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SCARBOROUGH:  And coming up, we found Saddam Hussein in a spider hole, but before that he was living the high life with billions of dollars from a kickback scheme that?s now rocking the United Nations.  Do you even have to ask if the French are involved? 

But, first, let?s get the latest headlines from the MSNBC News Desk. 

(NEWS BREAK)

(COMMERCIAL BREAK)

SCARBOROUGH:  Do you remember when Saddam sympathizers in the United Nations accused America of starving Iraq?s to death with sanctions?

Well, it turns out that the United Nations may actually have blood on its hands, blood from the money hundreds of U.N. employees allegedly got from Saddam Hussein.  New allegations are blowing the cover off the $100 billion oil-for-food scam, and the investigation into widespread bribery and kickbacks may even take down Kofi Annan.

Raghida Dergham of ?Al-Hayat? newspaper spoke with Kofi Annan and says we shouldn?t rush to judgment about the United Nations.  Congressman J.D.  Hayworth thinks this is more proof that the U.N. is dangerously out of touch. 

J.D., explain what?s happening in this scandal that is unfolding at the United Nations.

REP. J.D. HAYWORTH ?, ARIZONA:  Well, we talked about it being food for oil.  What it turned out to be was money for Saddam and death to the Iraqi people. 

Let me quote one figure that comes from UNICEF, the United Nations?

fund for children.  They estimated that because of the malfeasance here,

100,000 Iraqis per year died, 60,000 of those under the age of 5.  And of

the $100 billion you mentioned earlier, Joe, $63 billion went into the

pockets of Saddam Hussein.  You know

(CROSSTALK)

SCARBOROUGH:  Wait, wait.  J.D., hold on.  Are you telling me that a United Nations agency is saying, because of malfeasance in this program, that thousands of Iraqis died? 

HAYWORTH:  One hundred thousand Iraqis a year, 60,000 of those under the age of 5. 

(CROSSTALK) 

HAYWORTH:  So all the tripe we heard about America starving the Iraqi children was just that, total tripe. 

(CROSSTALK)

SCARBOROUGH:  So the U.N. has the blood of tens of thousands of Iraqi children on their hands? 

HAYWORTH:  Not only that.  We also see the money being diverted, Kofi Annan?s son Kojo working for a consulting group taking money, kickbacks, as detailed today in Bill Safire?s column in ?The New York Times,? the fact that our erstwhile allies, the French and Russians had a piece of the action here. 

This is very serious business, and it calls for incredible reform of the United Nations, reform that France and Russia and the U.N. itself probably not keen on getting done. 

SCARBOROUGH:  Raghida Dergham, let me bring you in here, because a Baghdad newspaper published the names of 270 people, including Kofi Annan?s right-hand man, who got vouchers to buy oil at a discount in exchange for keeping quiet about corruption. 

And ?The New York Times? William Safire wrote this in his column today

?         quote??At least $5 billion in kickbacks went from corrupt contractors, mainly French and Russian, into the pockets of Saddam and his thugs.?

Raghida, is the U.N.?s credibility going to be destroyed by this scandal? 

RAGHIDA DERGHAM, NBC FOREIGN AFFAIRS ANALYST:  Let?s wait for the investigation.  And it may be correct. 

And if that is the case, then there is, of course, a credibility problem for the United Nations.  But there is no investigation yet.  As to what the congressman just said about his figures, his figures are absolutely right.  The trouble is with what he said is that these figures relate to the impact of sanctions, sanctions imposed by the United States and other members of the Security Council on Iraq.  This is exactly what sanctions have cost the Iraqis; 5,000 children were dying a month.

That is according to the UNICEF figures that the congressman is

talking about.  So I think there?s a little bit of a problem here.  It

isn?t about

(CROSSTALK)

DERGHAM:  Sir, there?s no such thing as UNICEF figures saying that these deaths amount to?or these deaths are related to the corruption allegations by the United Nations, none whatsoever.

HAYWORTH:  Well, look at what we found in the wake of the war, Raghida, hundreds of mass graves and the deaths of people that regardless of their age on the hands of Saddam Hussein. 

