Iraq food aid chief ‘sought oil quotas’

Financial Times
February 4 2005

By Mark Turner at the United Nations and Claudio Gatti in New York

Benon Sevan, head of the United Nations office that administered
Iraq’s multi-billion dollar oil-for-food programme, “repeatedly
solicited” oil allocations from Baghdad, a UN-appointed inquiry said
yesterday.

“Iraqi officials provided such allocations for the purpose of
obtaining Mr Sevan’s support on several issues, particularly their
desire for funds to repair and rebuild the Iraqi oil infrastructure,”
it found.

The conclusions, in an interim report from an independent committee
led by Paul Volcker, deal a severe blow to the United Nations and to
Kofi Annan, its secretary-general.

Critics of the international body in the US Congress and elsewhere
accuse it of allowing Saddam Hussein’s regime to develop illicit
sources of funding as a result of corruption in the programme.

The Volcker report identified failings in the way the programme, set
up in 1996 to alleviate shortages created by international sanctions,
was administered and audited.

Mr Volcker also noted that the most serious violations of the
sanctions occurred outside the programme, and involved oil smuggling.

But the “most disturbing” findings concerned Mr Sevan’s role, which
“created a grave and continuing conflict of interest”.

“His conduct was ethically improper and seriously undermined the
integrity of the United Nations.”

The Financial Times revealed on Tuesday that the UN investigation was
targetting Mr Sevan’s efforts to steer lucrative contracts for Iraqi
oil to African Middle East Petroleum, a Panama-registered company
owned by a Swiss-based oil trader.

The report says Mr Sevan “was not forthcoming to the committee when he
denied approaching Iraqi officials and requesting oil allocations on
behalf of AMEP”. He also “failed to disclose the full nature and
extent of his contacts” with Fakhri Abdelnour, AMEP’s boss.

The report also queries declarations made by Mr Sevan about the source
of additional cash income – disclosed in a UN disclosure form –
between 1999-2003. Mr Sevan said the $160,000 (123,000,
£85,000)received over that period came from an aunt in Cyprus.

The woman, the Volcker report says, was “a retired government
photographer living on a modest pension”. Mr Sevan’s explanation was
“not adequately supported” by the information reviewed by the
committee.

A separate line of inquiry, into investigations into the procurement
of a contractor that employed Mr Annan’s son, Kojo Annan, were “well
advanced” and would be the subject of a further interim report.

Writing in The Wall Street Journal yesterday, Mr Volcker said UN
procurement procedures were “tainted, failing to follow the
established rules of the organisation” and that “political
considerations intruded in a manner that was neither transparent nor
accountable”.