Excerpts from previous updates, by subject

Removed on November 1, 2005

Political environment

After three months of negotiations, Iraqi leaders have signed and submitted a draft permanent constitution to the National Assembly in August 2005. None of the Sunni Muslims involved in the process supported the document, setting the stage for a divisive national referendum on October 15. Under the terms of the interim constitution, if three of Iraq’s 18 provinces vote to defeat the draft constitution, the Iraqi parliament will be dissolved, a new parliament elected, and discussions will begin anew. Sunni Muslims are thought to be a majority in four provinces.

Meanwhile, the United Nations has been looking into allegations of corruption in its prewar Oil-for-Food program. The program allowed Saddam Hussein to sell oil through the United Nations in exchange for humanitarian goods. An independent panel, appointed by U.N. Secretary-General Kofi Annan and headed by former U.S. Federal Reserve chairman Paul Volcker, is investigating charges against U.N. officials accused of accepting lucrative Iraqi oil allotments. A separate investigation by a committee of the U.S. Senate is looking into the matter.

The Volcker team issued a report in January 2005 in conjunction with the release of internal audits conducted by the United Nations Office of International Oversight Services. The report concluded that the internal audit team “capably reviewed” some aspects of the program, but did not even examine oil and humanitarian contracts, despite a concern that the contracts could be used to gather illicit payments.

A separate report issued by Volcker in August 2005 accused Benon Sevan, the former head of the oil-for-food program, of receiving nearly $150,000 in kickbacks funneled to him by Egyptian Fakhry Abdelnour, a cousin of former U.N. Secretary-General Boutros Boutros-Ghali. The payments purportedly went through Fred Nadler, the brother of Boutros-Ghali’s wife. Sevan immediately resigned from the United Nations, where he had been placed on suspension. Sevan denies the allegations.

The same report found that Alexander Yakovlev, a senior procurement officer, solicited a bribe from a French company that was bidding on an oil-for-food contract, and that he received hundreds of thousands of dollars from U.N. contractors working on other programs. Yakovlev subsequently pleaded guilty in a New York federal court to wire fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering.