Smash hit

Twice a year, the question of relaxing sanctions came before the Security Council and Iraq got steady support from France and Russia. By 2001, “the long struggle to outlast the containment policy seemed tantalisingly close”, Mr Duelfer said.

If Saddam hadn’t misjudged US resolve after the September 11 attacks, and the sympathy in the rest of the world, he might have been proved right. But surrounded by a huge US force,Saddam persisted in trying to strike bargains when the time was long past. Instead, he provoked the US to war.

HOW SADDAM’S SCAM WORKED

Saddam's manipulation of the Oil-for-Food programme demonstrated his Machiavellian calculation. The genius was that he never gave the politicians, officials, governments and political parties he tried to bribe any actual money. Instead, they collected their eventual payment from oil traders, making the transaction invisible to the UN. Under the Oil-for-Food scheme, Iraq was allowed to sell oil at a price fixed by the UN. The proceeds went into a UN account, and the money could then be used to buy humanitarian goods approved by the UN sanctions committee.

LOOPHOLE 1

The first loophole was that Saddam, insisting on sovereign rights, was allowed to choose who bought the oil. From the beginning, he used this power to hand out valuable oil “allocations” — sometimes referred to as “vouchers” — to those he felt could help his campaign to get rid of the embargo.

On sales of millions of barrels, the sums of money for the “favorites” holding the vouchers could reach seven figures, Mr Duelfer alleged.

LOOPHOLE 2

This scam was possible only because of a second flaw: the UN set the price for oil sales too low. It appointed “oil overseers” to set a price low enough to give traders a good profit but not so low that Saddam could skim off extra. At first, there were four, from the US, Norway, France and Russia. But the Norwegian stepped down in February 1997. He was followed out by the American in July 1998, and the Frenchman in July 1999. Yet Russia and China blocked the appointment of replacements.

As a result, the Russian, Aleksandr Kramar, effectively set the UN oil price by himself from July 1999 until August 2000. Maurice Lorenz, the former US “oil overseer”, told The Times that after his departure, he told the US government that the Russian and French overseers were underpricing Iraqi crude.

“There is just no excuse for letting it be so profitable,” Mr Lorenz said. “The pricing was just outrageously bad.”

But the UN sanctions committee, made up of all 15 Security Council members, including Britain and the US, did nothing. Since full agreement was required, any single member effectively had a veto.

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