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Scotland Recovers, and Plans to Waste, Oil for Food Kickbacks

A Glasgow-based engineering firm, Weir Group, has been fined 3 million pounds and had 13.9 million pounds of illegal profits confiscated after it admitted paying kickbacks to former Iraqi dictator Saddam Hussein’s regime. Weir Group, the BBC reports, made payments of 3.1 million pounds to the regime, plus another 1.4 million pounds to “an agent in Iraq” (regrettably not named in the judgment) in order to secure a contract worth approximately 35 million pounds. Weir Group, now under new management, fully acknowledged and apologized for its wrongdoing.

The judgment by Lord Carloway correctly describes the Oil for Food Programme as “bedeviled by corruption,” though his Lordship is charitable in stating that this was recognized “by 2004.” Actually, by 2004, the investigation into the Oil for Food fraud had not begun, and the scale of the corruption — and the extent to which individuals, companies, and UN officials were complicit in it — was certainly not fully established.

The sorry saga prompts a few reflections on Oil for Food and the problems inherent in it. The first is that doing prohibited business with dirty dictators is amazingly profitable: Weir Group made almost 14 million pounds off a contract worth 35 million. Even after making illegal payments amounting to 4.5 million pounds, that leaves about 10 million pounds of profit, about 30 percent of the value of the contact. There are very few legitimate businesses, here or abroad, that can boast that kind of return on “investment.” Other shady businesses will probably find doing deals with regimes under UN sanctions similarly profitable.

The second is that this judgment comes almost seven years after the illegal payments ended, and almost a decade after they began. Lord Carloway justified the imposition of the fine, in part, on the grounds that it would “deter future offenses.” Well, one can hope. But judgments that come so late after the offense are not likely to deter. Furthermore, Lord Carloway had remarkably few similar cases on which to base his decision, so, frankly, the odds of getting away with this sort of kickback scheme must still look pretty good — especially because the corruption of Oil for Food came to light only because the U.S. and its allies overthrew Saddam. One wonders if the conclusive proof of Weir Group’s payments — and they are, of course, only the tip of the iceberg of payments made round the world — will prompt any opponents of the war in Iraq to reflect that, just maybe, Saddam was not so securely “in his box” after all.

And third, there is the question of what will happen to the money recovered by the Scottish government. That may be the most depressing part of the saga. Let’s be clear about this: the illegal profits that Weir Group earned were stolen from the Iraqi people. The money should be returned to them, in full, with the fine included as interest. Instead, Justice Secretary Kenny MacAskill has stated that some of the funds will “be put to good use through our successful cashback for communities program” — in other words, spent to fund what the government describes as “diversionary activities for young people.” The remainder — “a significant sum” — will be used to “support the Scottish government’s international development work.”

Fantastic: the fate of these millions of pounds, stolen by a corrupt government and a corrupt firm, will be to fund soccer pitches in Scotland and foreign-aid programs that have already wasted billions. Well, knowing that would certainly put me off paying bribes to Saddam. But maybe it’s an appropriate decision: money born of corruption will flow to an activity that all too frequently promotes it.



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