UN Official Solicited Oil Deal from Iraq -Report
Thu Feb 3, 4:44 PM ET World – Reuters

By Evelyn Leopold and Irwin Arieff

UNITED NATIONS (Reuters) – A senior U.N. official solicited and
received allocations of oil from Iraq (news – web sites) for a trading
company while he was directing the U.N. oil-for-food program, a key
investigative report said on Thursday.

The official, Benon Sevan of Cyprus, engaged in conduct that was
“ethically improper and seriously undermined the integrity of the
United Nations (news – web sites),” said the report by Paul Volcker,
the former U.S. Federal Reserve (news – web sites) chairman.

Volcker was appointed by the United Nations to lead a probe of the
now-defunct $67 billion program and on Thursday gave an interim
report. The final analysis is expected in June.

The report did not say that Sevan received bribes but mentioned that
he got $160,000 in cash from 1999 to 2003 from his aunt in Cyprus, who
has now died. The report said the aunt’s lifestyle did not suggest
wealth.

But Volcker said Sevan solicited and received allocations of oil on
behalf of the African Middle East Petroleum Company, a small trading
firm, registered in Panama with offices in Switzerland, Monaco and
elsewhere. It was run by Egyptian Fahkry, a cousin of former
U.N. Secretary-General Boutros Boutros-Ghali, who left office at the
end of 1996.

It was “highly unlikely” that such a company would have been allowed
to buy oil unless someone lobbied Baghdad. In return for the
allocations, Sevan was expected to make a case for Iraq receiving cash
to upgrade its deteriorating oil facilities, which he and several
Security Council members did.

“Mr. Sevan repeatedly solicited allocations of oil under the program,”
the report said. Iraqi officials in return expected Sevan’s support on
such issues as funds for repairing Iraq’s crumbling oil facilities, it
said.

The oil-for-food program, which began in December 1996 and ended in
November 2003, allowed Saddam Hussein (news – web sites)’s government
to sell oil in order to buy humanitarian goods. It was intended to
ease the life of ordinary Iraqis under 1990 U.N. sanctions.

But in his report of more than 200 pages, Volcker told a news
conference that “we have not found a systematic misuse of funds
dedicated to the administration of the oil-for-food program.” He said
the investigation was continuing.

Since the U.S. invasion of Iraq, documents have emerged that show
Saddam Hussein skimming funds from the program, selling oil illegally
outside the program, often with the knowledge of big powers on the
Security Council, and bribing a variety of officials around the world.

Volcker also said that U.N. officials ignored procurement procedures
and safeguards from the very start of the program.

Investigators found “convincing and uncontested evidence” that the
selection process was tainted by irregularities for each of the first
three contractors selected — the French bank Banque Nationale de
Paris, the Dutch firm Saybolt Eastern Hemisphere BV and the British
Lloyd’s Register Inspection Ltd, the report said.

A CIA (news – web sites) investigation last September found Saddam
earned $1.7 billion through kickbacks and illegal surcharges on the
program from 1996 to 2003. He got an additional $8 billion in illegal
oil sales to Jordan, Turkey and Syria, which were known to the
Security Council, including the United States, in its supervision of
the program.

Volcker said it was a matter of record that the United States, among
others, have given Jordan and Turkey a waiver to receive Iraq oil
outside of the U.N. program because they suffered hardships from the
sanctions.

Volcker said allegations of conflict of interest by Annan would be
handled in a later report. Annan’s son Kojo, had once worked in West
Africa for a firm under contract to the United Nations in Iraq. Annan,
who only became secretary-general in 1997, has said he had no hand in
assigning contracts.

The report also said that another senior official, Joseph Stephanides,
who was involved in the program in 1996 and before Sevan took over the
operation, intervened in procuring major contracts for large firms.

“The evidence amply demonstrates that a tainted procurement process
took place in 1996, when the program was just getting under way,”
Volcker said, adding that political considerations came into play.

From: Emil Lazarian | Ararat NewsPress