Recalcitrant Oil-for-Food opportunists must be disqualified from future contracts, says TI

Issued by Transparency International Secretariat

The United Nations (UN), development banks, and governments must debar companies from future contracting where sufficient evidence of corruption exists. Danish company Grundfos' admission of corruption in conjunction with the UN's Iraqi Oil-for-Food programme provides another startling example of the public interest subverted for private gain.

The UN's Independent Inquiry Committee on the Oil-for-Food programme has called on at least 140 Danish companies to disclose details of their participation in the controversial initiative. The Danish National Agency for Enterprise and Construction estimates that Danish companies conducted business worth EUR 440 million under the programme.

'Grundfos is not the only company to have engaged in wrongdoing', said Jens Berthelsen, Deputy Chairman of Transparency International's national chapter in Denmark. He urged other companies to cooperate with investigations, adding, 'An honest admission of wrongdoing is preferable to wilful deceit. The sanctions applied should reflect this.'

'Corruption can never be tolerated, but it is especially sickening when it diverts resources from public programmes designed to help people desperately in need', said TI Chairman Peter Eigen. 'Where there is sufficient evidence of corruption in the context of Oil-for-Food, companies should be debarred from bidding on future projects, especially in cases where companies have shown no will to co-operate or change their behaviour.' Eigen continued, saying, 'On the other hand, premature allegations against individuals driven by political motives, are not productive.'

The unfolding Oil-for-Food scandal shows that governments of wealthy states are failing to fulfill their obligations under the OECD Anti-Bribery Convention, which criminalises foreign bribery for signatories. While the business community in OECD countries has been publicly supportive of curbing corruption, there is a lack of awareness of the Convention among both public and private sector decision-makers. Cumbersome legal procedures and a lack of cross-border co-operation have meant that few cases have been successfully prosecuted under the Convention.

The Oil-For-Food programme, which was in operation from December 1996 until November 2003, allowed Iraq to sell oil to pay for food and humanitarian supplies. The former Iraqi government under President Saddam Hussein extorted bribes and surcharges from handpicked buyers of Iraqi oil and vendors of humanitarian goods, and is estimated to have amassed between US$ 1.7 billion and US$ 4.7 billion, according to various studies.


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