contributed to 

delays in prioritizing and renegotiating contracts. The August bombing of 

the U.N. office also resulted in the temporary suspension of the border 

inspection process and shipments of humanitarian supplies and 

equipment. A March 2004 CPA report noted that stability of the food 

supply would be affected if security conditions worsened. 

Inadequate Planning, 

Coordination, and Security 

Have Resulted in Tenuous 

Food Supplies 
Page 14 GAO-04-880T 

According to an Oil for Food coordination center official, the worsening 

security situation during April 2004 affected food supplies. As of early 

June, major food transport corridors from Jordan and the port of Umm 

Qasr are restricted due to security concerns, and border crossings from 

Jordan, Syria, and Turkey are congested. Also, fewer drivers are willing to 

work in this environment, thereby reducing the movement of food from 

the borders and ports to the food warehouses. This situation is 

exacerbated by congestion at the major port of Umm Qasr, which is 

operating at 50 percent of its capacity due to inadequate fuel and power 

supply, off-loading delays, dredging activity, inadequate storage capacity, 

and security concerns. 

Initial planning and management problems, combined with security and 

port congestion issues limiting the movement of food, have resulted in the 

drawing down of warehouse food stocks. The food supply situation was 

described as tenuous by several U.S. and WFP sources in early June. At 

that time, Iraq had less than a 1-month food supply for several items in the 

food basket, including grains. About 360,000 metric tons of the 1.6 million 

metric tons procured for the buffer stock had arrived as of June 10, but the 

full amount will not be delivered until September, according to a WFP 

official. Moreover, these commodities are not being reserved as a buffer 

stock, but are immediately used as operating stocks. 

U.S. officials are concerned that, as the Iraqi government assumes full 

responsibility for food distribution on July 1, 2004, it will find it difficult to 

manage the food distribution system given low food supplies. According to 

U.S. and WFP officials, the Ministry of Trade implemented the food 

distribution system during the Oil for Food program under more favorable 

conditions. For example, the Ministry was able to maintain at least a 6-

month food inventory and operate in a more secure environment. 

The Oil for Food program facilitated the operation of the Public 

Distribution System run by Iraq’s Ministry of Trade. Under this system, 

each Iraqi is eligible to receive a monthly “food basket” that normally 

consists of a dozen items.10

 10Wheat flour, rice, vegetable ghee (semifluid clarified butter used for cooking), pulses 

(edible seeds of various leguminous crops, such as peas, beans, or lentils), sugar, tea, salt, 

milk, infant formula, weaning cereal, soap, and detergent. 

Food Distribution System 

Essential for Current Food 

Security But May Not Be 

Sustainable 
Page 15 GAO-04-880T 

After the CPA transfers responsibility for the food distribution system to 

the Iraqi provisional government in July 2004, the government will have to 

decide whether to continue, reform, or eliminate the current system. 

Documents from the Ministries of Finance and Planning indicate that the 

annual cost of maintaining the system is as high as $5 billion, or about 25 

percent of total government expenditures. In 2005 and 2006, expenditures 

for food will be almost as much as all expenditures for capital projects. 

According to a September 2003 joint U.N. and World Bank needs 

assessment of Iraq,11 the food subsidy, given out as a monthly ration to the 

entire population, staved off mass starvation during the time of the 

sanctions, but disrupted the market for food grains produced locally. The 

agricultural sector had little incentive to produce crops in the absence of a 

promising market. 

However, the Iraqi government may find it politically difficult to scale back 

the food distribution system with an estimated 60 percent of the 

population relying on monthly rations as their primary source of nutrition. 

WFP is completing a vulnerability assessment that Iraq could use to make 

future decisions on food security programs and better target food items to 

those most in need. WFP’s preliminary assessment results found that 10 

percent of the population was extremely poor and needed food aid in 

addition to the Public Distribution System. WFP is also developing an 

emergency operation plan to meet the needs of vulnerable populations. In 

addition, in April 2004, a USAID contractor submitted a strategy for a 

short-term plan to stabilize the agricultural sector by providing agricultural 

supplies, re-establishing domestic wheat markets, rehabilitating irrigation 

systems, and rehabilitating Ministry of Agriculture facilities. The strategy 

also includes a medium-term plan to create appropriate agricultural 

policies, provide capacity building for market-led agriculture, and 

strengthen the agricultural sector through national programs. 

