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Our Special Correspondent

Chennai , Oct. 29

INDIAN companies numbering over 130 paid or are estimated to have paid a little over $22 million in connection with contracts worth approximately $425 million they executed in Iraq under the United Nation's Oil-for-Food programme. This is revealed by an analysis of the data contained in the report of the UN-appointed committee headed by the former Chairman of the US Federal Reserve System, Mr Paul Volcker.

These payments have been made by successful Indian companies as charges towards inland transportation and for after-sales service. The Committee has determined that these payments were not only outside the scope of the UN-approved contracts for such humanitarian supplies but were also excessive of the actual costs in transportation or after-sales service. The Committee, it may be recalled, was constituted to go into allegations of corruption in the award of contracts by the then Iraqi Government and hence amounted to illegal diversion of monies generated from the sale of oil under the above programme.

The Committee has stated that an overwhelming majority of the companies cited by it in the report had chosen not to respond to its initial findings that these payments were illicit. The few that responded either denied having made any payments or argued that these payments were duly authorised under the UN-approved contracts and in any case were towards services legitimately rendered to it in executing these contracts.

The Committee, tracing the origin of these payments, said that in the initial years of the programme there was no attempt by the Iraqi Government to secure kickbacks for award of contracts. But in later years, they took the form of inland transportation charges and later by way of vastly disproportionate levies of after-sales service payments. The Volcker Committee has charged the Iraqi Government as uniformly levying 10 per cent of the contract value as after-sales service payments.

The Committee has, however, conceded that the identification of a particular company's contract as having been the subject of an illicit payment did not necessarily mean that the company either made such payments or that it authorised it or was otherwise aware of it. Such payments could well have been made by an agent or by a secondary purchaser with an interest in the transaction. Interestingly, the Committee has also observed that the basic prices for goods supplied were also substantially higher than the normal price for these goods at the time when the contracts were signed. It has, however, clarified that it would need a detailed investigation to ascertain if any diversion of funds was built into the contract prices themselves.

How `Oil-for-Food' came about

AFTER Iraq invaded Kuwait in August 1990, the UN imposed sanctions on the former. But these sanctions continued even after it was evicted from Kuwait by an alliance of forces led by the US.

The sanctions were to continue till such time it was established that Iraq did not possess any ballistic missiles with a range beyond 150 km or that it did not possess biological chemical or nuclear weapons.

Even as the sanctions were in force, reports began to appear that the country's children suffered from severe malnutrition.

An American professor had, in a letter published in the British medical journal Lancet in the mid-90s, estimated that half a million children might have died because of malnutrition consequent to the imposition of economic sanctions.

A subsequent report by UNICEF put the figure in excess of a million. The international uproar that followed set the stage to put in place an `Oil for Food' programme.

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