Oil-for-food was money for jam
New York correspondent David Nason

Australian, Australia
Feb 14 2005

IN an Armenian community newsletter circulated in New York in 2002,
Benon Sevan, the career diplomat accused of presiding over massive
corruption in the UN’s now defunct oil-for-food program in Iraq,
complained that he operated in the world’s toughest neighourhoods. “I
have no choice but to deal with the people involved,” he said at
the time.

In the end that may be the only defence left to the 68-year-old
Sevan who, on all the currently available evidence, stands guilty
of allowing the biggest aid program in UN history to descend into a
cesspit of patronage, bribes and kickbacks – a disaster that provided
Saddam Hussein with a secret, illegal income stream worth possibly
billions of dollars.

Exactly how much cash Saddam and his henchmen managed to rort from
dodgy UN-approved oil contracts between 1996 and 2003, and where
all that cash went, are key questions in the multitude of UN and US
congressional inquiries into oil-for-food now under way.

The biggest fear is that Saddam managed to channel large chunks
into the pockets of terrorist outfits such as Hamas, Hezbollah and
al-Qa’ida, a frightening concern given that some estimates say upwards
of $US5 billion ($6.5billion) was skimmed.

There are other compelling questions in the oil-for-food case too, like
why Kojo Annan, the son of UN Secretary-General Kofi Annan, continued
to be paid $US30,000 a year for five years by Cocetna Inspections,
a Swiss company holding a lucrative oil-for-food contract to monitor
the humanitarian aid arriving in Iraq, when he no longer worked for
it? And what role, if any, did the Secretary-General play in Cocetna
getting its contract in the first place?

For Australia also there are potential implications. Australian
wheat formed a significant part of food imports to Iraq under the
oil-for-food program and there have been allegations – all of them
denied by the Australian Wheat Board – of kickbacks worth $120 million
to keep US wheat out.

The answers to such questions will have a big bearing on how radical
the US push to reform or even abandon the UN becomes, but for Sevan,
who climbed from humble beginnings in Cyprus to become a trusted senior
official in charge of both the oil-for-food program and security at
all UN offices around the world post September 11, the catastrophe is
personalised by the expectation he soon will face corruption charges
of his own.

While he denies any criminal wrongdoing, this month’s interim report
of the UN’s independent inquiry headed by former US Federal Reserve
chairman Paul Volcker confirmed allegations first raised in 2004
that Sevan repeatedly lobbied Saddam officials in the late 1990s
to provide contracts to a Swiss-based company run by small-time oil
trader Fahkry Abdelnour.

Sevan did himself no favours when he told Volcker’s investigators
he and Abdelnour hardly knew each other and had spoken just once –
a fabrication quickly exposed by a check of his UN phone records and
electronic diaries. It got worse when Abdelnour confessed to paying an
illegal $US160,000 surchage into an Iraqi-controlled Jordanian bank
account once the 11-million-barrel oil concession Sevan had secured
on his behalf was sold.

Not surprisingly, there is now intense interest in the financing of
properties Sevan owns in Manhattan, New Jersey, the expensive upstate
New York district of Rye and in the elite Hamptons precinct of Long
Island Sound.

Also troubling investigators is a mysterious $US160,000 deposit in
one of Sevan’s US bank accounts.

Sevan claims the cash came from the Cypriot aunt who raised him as a
child, but in a twist worthy of a John Le Carre thriller, the aunt fell
down an elevator shaft in Nicosia last June – police say accidently –
and died before she could be questioned.

In his report, Volcker expressed doubts that the aunt had the means
to provide Sevan with funds of such magnitude, a view supported in
Cyprus last week by editor, publisher and fellow Armenian Matthew
der Parthogh, whose father Georges is one of Sevan’s oldest friends.

“She (the aunt) had just a small flat and she lived on a pension, so
I doubt very much the money came from her,” der Parthogh said. “She
was a public servant who never married and was quite frugal, but I
still don’t think it is possible.”

More revealing is der Parthogh’s view that Sevan may have fallen
victim to his own deceptions.

“Many times Benon was in Cyprus and told us he did things for the UN in
Iraq and other places that in the West would be considered unethical,”
de Parthogh explained.

“He made no apologies for it. He said you had to know how to manoeuvre
your way through bureaucracy and know when to turn a blind eye to
make sure things got done.

“In Iraq he always said his job was to get humanitarian aid to the
suffering people, so he did what had to done. I don’t think Benon is
crooked but maybe he was not so bright sometimes.”

Curiously it was to Australia, not Cyprus, that Sevan fled when the
first whiff of scandal about his oil lobbying for Abdelnour emerged
in 2004, ironically in the newly free Baghdad newspaper Al-Mada which
named 270 individuals who had received vouchers to buy Iraqi oil at
cut-rate prices.

Among those named on official documents Al-Mada obtained were then
Indonesian president Megawati Sukarnoputri, British Labor MP George
Galloway, former UN weapons inspector Scott Ritter and a small army
of Russian politicians.

When this extraordinary tale was picked up by the international media,
Sevan took off, holing up at a luxury resort at Noosa in Queensland. A
month later he returned to New York and announced his retirement.

Australian ambassador to the UN John Dauth said last week he understood
Sevan had visited a close friend in Queensland. But he said he had
not had any requests from investigators for information about Sevan’s
movements in Australia.

Despite his retirement Sevan remains a UN staffer with full diplomatic
immunity, courtesy of a token annual $US1 salary agreement that
ensures his continued co-operation with the Volcker inquiry.

However, Annan has vowed that if a prosecutor establishes a criminal
case against Sevan, he will remove the diplomatic immunity in order
for justice to take its course.

What would happen to Annan’s immunity should Volcker nail him in
regard to Cocetna is unclear, but the most likely scenario for
Sevan is charges laid by the Manhattan district attorney who has
been given copies of all relevant files and is conducting a criminal
investigation.