In the absence of significant reforms, the history of inadequate oversight 

and corruption in the Oil for Food program raises questions about the Iraqi 

government’s ability to manage the import and distribution of food 

commodities and the billions in international assistance expected to flow 

into the country. The CPA and Iraqi ministries must address corruption to 

help ensure that the food distribution system is managed with transparent 

and accountable controls. Building these internal control and 

 11United Nations/World Bank, Joint Iraq Needs Assessment: Agriculture, Water Resources, 

and Food Security (New York: October 2003). 

Addressing Corruption 
Page 16 GAO-04-880T 

accountability measures into the operations of Iraqi ministries will also 

help safeguard the $18.4 billion in fiscal year 2004 U.S. reconstruction 

funds and $13.8 billion pledged by other countries. 

To address these concerns and oversee government operations, the CPA 

administrator appointed inspectors general for Iraq’s 26 national 

ministries. At the same time, the CPA announced the establishment of two 

independent agencies to work with the inspectors general—the 

Commission on Public Integrity and a Board of Supreme Audit. Finally, the 

United States will spend about $1.63 billion on governance-related 

activities in Iraq, which will include building an effective financial 

management system in Iraq’s ministries. 

The CPA’s coordination center continues to provide on-the-job training for 

ministry staff who will assume responsibility for food contracts after July 

2004. Coalition personnel have provided Iraqi staff with guidance on 

working with suppliers in a fair and open manner and determining when 

changes to letters of credit are appropriate. In addition, according to 

center staff, coalition and Iraqi staff signed a code of conduct, which 

outlined proper job behavior. Among other provisions, the code of 

conduct prohibited kickbacks and secret commissions from suppliers. The 

center also developed a code of conduct for suppliers. In addition, the 

center has begun implementing the steps needed for the transition of full 

authority to the Iraqi ministries. These steps include transferring contractrelated documents, contacting suppliers, and providing authority to amend 

contracts. In addition, the January 2004 MOU agreement commits WFP to 

training ministry staff in procurement and transport functions through 

June 30, 2004. Ten ministry staff are being trained at WFP headquarters in 

Rome, Italy. 

Mr. Chairman and Members of the Committee, this concludes my prepared 

statement. I will be happy to answer any questions you may have. 

For questions regarding this testimony, please call Joseph Christoff at 

(202) 512-8979. Other key contributors to this statement were Pamela 

Briggs, Mark Connelly, Lynn Cothern, Zina Merritt, Tetsuo Miyabara, 

Valerie Nowak, Stephanie Robinson, Jonathan Rose, Richard Seldin, 

Audrey Solis, Roger Stoltz, and Phillip Thomas. 

Contacts and 

Acknowledgments 
Page 17 GAO-04-880T 

We used the following methodology to estimate the former Iraqi 

regime’s illicit revenues from oil smuggling, surcharges on oil, and 

commissions from commodity contracts from 1997 through 2002: 

• To estimate the amount of oil the Iraqi regime smuggled, we used 

Energy Information Administration (EIA) estimates of Iraqi oil 

production and subtracted oil sold under the Oil for Food program and 

domestic consumption. The remaining oil was smuggled through 

Turkey, the Persian Gulf, Jordan, and Syria (oil smuggling to Syria 

began late 2000). We estimated the amount of oil to each destination 

based on information from and discussions with officials of EIA, 

Cambridge Energy Research Associates, the Middle East Economic 

Survey, and the private consulting firm Petroleum Finance. 

• We used the price of oil sold to estimate the proceeds from smuggled 

oil. We discounted the price by 9 percent for the difference in quality. 

We discounted this price by 67 percent for smuggling to Jordan and by 

33 percent for smuggling through Turkey, the Persian Gulf, and Syria. 

According to oil industry experts, this is representative of the prices 

paid for smuggled oil. 

