The Oil-for-Food Scandal at UN: Questions of Governance Issues


Code : GOV0017

Year :

Industry : Business Law, Governance and Ethics

Region : Iraq

Teaching Note: Not Available

Structured Assignment : Not Available

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The Oil-for-Food Programme After the Persian Gulf War of 1991 [Exhibit 1], the United Nations imposed comprehensive economic sanctions [Exhibit 2] on Iraq that required allmember states to ban all imports fromIraq, including oil purchases and to stop exporting non-humanitarian goods to Iraq. This led to a critical shortage of food andmedicines in Iraq that affectedmajority of the population. The inter-agencymission, sent by the UN Secretary-General inMarch 1991, to assess humanitarian needs in Iraq and Kuwait, reported that ‘the Iraqi peoplemay soon face a further imminent catastrophe,which could include epidemic and famine, ifmassive life-supporting needs are not rapidlymet.’5 Due to the rising concerns over the humanitarian situation in Iraq, theUNset up theOil-for-Food Programme through aMemorandumof Understanding (MOU),whichwas signed by Iraq in 1996 after an initial refusal. The programme permitted Iraq to sell oil to other countries to finance the purchase of humanitarian goods...

The Persian Gulf War (1990-1991) Amid growing tension between the twoPersianGulf neighbors,SaddamHussein concluded that theUnitedStates and the rest of the outsideworldwould not interfere to defendKuwait.OnAugust 2, 1990, Iraqi forces invadedKuwait and quickly seized control of the small nation. Within days, the United States, along with the United Nations, demanded Iraq’s immediate withdrawal. US and other UN member nations began deploying troops in Saudi Arabia within the week, and the world-wide coalition began to formunder UNauthority...

The Scandal TheMemorandumof Understanding (MOU), signed by the Iraqi government with the UN, granted Iraq the provision to select the suppliers and distributors. Hence, itwas alleged that SaddamHussein, instead of allotting the contracts to the end-users,16 allotted it to those individuals or organisations who were supporters of the Iraqi regime. Oil vouchers were provided to politicians and businessmen either as gifts or as payments for import of goods,which violated theUNsanctions. The vouchers had discounted rate of oil prices and could be tendered to any specialised company by charging a transaction fee or commission that ranged between $0.25 and $0.30 per barrel. This provided the voucher owner a profit of $250,000 to $300,000 for every one million barrel oil voucher...

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Governance Issues at UN United Nations is known for its charter of values and unbiased nature of work towards world peace and security. The UnitedNations together with its programmes, funds and specialised agencies forms theUN System[Exhibit 3]. It has been working towards various global issues ranging from development to disarmament to human rights. However, over the years, with various scandals being uncovered, the United Nations and its various programmes has been charged with mismanagement and corruption...

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