IRAQ: Lucrative Fraud

BUREAUCRATS who stuff their pockets with money intended to mitigate the suffering of the hard-pressed Iraqi people are a disgrace. It was true when Saddam Hussein was in power and the United Nations was directing the oil-for-food program - and it is true today.

The latest investigative report into the United Nations' aid project - which was designed to cushion ordinary Iraqis from the effects of U.N. sanctions - provided dismaying new evidence of criminal conduct. That the United Nations should prove so susceptible to corruption is bad enough, but that the corrupt officials were essentially in cahoots with the Iraqi regime is despicable.

The investigators, led by Paul A. Volcker, accused the program's chief, Benon V. Sevan, of having accepted $150,000 in kickbacks (which he denies), and Alexander Yakovlev, a procurement officer, of having received kickbacks of nearly $1 million. (He pleaded guilty to related charges the same day the report came out.) Mr. Volcker said that half the 4,500 companies that took part in the program had paid kickbacks or illegal surcharges. Mr. Hussein was said to have skimmed off $1.6 billion in hard currency from the $60 billion program.

The cynicism of those who sought to take advantage of such a situation is repellent. Mr. Volcker's report suggests a fat and morally untethered U.N. bureaucracy, unburdened by oversight or conscience. All of this provides perfect - and undeniably legitimate - ammunition to the new U.S. ambassador, John R. Bolton, and others who seek sweeping changes at the United Nations.

But since 2003, the disbursement of aid and reconstruction funds in Iraq has not been in the hands of the United Nations, and if anything the record is even more dismal.

The interim government of Ayad Allawi, installed by the United States, has been accused of widespread corruption; an illustrative if not particularly imaginative example concerns the contract for garbage-hauling in Baghdad, which increased fivefold.

But crooked Americans weren't idly standing by. More than $7 million in cash went missing from a small American aid office in the city of Hilla, and there has been no explanation. The special inspector general for Iraq reconstruction issued his latest report in July; he said he has found millions of dollars worth of fraud by U.S. officials and contractors. Members of Congress are still trying to find out more about $200 million in questionable Halliburton invoices from work in Iraq in 2003, but the Pentagon has been stonewalling.

This starts to add up to a lot of money. And the inspector general says almost $9 billion has been dispensed to Iraqi ministries with insufficient oversight or control over the money. A putrid picture is emerging. Of course the United Nations needs a thorough reform, both structural and moral - but the work can't stop there.