• To estimate the amount Iraq earned from surcharges on oil, we 

multiplied the barrels of oil sold under the Oil for Food program from 

1997 through 2002 by 25 cents per barrel. According to Security 

Council members, the surcharge varied, but Iraq tried to get as much 

as 50 cents per barrel. Industry experts also stated the surcharge 

varied. 

• To estimate the commission from commodities, we multiplied Iraq’s 

letters of credit for commodity purchases by 5 percent for 1997 

through 1998 and 10 percent for 1999 through 2002. According to 

Security Council members, the commission varied from 5 percent to 10 

percent. This percentage was also confirmed in interviews conducted 

by U.S. officials with former Iraqi regime ministers of oil, finance, and 

trade and with Saddam Hussein’s presidential advisors. 

GAO did not obtain source documents and records from the former regime 

about its smuggling, surcharges, and commissions. Our estimate of illicit 

revenues is therefore not a precise accounting number. Areas of 

uncertainty in our estimate include: 

• GAO’s estimate of the revenue from smuggled oil is less than the 

estimates of U.S. intelligence agencies. We used estimates of Iraqi oil 

production and domestic consumption for our calculations. U.S. 

Appendix I: Scope and Methodology 
Page 18 GAO-04-880T 

intelligence agencies used other methods to estimate smuggling. 

• GAO’s estimate of revenue from oil surcharges is based on a surcharge 

of 25 cents per barrel from 1997 through 2002. However, the average 

surcharge could be lower. U.N. Security Council members and oil 

industry sources do not know when the surcharge began or ended or 

the precise amount of the surcharge. One oil industry expert stated 

that the surcharge was imposed at the beginning of the program but 

that the amount varied. Security Council members and the U.S. 

Treasury Department reported that surcharges ranged from 10 cents to 

50 cents per barrel. As a test of reasonableness, GAO compared the 

price paid for oil under the Oil for Food program with a proxy oil price 

for the period 1997 through 2002. We found that for the entire period, 

the price of Iraqi oil was considerably below the proxy price. Oil 

purchasers would have to pay below market price to have a margin to 

pay the surcharge. 

GAO’s estimate of the commission on commodities could be understated. 

We calculated commissions based on the commodity contracts for the 15 

governorates in central and southern Iraq (known as the “59-percent 

account” because these governorates received this percentage of Oil for 

Food revenues). We excluded contracts for the three northern 

governorates (known as the “13-percent account”). However, the former 

Iraqi regime negotiated the food and medical contracts for the northern 

governorates, and the Defense Contract Audit Agency found that some of 

these contracts were potentially overpriced. The Defense Contract Audit 

Agency also found extra fees of between 10 and 20 percent on some 

contracts.
Page 19 GAO-04-880T 

Date Event/Action Summary 

Aug. 2, 1990 U.N. Security Council 

Resolution 660 

Iraqi forces invaded Kuwait. Resolution 660 condemned the invasion and 

demands immediate withdrawal from Kuwait. 

Aug. 6, 1990 U.N. Security Council 

Resolution 661 

Imposed economic sanctions against the Republic of Iraq. The resolution called 

for member states to prevent all commodity imports from Iraq and exports to 

Iraq, with the exception of supplies intended strictly for medical purposes and, in 

humanitarian circumstances, foodstuffs. 

Aug. 6, 1990 Operation Desert Shield President Bush ordered the deployment of thousands of U.S. forces to Saudi 

Arabia. 

Nov. 5, 1990 U.S. legislation Public Law 101-513, § 586C, prohibited the import of products from Iraq into the 

United States and the export of U.S. products to Iraq. 

Jan. 12, 1991 U.S. legislation Iraq War Powers Resolution authorized the president to use “all necessary 

means” to compel Iraq to withdraw military forces from Kuwait. 

Jan. 16, 1991 Operation Desert Storm Operation Desert Storm was launched: coalition operation was targeted to force 

Iraq to withdraw from Kuwait. 

Feb. 28, 1991 Gulf War cease-fire Iraq announced acceptance of all relevant U.N. Security Council resolutions. 