(CROSSTALK)

HAYWORTH:  Here?s the crucial matter, Raghida.  The fact is Saddam was emboldened by this scam to continue on, rather than preserving.  The United Nations empowered Saddam Hussein to continue his terror. 

(CROSSTALK)

DERGHAM:  With all due respect, Congressman, I beg to differ with you, because I?with all due respect, your information is totally...

HAYWORTH:  Sure.  Saddam is a wonderful man.  He was a wonderful man,

Raghida.  Try to sell that to

(CROSSTALK)

DERGHAM:  Don?t railroad me here, Congressman.  Please don?t.  I did not say any such thing.  We?re talking about the United Nations. 

You are saying that the United Nations is the organization that really brought about the misery to the Iraqi people, and, in a way, you are right.  It is because of the sanctions imposed by member states of the United Nations, including the United States. 

(CROSSTALK)

DERGHAM:  Secondly?please, sir, in terms of Saddam Hussein having been responsible for the death of many Iraqis, you?re right, but this has nothing to do with this so-called scandal and allegations. 

(CROSSTALK)

HAYWORTH:  It has everything to do with this, Raghida.  The fact is,

what happened is, the United Nations, through kickbacks to its own members,

through contracts going to the French and Russians, and to the general

misconduct, to put it mildly, of Saddam Hussein

(CROSSTALK)

DERGHAM:  You don?t know that, Congressman.  You don?t know it.

HAYWORTH:  We don?t know it? 

(CROSSTALK)

DERGHAM:  No, you don?t. 

HAYWORTH:  Well, I?ll tell you what.

(CROSSTALK)

SCARBOROUGH:  Raghida, one at a time.  Hold on.  Hold on.  One at a time. 

(CROSSTALK) 

SCARBOROUGH:  Raghida, hold on.   

DERGHAM:  OK.  Surely.

SCARBOROUGH:  One at a time. 

I?m going to play you?I?ll read you what Secretary-General Kofi Annan said when he flipped sides last week and agreed to an outside investigation.  He said?quote??It is highly possible that there has been quite a lot of wrongdoing.?

Now, look, on one side, you say, sure, there?s been a lot of wrongdoing.  But on the other side of it, you seem to be saying here tonight that the $5 billion to $10 billion that even the U.N. is saying was probably skimmed off of this program didn?t starve little children that wanted the money that needed the food. 

DERGHAM:  Here?s what I?m saying, Joe.  Here?s what I?m saying. 

I am saying, if the United Nations officials and governments and countries and companies belonging, be it to the French or the Germans, are indeed involved in this bribery charges, indeed have skimmed the Iraqi people of their money that was supposed to be for food, then they should be accountable.  And I think William Safire is doing the world a favor by holding their feet to the fire.  So I am all for it.

But what I?m against is jumping to conclusions before there is an investigation.  I would like to say that this investigation should not be only by Kofi Annan, that he is the jury and the judge of the executioner.  It should be much more independent.  And I think it?s healthy to do this investigation.  And I?m all for it. 

(CROSSTALK)

SCARBOROUGH:  OK.

J.D., three Iraqi investigations showed the corruption was so bad that Iraq knowingly spent millions of dollars on rotten food and useless medicine just to get kickback money from U.N.-approved companies.  Is Congress going to hold the United Nations? feet to the fire by saying we?re not going to continue giving you 25 percent of your budget unless you account for where all of this money went? 

HAYWORTH:  You?ll recall I brought an amendment to the floor dealing with appropriations for the U.N. last year that my friend, Steve King, managed in my absence, as I couldn?t be there that day.  But I?ll bring it back again this time, and I welcome the fact that the International Relations Committee, Chairman Henry Hyde, absolutely has to move forward with hearings. 

When it comes to the U.N. investigating itself, listen, the French, the Russians, and a lot of other folks are going to work overtime to ensure there is not a thorough investigation. 

SCARBOROUGH:  Exactly. 

HAYWORTH:  The United States has to lead the way also.  On June 30, sovereignty day, look for the new Iraqi government to have millions of documents currently under seal and they will also have a hand in this as well.