Kudlow & Company

Claudia, it’s great to see you.

Ms. CLAUDIA ROSETT (Foundation for the Defense of Democracies): Great to see you, Larry.

KUDLOW: The Volcker report, preliminary–preliminary that it is, really didn’t get there.

Ms. ROSETT: It doesn’t.

KUDLOW: But as I read your accounts, that I believe, because I know you’ve done phenomenal legwork here…

Ms. ROSETT: Thank you.

KUDLOW: …this is really all Kofi Annan, all the time, that all the fingers and evidence are pointing to his operation as first and foremost in this scandal. What do you say on that?

Ms. ROSETT: Yes, absolutely. He was the boss. He ran it for all but the first month. He appointed Benon Sevan, who now has been accused by Senator Norm Coleman of activity that went even beyond what Volcker said, things that should involve criminal liability. And it was Kofi Annan who went to the Security Council in 1998 and began urging that they expand the program, that they start bringing in oil parts to ramp up Saddam’s production, and this was what turned into the bonanza of smuggling and graft that finally gave us the scandal.

KUDLOW: I mean, he went to Baghdad.

Ms. ROSETT: Yes.

KUDLOW: He visited with Saddam. He had to know that this oil-for-food program was keeping Saddam’s regime aloft. He had to know this. Why did he do this?

Ms. ROSETT: Good question. I mean, the answer is not comfortable. Either he had to know or you are dealing with somebody deaf, dumb and blind. In fact, the defense that the secretary has mounted with our tax money, which pays for almost a quarter of the salaries of Kofi Annan’s PR staff, has over and over again tried to deflect any responsibility. It’s been–Larry, it’s been almost funny. We’ve heard he wasn’t responsible for this aspect, that aspect. In the end, you have to wonder `What was he responsible for? And if he was responsible for nothing, then what is he doing as secretary-general of the UN?’

KUDLOW: Yeah. You know, the thing…

Mr. ROSETT: Yeah.

KUDLOW: …that real–among many things that gall me, this is like the Ken Lay-Bernie Ebbers defense–`I didn’t know what was going on.’

Ms. ROSETT: Yeah.

KUDLOW: I don’t believe that for one minute. I think this guy was probably assigning parking spots, he had so much knowledge of detail.

Ms. ROSETT: Actually, Larry, he was doing worse. He was signing off on Saddam’s distribution plans.

KUDLOW: There you go. So he had to know.

Ms. ROSETT: He was recommending that it be continued every phase, yeah.

KUDLOW: Listen, but there’s a convenient arrangement here. I mean, Kofi Annan is helping Saddam to survive…

Ms. ROSETT: Right.

KUDLOW: …with this multi–$10 billion, $15 billion, $20 billion program, financing Kofi Annan’s own administrative offices back at the UN. They took 2.2 percent in commissions.

Ms. ROSETT: Exactly.

KUDLOW: So this is, like, `Oh, my gosh. They’re in bed together.’

Ms. ROSETT: Yeah. In fact, it was a more than $110 billion program if you look at the total amount of transactions that the UN approved for Saddam, oil sales and relief purchases. And Kofi Annan’s secretariat collected almost $2 billion, in fact, for oil-for-food and weapons inspections, which didn’t take place for four years during most of this, and, in other words, was getting paid an enormous amount as a percentage cut of Saddam’s oil sales for monitoring Saddam. It was set up as a conflict of interest. It never seems to have occurred to–certainly not to Kofi Annan, certainly not that he’s said, but that’s just how it was structured. But certainly that would have created incentive for him to push to expand it. That is what he did, and we have yet to see, despite the Volcker interim report, despite all the stuff that’s gone on, we have yet to see a full accounting for all that.

KUDLOW: All right. Claudia, Volcker has really pulled his punches on this.

Ms. ROSETT: Yeah.

KUDLOW: Now maybe he’s going to show it in subsequent releases, which are coming.

Ms. ROSETT: Yeah.

KUDLOW: But one guy that really impresses me, who was hot on the trail, former prosecutor, Senator Norman Coleman of Minnesota.

Ms. ROSETT: Yes.

KUDLOW: Been on this show many times. He’s got the zeal. He dislikes corruption. What do you make of this story? This Kofi Annan story may yet surface in full.

Ms. ROSETT: It may yet. Mr. Volcker’s promised us that his next interim report, due out in some weeks, will focus on the Annan saga–Kofi, the father; Kojo, the son, who did business and then received payments from one of the major contractors, Cotecna Inspection, under oil-for-food. But Senator Coleman was getting much more into it than anyone really has to date at his hearing on Tuesday and arrived at sort of interesting moments, of asking what was Kofi Annan’s son doing at the UN general assembly meeting in New York in September of 1998…

KUDLOW: Right. You have the 15…

Ms. ROSETT: …the fall that his company got the contract.

KUDLOW: This is the 15-day missing tape.

Ms. ROSETT: Precisely.

KUDLOW: It’s worse than Rosemary Wood 30, 35 years ago.

Ms. ROSETT: Right.

KUDLOW: Well, lookit. Let’s go–let’s think of this in terms of ordinary American people, OK?

Ms. ROSETT: Yeah.

KUDLOW: Having dinner, worried about this story, listening to this story.

Ms. ROSETT: Sure.

KUDLOW: We’re supposed to take the North Korea problem to the UN. We’re supposed to take the Iran problem to the UN. Don’t you think that until Kofi Annan is gone and the place is scrubbed clean and there’s a totally new management, the UN will never rebuild its real credibility with, let’s say, the red state heartland of this country?

Ms. ROSETT: Oh, not only will its credibility not be rebuilt; you know, the problem isn’t just Kofi Annan. It’s the whole system that produced him. He’s the product of more than 40 years at the UN. And the–Senator Coleman–but I may not get the quote exactly right, but he said at the hearing on Tuesday, and he was–there was great–there’s much to substantiate this, that every organization has its problems, but he’s never seen one where it was so completely deficient in every basic aspect of management competency…

KUDLOW: Right.

Ms. ROSETT: …to manage any program. And it’s not just that. It’s not just ineptitude. It is also a kind of moral bankruptcy that they cut their deals with the dictators.

KUDLOW: That’s a great point. No, no, that moral bankruptcy’s a great point.

Ms. ROSETT: Yeah.

KUDLOW: I’ll tell you, Claudia, if Norm Coleman or anybody else finds that Kofi Annan himself took a nickel off the top, he is going to wind up under criminal prosecution, could wind up in jail in this country. Anyway, you’re terrific for coming on.

Ms. ROSETT: Thank you.

KUDLOW: I hope to see lots of you. I believe this is a very important story with respect to the whole global war on terrorism.

Ms. ROSETT: Yes. Yeah.

KUDLOW: And how to use the UN.

Ms. ROSETT: Yes.

KUDLOW: Claudia Rosett, thanks a million.

Ms. ROSETT: Thank you, Larry.

KUDLOW: Up next on KUDLOW & COMPANY, we go on tour with the president, campaigning for Social Security reform, and we’ve got an expert coming up from the other political party.