United Press International
June 2 2005

First firing in U.N. oil-food scandal
By William M. Reilly

UPI United Nations Correspondent
Published June 2, 2005

UNITED NATIONS — The firing of Joseph Stephanides, director of the
U.N. Security Council Affairs Division, marks the first termination
ordered by Secretary-General Kofi Annan in connection with the Iraq
Oil-for-Food Program scandal.

Stephane Dujarric, a spokesman for Annan, told reporters
Wednesday, “After a thorough review of all aspects of the case the
secretary-general has decided that Joseph Stephanides be summarily
dismissed for serious misconduct in accordance with the U.N. staff
regulations. Stephanides was advised accordingly (Tuesday) and was
separated from service with immediate affect.”

Stephanides said he would appeal.

Annan’s decision to dismiss Stephanides brought to 40 the
number of staffers who have been summarily fired since he became
secretary-general in 1997.

A 24-year-veteran of the world organization, Stephanides was involved
in awarding of contracts for the $64 billion Security Council-mandated
program to ease the suffering of Iraqi civilians under Security
Council-imposed sanctions against the regime of former Iraqi President
Saddam Hussein.

The Independent Inquiry Committee for the Iraq Oil-for-Food Program,
commissioned by Annan to investigate the scandal, issued a report
in February which found that a U.N. steering committee “prejudiced
and pre-empted the competitive process in a manner that rejected
the lowest qualified bidder” with the “active participation” of
Stephanides. He was immediately suspended and given time to respond
to the administrative charges against him as part of due process.

According to the IIC report, Stephanides violated procurement rules
to enable Britain’s famed Lloyd’s Register Inspection, Ltd. to
secure a multimillion dollar U.N. contract under oil-for-food. While
Stephanides acknowledged this to be a technical violation of the rules,
he contended he acted to benefit the United Nations by negotiating
the lowest price and not for personal gain, the report said.

However, the IIC did not accept this explanation, noting Stephanides
“shared information with and enlisted the United Kingdom’s assistance
in an effort to win the contract for Lloyd’s, not simply to obtain
a better price from Lloyd’s for a contract award that already had
been decided.”

The inquiry committee said it did “not doubt the sincerity of
Stephanides view that Lloyd’s was the best company for the contract
or that this view was shared by high-ranking officials of the United
Nations and some members of the Security Council,” but maintained
that rules which should have been followed were not.

Stephanides, 59, and Benon Sevan, 67, head of the oil-for food program,
were suspended with pay after the IIC, headed by former U.S.

Federal Reserve Chairman Paul Volcker, accused them of misconduct
in February.

Both men have said they were being made scapegoats, a view shared by
several at “U.N. HQ.”

Dujarric said any action that may be taken against Sevan, an
Armenian-Cypriot retained after retirement on a $1 a year contract
to keep him available, would be delayed until after the committee was
finished investigating him so that “if administrative action is to be
taken against Sevan it would be taken as a whole instead of piecemeal.”

The pensions of both Sevan and Stephanides, coincidentally also
a Cypriot, could not be affected by any disciplinary action, a
spokesman said.

Sevan, a 40-year veteran of the world organization, was accused in
the February interim report of a “grave conflict of interest” for
requesting Baghdad sell oil to a Swiss-based oil company, African
Middle East Petroleum Co. Ltd. Inc.

It said seeking oil from Iraq was “ethically improper and seriously
undermined the integrity of the United Nations.”

While the report did not accuse him of taking kickbacks, it did show
concern for $160,000 Sevan said he received between 1999 and 2003
from an aunt, a retired photographer for the government in Cyprus. She
recently died in a fall down an elevator shaft.

“Sevan never took a penny,” said his lawyer, Eric Lewis, in a recent
statement.

The gregarious Sevan, frequently seen in the vicinity of U.N.

World Headquarters in New York, recently in a nearby restaurant gave
a friendly cuff to a United Press International correspondent and to
the amusement of other people at the table, said: “I just wanted you
to see I am not running away from anything. I am right here.”

Saddam reputedly handed out oil vouchers to influential people who
could then sell them.

The Security Council’s oil-for-food scheme allowed Baghdad to sell oil
as long as the income went into a bank account to fund the purchase
of humanitarian goods, compensation to 1991 Gulf War victims and oil
infrastructure maintenance.

Saddam’s regime decided who could buy Iraqi oil, what goods to buy
and from whom. Then the U.N. Security Council’s “661 Committee,” named
after the authorizing resolution, vetted the requests, monitored the
contracts and watched out for the possibility any of the requested
goods might have “dual use” for building or maintaining weapons of
mass destruction or a means to deliver them.

All along, there was rampant smuggling of oil out of Iraq members of
the Security Council turned a blind eye to because it was heading in
most instances to allies.