First report of the Secretary-General pursuant to paragraph 3 of resolution 1905 (2009)
B. Obligatory payments to the United Nations Compensation Fund
23. The issue of arrangements for ensuring payments to the United Nations Compensation Fund following the transfer of the oversight function from the International Advisory and Monitoring Board to the Committee of Financial Experts has been highlighted in two of my previous reports: the report pursuant to paragraph 5 of Security Council resolution 1859 (2008) (S/2009/385) and the report pursuant to paragraph 3 of that same resolution (S/2009/430).
24. In paragraph 21 of Security Council resolution 1483 (2003), the Council decided not only that 5 per cent of the proceeds of all export sales of petroleum, petroleum products and natural gas from Iraq should be deposited into the Compensation Fund established in accordance with resolution 687 (1991) but also that “unless an internationally recognized, representative Government of Iraq and the Governing Council of the United Nations Compensation Commission … decide otherwise, this requirement shall be binding on a properly constituted, internationally recognized representative Government of Iraq and any successor thereto”.
25. Thus, unless the Government of Iraq and the Governing Council of the United Nations Compensation Commission mutually agree to change the percentage or terminate such payments (or all outstanding United Nations Compensation Commission awards have been paid off), it is imperative that the Government of Iraq continue to be obliged to deposit 5 per cent of the proceeds of all export sales of petroleum, petroleum products and natural gas into the Compensation Fund. It is also necessary to ensure that the present mechanism is maintained or that an alternative, equally effective mechanism is established to ensure the payment into the Compensation Fund.
26. On a practical level, as an alternative mechanism to ensure such payment, the banking services agreement to be established by the Government of Iraq for any accounts that would be used to hold the proceeds of export sales of petroleum, petroleum products and natural gas from Iraq could include an article specifying the percentage that would be taken from the total and deposited into the Compensation Fund. I recognize the difficulty in ensuring that all proceeds from the export sales of petroleum, petroleum products and natural gas are recorded; however, a mechanism that would trigger a possible audit of the Fund could be established. Alternatively, the Security Council may request that a fixed yearly amount be paid by the Government of Iraq into the Compensation Fund, irrespective of the amount of oil proceeds.
C. Privileges and immunities of the Development Fund for Iraq
27. In accordance with paragraph 22 of its resolution 1483 (2003), the Security Council accorded the Development Fund for Iraq privileges and immunities equivalent to those enjoyed by the United Nations, subject to certain exceptions. From the inception of the Fund, it was clearly understood that the Fund would enjoy such privileges and immunities for a limited and specified period of time. While the original expiration date of 31 December 2007 has been extended several times, including most recently in paragraph 1 of Security Council resolution 1905 (2009), there is no legal basis on which to perpetuate the protected status of the Fund once it becomes a fully nationally owned and controlled fund. Unless otherwise decided by the Council, the Fund should thus cease to enjoy such privileges and immunities on 31 December 2010.
28. In addition to the environmental and contractual claims to which the Development Fund is currently exposed under the exceptions to the privileges and immunities specified in paragraph 22 of Security Council resolution 1483 (2003) and paragraph 27 of Security Council resolution 1546 (2004), the Government of Iraq should be prepared to assume responsibility for any claims and liabilities to which the successor arrangements may be exposed.
B. Obligatory payments to the United Nations Compensation Fund
23. The issue of arrangements for ensuring payments to the United Nations Compensation Fund following the transfer of the oversight function from the International Advisory and Monitoring Board to the Committee of Financial Experts has been highlighted in two of my previous reports: the report pursuant to paragraph 5 of Security Council resolution 1859 (2008) (S/2009/385) and the report pursuant to paragraph 3 of that same resolution (S/2009/430).
24. In paragraph 21 of Security Council resolution 1483 (2003), the Council decided not only that 5 per cent of the proceeds of all export sales of petroleum, petroleum products and natural gas from Iraq should be deposited into the Compensation Fund established in accordance with resolution 687 (1991) but also that “unless an internationally recognized, representative Government of Iraq and the Governing Council of the United Nations Compensation Commission … decide otherwise, this requirement shall be binding on a properly constituted, internationally recognized representative Government of Iraq and any successor thereto”.
25. Thus, unless the Government of Iraq and the Governing Council of the United Nations Compensation Commission mutually agree to change the percentage or terminate such payments (or all outstanding United Nations Compensation Commission awards have been paid off), it is imperative that the Government of Iraq continue to be obliged to deposit 5 per cent of the proceeds of all export sales of petroleum, petroleum products and natural gas into the Compensation Fund. It is also necessary to ensure that the present mechanism is maintained or that an alternative, equally effective mechanism is established to ensure the payment into the Compensation Fund.
26. On a practical level, as an alternative mechanism to ensure such payment, the banking services agreement to be established by the Government of Iraq for any accounts that would be used to hold the proceeds of export sales of petroleum, petroleum products and natural gas from Iraq could include an article specifying the percentage that would be taken from the total and deposited into the Compensation Fund. I recognize the difficulty in ensuring that all proceeds from the export sales of petroleum, petroleum products and natural gas are recorded; however, a mechanism that would trigger a possible audit of the Fund could be established. Alternatively, the Security Council may request that a fixed yearly amount be paid by the Government of Iraq into the Compensation Fund, irrespective of the amount of oil proceeds.
C. Privileges and immunities of the Development Fund for Iraq
27. In accordance with paragraph 22 of its resolution 1483 (2003), the Security Council accorded the Development Fund for Iraq privileges and immunities equivalent to those enjoyed by the United Nations, subject to certain exceptions. From the inception of the Fund, it was clearly understood that the Fund would enjoy such privileges and immunities for a limited and specified period of time. While the original expiration date of 31 December 2007 has been extended several times, including most recently in paragraph 1 of Security Council resolution 1905 (2009), there is no legal basis on which to perpetuate the protected status of the Fund once it becomes a fully nationally owned and controlled fund. Unless otherwise decided by the Council, the Fund should thus cease to enjoy such privileges and immunities on 31 December 2010.
28. In addition to the environmental and contractual claims to which the Development Fund is currently exposed under the exceptions to the privileges and immunities specified in paragraph 22 of Security Council resolution 1483 (2003) and paragraph 27 of Security Council resolution 1546 (2004), the Government of Iraq should be prepared to assume responsibility for any claims and liabilities to which the successor arrangements may be exposed.