CANADA: UN Probes $23.15 Million Payment to Saskatchewan Wheat Pool in Oil-for-Food Scandal

UNITED NATIONS -- The Saskatchewan Wheat Pool has emerged as one of the companies involved in Iraq oil-for-food deals now under investigation by a U.S. congressional committee probing the United Nations aid program, which Saddam Hussein manipulated to skim off billions of dollars for himself.

The focus on the company comes as the UN announced Friday it had discovered a staff-rule violation by Canadian businessperson and international diplomat Maurice Strong, whose long record at the world body is being reviewed after he, too, was recently swept up in the swirl of oil-for-food allegations and inquiries.

Six U.S. congressional committees and the UN itself are investigating the $50.92-billion program following allegations of mismanagement and corruption that helped Saddam siphon off funds through kickbacks and other forms of manipulation. A U.S. federal investigation is also underway in New York, and has already issued several indictments.

Among those indictments are charges against Korean businessperson Tongsun Park for allegedly trying to bribe UN officials with Iraqi funds.

Strong, named in 2003 as UN special adviser on North Korea because of his abundance of contacts in the region, subsequently acknowledged he'd had business ties with Park. UN spokesperson Stephane Dujarric said a review of Strong's employment by the UN showed the Canadian had put his stepdaughter on his payroll in violation of UN rules.

Strong has not been accused of any wrongdoing in the oil-for-food program, and has denied any connection to it. Pending investigation by the UN oil-for-food probe into his business ties with Park, he has nevertheless stepped down as North Korea envoy.

The congressional hearing in which the Saskatchewan Wheat Pool was mentioned Thursday saw BNP Paribas, the bank the UN used to broker deals in the oil-for-food program, acknowledge it improperly made 403 payments to third parties or their banks rather than to companies approved by the UN to deliver goods for Iraq.

Four of those payments are listed as going to the Saskatchewan Wheat Pool from 1999-2000, total value $23.15 million, and another two went to a Canadian-registered company called Limpex Trading in 2001, total value $124.1 million.

No allegation of corruption has surfaced, but congressional officials want to know more about the payments.

Officials of the Pool, Saskatchewan's largest grain handler and marketer, say that "as an accredited exporter for the Canadian Wheat Board," the Pool sent wheat to Iraq at that time.

They explain five vessels carried the shipments under the oil-for-food program, which the UN launched in late 1996 as a way to provide food and medicine to ordinary Iraqis as it pressed sanctions against the Saddam regime over weapons inspections.

"We received all the required verified approvals, and I have no reason to question the documentation wasn't valid," Mayo Schmidt, chief executive officer of the Saskatchewan Wheat Pool, said Friday in an interview.

"We disclosed in our annual report of 2000 that there were shipments to Iraq. In fact, we ended up suffering an $8.7-million loss because portions of the CWB wheat were rejected, and there were costs related to unloading delays and the transfer of the wheat to alternative buyers."

The UN directed the New York branch of Banque Nationale de Paris, which later became BNP Paribas, to handle finances for the six-year program, which ended following Saddam's overthrow.

Appearing at the hearing, held by the U.S. House subcommittee on oversight investigations, Everett Schenk, chief executive of BNP Paribas North America, said "some mistakes were made" as the bank processed 54,000 payments. But of the 403 he said "should not have occurred," he said the bank has uncovered no evidence any were "related to any corruption which may have occurred in the oil-for-food program."

Schmidt said the Pool will provide documentation of its shipments to Iraq "if asked by an agency of government that requires information about" them.

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