Apr. 3, 1991 U.N. Security Council 

Resolution 687 

(Cease-Fire Resolution) 

Mandated that Iraq must respect the sovereignty of Kuwait and declare and 

destroy all ballistic missiles with a range of more than 150 kilometers as well as 

all weapons of mass destruction and production facilities. 

Jun. 17, 1991 Creation of U.N. Special 

Commission 

The U.N. Special Commission (UNSCOM) was charged with monitoring Iraqi 

disarmament as mandated by U.N. resolutions and to assist the International 

Atomic Energy Agency in nuclear monitoring efforts. 

Aug. 15, 1991 U.N. Security Council 

Resolution 706 

Proposed the creation of an Oil for Food program and authorized an escrow 

account to be established by the Secretary General. Iraq rejected the terms of 

this resolution. 

Sep. 19, 1991 U.N. Security Council 

Resolution 712 

Second attempt to create an Oil for Food program. Iraq rejected the terms of 

this resolution. 

Oct. 2, 1992 U.N. Security Council 

Resolution 778 

Authorized transferring money produced by any Iraqi oil transaction on or after 

August 6, 1990, which had been deposited into the escrow account, to the 

states or accounts concerned as long as the oil exports took place or until 

sanctions were lifted. 

Apr. 14, 1995 U.N. Security Council 

Resolution 986 

Allowed Iraq to sell $1 billion worth of oil every 90 days. Proceeds were to be 

used to procure foodstuffs, medicine, and material and supplies for essential 

civilian needs. Resolution 986 was supplemented by several U.N. resolutions 

over the next 7 years that extended the Oil for Food program for different 

periods of time and increased the amount of exported oil and imported 

humanitarian goods. 

Mar. 27, 1996 U.N. Security Council 

Resolution 1051 

Established the export and import monitoring system for Iraq. 

May 20, 1996 Government of Iraq and the United 

Nations 

Signed a memorandum of understanding allowing Iraq’s export of oil to pay for 

food, medicine, and essential civilian supplies. 

Jun. 17, 1996 United States Based on information provided by the Multinational Interception Force (MIF), 

communicated concerns about alleged smuggling of Iraqi petroleum products 

through Iranian territorial waters in violation of resolution 661 to the Security 

Council sanctions committee. 

Appendix II: Timeline of Major Events 

Related to Sanctions Against Iraq and the 

Administration of the Oil for Food Program 
Page 20 GAO-04-880T 

Date Event/Action Summary 

Jul. 9, 1996 U.N. Security Council Sanctions 

Committee 

Committee members asked the United States for more factual information about 

smuggling allegations, including the final destination and the nationality of the 

vessels involved. 

Aug. 28, 1996 U.S. delegation to the U.N. Security 

Council Sanctions Committee 

Provided briefing on the Iraqi oil smuggling allegations to the sanctions 

committee. 

Dec. 3, 1996 Islamic Republic of Iran Permanent 

Representative to the United 

Nations 

Acknowledged that some vessels carrying illegal goods and oil to and from Iraq 

had been using the Iranian flag and territorial waters without authorization and 

that Iranian authorities had confiscated forged documents and manifests. 

Representative agreed to provide the results of the investigations to the 

sanctions committee once they were available. 

Dec. 10, 1996 Iraq and the United Nations Phase I of the Oil for Food program began. 

Jun. 4, 1997 U.N. Security Council 

Resolution 1111 

Extended the term of resolution 986 another 180 days (phase II). 

Sep. 12, 1997 U.N. Security Council 

Resolution 1129 

Authorized special provision to allow Iraq to sell petroleum in a more favorable 

time frame. 

Oct. 8, 1997 Representatives of the United 

Kingdom of Great Britain and 

Northern Ireland to the United 

Nations 

Brought the issue of Iraqi smuggling petroleum products through Iranian 

territorial waters to the attention of the U.N. Security Council sanctions 

committee. 

Nov. 18, 1997 Coordinator of the Multinational 

Interception Force (MIF) 

Reported to the U.N. Security Council sanctions committee that since February 

1997 there had been a dramatic increase in the number of ships smuggling 

petroleum from Iraq inside Iranian territorial waters. 

