Security Council receives report on oversight body monitoring Iraqi oil sales

United Nations Secretary-General Kofi Annan has transmitted to the Security Council a new report on the International Advisory and Monitoring Board for Iraq (IAMB), which serves as an audit oversight body dealing with the country's oil revenues.

Currently, the IAMB monitors the Development Fund for Iraq (DFI), which holds the proceeds from Iraq's petroleum exports, as well as remaining balances from the UN Oil-for-Food programme and other frozen Iraqi funds. The DFI was managed by the United States-led Coalition Provisional Authority (CPA).

The update, provided by UN Controller Jean-Pierre Halbwachs, who represents the UN on the Board, points to a number of concerns raised by the international auditing firm KPMG, which was hired by the IAMB.

Those concerns, already made public and communicated to the CPA, include "a lack of adequate control over the extraction of crude oil" from Iraq. The CPA subsequently took steps to correct this situation, according to the report.

Also of concern were "sole-sourced contracts" that were awarded without any competitive bidding process. In June, the CPA told the IAMB that it would move towards an audit sought by the Board to address the issue.

With the restoration of sovereignty to Iraq at the end of June, adjustments are being made to adapt the IAMB's work accordingly, the report states.

The IAMB comprises representatives of the Arab Fund for Economic and Social Development, the International Monetary Fund (IMF), the UN and the World Bank.

The Board serves to promote the objectives laid out by Security Council resolution 1483 which, in part, underlined that the DFI "shall be used in a transparent manner to meet the humanitarian needs of the Iraqi people, for the economic reconstruction and repair of Iraq's infrastructure, for the continued disarmament of Iraq, and for the costs of Iraqi civilian administration," as well as for other purposes benefiting the Iraqi people.