Dec. 4, 1997 U.N. Security Council 

Resolution 1143 

Extended the Oil for Food program another 180 days (phase III). 

Feb. 20, 1998 U.N. Security Council 

Resolution 1153 

Raised Iraq’s export ceiling of oil to about $5.3 billion per 6-month phase (phase 

IV). 

Mar. 25, 1998 U.N. Security Council 

Resolution 1158 

Permitted Iraq to export additional oil in the 90 days from March 5, 1998, to 

compensate for delayed resumption of oil production and reduced oil price. 

Jun. 19, 1998 U.N. Security Council 

Resolution 1175 

Authorized Iraq to buy $300 million worth of oil spare parts to reach the export 

ceiling of about $5.3 billion. 

Aug. 14, 1998 U.S. legislation Public Law 105-235, a joint resolution finding Iraq in unacceptable and material 

breach of its international obligations. 

Oct. 31, 1998 U.S. legislation: Iraq Liberation Act Public Law 105-338, § 4, authorized the president to provide assistance to Iraqi 

democratic opposition organizations. 

Oct. 31, 1998 Iraqi termination of U.N. Special 

Commission (UNSCOM) Activity 

Iraq announced it would terminate all forms of interaction with UNSCOM and 

that it would halt all UNSCOM activity inside Iraq. 

Nov. 24, 1998 U.N. Security Council 

Resolution 1210 

Renewed the Oil for Food program for 6 months beyond November 26 at the 

higher levels established by resolution 1153. The resolution included additional 

oil spare parts (phase V). 

Dec. 16, 1998 Operation Desert Fox Following Iraq’s recurrent blocking of U.N. weapons inspectors, President 

Clinton ordered 4 days of air strikes against military and security targets in Iraq 

that contribute to Iraq’s ability to produce, store, and maintain weapons of mass 

destruction and potential delivery systems. 
Page 21 GAO-04-880T 

Date Event/Action Summary 

Mar. 3, 1999 President Clinton Report to 

Congress 

President Clinton provided the status of efforts to obtain Iraq’s compliance with 

U.N. Security Council resolutions. He discussed the MIF report of oil smuggling 

out of Iraq and smuggling of other prohibited items into Iraq. 

May 21, 1999 U.N. Security Council 

Resolution 1242 

Renewed the Oil for Food program another 6 months (phase VI). 

Oct. 4, 1999 U.N. Security Council 

Resolution 1266 

Permitted Iraq to export an additional amount of $3.04 billion of oil to make up 

for revenue deficits in phases IV and V. 

Nov. 19, 1999 U.N. Security Council 

Resolution 1275 

Extended phase VI of the Oil for Food program for 2 weeks until December 4, 

1999. 

Dec. 3, 1999 U.N. Security Council 

Resolution 1280 

Extended phase VI of the Oil for Food program for 1 week until December 11, 

1999. 

Dec. 10, 1999 U.N. Security Council 

Resolution 1281 

Renewed the Oil for Food program another 6 months (phase VII). 

Dec. 17, 1999 U.N. Security Council 

Resolution 1284 

Abolished Iraq’s export ceiling to purchase civilian goods. Eased restrictions on 

the flow of civilian goods to Iraq and streamlined the approval process for some 

oil industry spare parts. Also established the United Nations Monitoring, 

Verification and Inspection Commission (UNMOVIC). 

Mar. 31, 2000 U.N. Security Council 

Resolution 1293 

Increased oil spare parts allocation from $300 million to $600 million under 

phases VI and VII. 

Jun. 8, 2000 U.N. Security Council 

Resolution 1302 

Renewed the Oil for Food program another 180 days until December 5, 2000 

(phase VIII). 

Dec. 5, 2000 U.N. Security Council 

Resolution 1330 

Extended the Oil for Food program another 180 days (phase IX). 

Mar. 8, 2001 Deputy U.S. Representative to the 

United Nations Remarks to the 

Security Council 

Ambassador Cunningham acknowledged Iraq’s illegal re-export of humanitarian 

supplies, oil smuggling, establishment of front companies, and payment of 

kickbacks to manipulate and gain from Oil for Food contracts. Also 

acknowledged that the United States had put holds on hundreds of Oil for Food 

contracts that posed dual-use concerns. 

Mar. 8, 2001 Acting U.S. Representative to the 

United Nations Remarks to the 

Security Council 

Ambassador Cunningham addressed questions regarding allegations of 

surcharges on oil and smuggling. Acknowledged that oil industry 

representatives and other Security Council members provided the United States 

anecdotal information about Iraqi surcharges on oil sales. Also acknowledged 

companies claiming they were asked to pay commissions on contracts. 

Jun. 1, 2001 U.N. Security Council 

Resolution 1352 

Extended the terms of resolution 1330 (phase IX) another 30 days. 

Jul. 3, 2001 U.N. Security Council 

Resolution 1360 

Renewed the Oil for Food program an additional 150 days until November 30, 

2001 (phase X). 

Nov. 29, 2001 U.N. Security Council 

Resolution 1382 

The resolution stipulated that a new Goods Review List would be adopted and 

that relevant procedures would be subject to refinement. Renewed the Oil for 

Food program another 180 days (phase XI). 

May 14, 2002 U.N. Security Council 

Resolution 1409 

UNMOVIC reviewed export contracts to ensure that they contain no items on a 

designated list of dual-use items known as the Goods Review List. The 

resolution also extended the program another 180 days (phase XII). 

Nov. 6, 2002 U.N. Security Council Sanctions 

Committee 

MIF reported that there had been a significant reduction in illegal oil exports 

from Iraq by sea over the past year but noted oil smuggling was continuing. 
Page 22 GAO-04-880T 

Date Event/Action Summary 

Nov. 25, 2002 U.N. Security Council 

Resolution 1443 

Extended phase XII of the Oil for Food program another 9 days. 

Dec. 4, 2002 U.N. Security Council 

Resolution 1447 

Renewed the Oil for Food program another 180 days until June 3, 2003 (phase 

XIII). 

Dec. 30, 2002 U.N. Security Council 

Resolution 1454 

Approved changes to the list of goods subject to review by the sanctions 

committee. 

Mar. 12, 2003 U.N. Security Council Sanctions 

Committee 

Chairman reported on a number of alleged sanctions violations noted by letters 

from several countries and the media from February to November 2002. 

Alleged incidents involved Syria, India, Liberia, Jordan, Belarus, Switzerland, 

Lebanon, Ukraine, and the United Arab Emirates. 

Mar. 19, 2003 Operation Iraqi Freedom Operation Iraqi Freedom is launched. Coalition operation led by the United 

States initiated hostilities in Iraq. 

Mar. 28, 2003 U.N. Security Council 

Resolution 1472 

Adjusted the Oil for Food program and gave the Secretary General authority for 

45 days to facilitate the delivery and receipt of goods contracted by the 

Government of Iraq for the humanitarian needs of its people. 

Apr. 16, 2003 U.S. legislation Public Law 108-11, § 1503, authorized the President to suspend the application 

of any provision of the Iraq Sanctions Act of 1990. 

Apr. 24, 2003 U.N. Security Council 

Resolution 1476 

Extended provisions of resolution 1472 until June 3, 2003. 

May 1, 2003 Operation Iraqi Freedom End of major combat operations and beginning of post-war rebuilding efforts. 

May 22, 2003 U.N. Security Council 

Resolution 1483 

Lifted civilian sanctions on Iraq and provided for the end of the Oil for Food 

program within 6 months, transferring responsibility for the administration of any 

remaining program activities to the Coalition Provisional Authority (CPA). 

Nov. 21, 2003 U.N. Secretary General Transferred administration of the Oil for Food program to the CPA. 

Mar.19, 2004 U.N. Secretary General Responded to allegations of fraud by U.N. officials that were involved in the 

administration of the Oil for Food program. 

Mar. 25, 2004 U.N. Secretary General Proposed that a special investigation be conducted by an independent panel. 

April 21, 2004 U.N. Security Council 

Resolution 1538 

Supported the appointment of the independent high-level inquiry and called 

upon the CPA, Iraq, and member states to cooperated fully with the inquiry. 

(320293) 
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