Oil-for-food probe accuses former chief

Associated Press
8/4/2005

NEW YORK (AP) – Investigators have concluded that the former chief
of the Iraq oil-for-food program, Benon Sevan, took kickbacks under
the $64 billion humanitarian operation and refused to cooperate with
their probe, his lawyer said Thursday.

While the amount of money Sevan allegedly took wasn’t immediately
known – and may be as little as $160,000 – the findings would be a
major blow because of his stature in the organization and the control
he had over it. The program was one of the largest in history.

The Independent Inquiry Committee had planned to release its findings
about Sevan on Tuesday, and had sent advance notice to Sevan’s lawyer,
Eric Lewis, last week. Lewis revealed the findings early and vehemently
denied both claims against Sevan, whom the U.N. is paying a symbolic
one dollar a year to keep him on payroll so he’ll cooperate.

“The fact is, the committee’s allegations are baseless,” Lewis said
in a statement. “Mr. Sevan never took a penny, as he has said from
the beginning.”

The committee, led by former U.S. Federal Reserve Chairman Paul
Volcker, refused to comment on Lewis’ claims. Committee spokesman
Mike Holtzman had said earlier Sevan would be one of several people
considered in the Tuesday report.

“Our final judgment on him will be rendered on Tuesday,” Holtzman said.

The oil-for-food program, launched in December 1996 to help ordinary
Iraqis cope with U.N. sanctions imposed after Saddam Hussein’s 1990
invasion of Kuwait, quickly became a lifeline for 90% of the country’s
population of 26 million.

Under the program, Saddam’s regime could sell oil, provided
the proceeds went to buy humanitarian goods or pay war
reparations. Saddam’s government decided on the goods it wanted,
who should provide them and who could buy Iraqi oil. But the Security
Council committee overseeing sanctions monitored the contracts.

In a bid to curry favor and end sanctions, Saddam allegedly gave
former government officials, activists, journalists and U.N. officials
vouchers for Iraqi oil that could then be resold at a profit.

According to Lewis, the committee will find that a small trading
company called African Middle East Petroleum Co. Ltd. Inc. paid Sevan
in exchange for his helping it win oil contracts from Saddam Hussein’s
regime. It will say that he acted “in concert” with a friend named
Fred Nadler.

Lewis said the letter of findings that Volcker’s team sent to him
does not spell how much he got in kickbacks.

Volcker’s team has been investigating oil-for-food for more than
a year. In an interim report released in February, the committee
concluded that Sevan solicited oil allocations from Saddam Hussein’s
regime on behalf of the company, known as AMEP, between 1998 and
2001. It said Nadler was essentially his middleman and accused Sevan
of a “grave conflict of interest.”

In its report, Volcker’s team mentioned $160,000 in “unexplained
funds” belonging to Sevan. Sevan had disclosed the money earlier,
saying it was from an aunt in Cyprus.

Lewis said Volcker’s committee will also say that Sevan refused to
cooperate with its investigators, apparently because he would not meet
face-to-face with them in recent months. Lewis acknowledged that Sevan
had refused to do so since January because investigators accused him
of lying or changing his testimony when he didn’t remember meetings
or phone calls he’d had years before.

He said instead Sevan had agreed to respond to written questions.

Lewis accused Volcker’s team of treating Sevan unfairly by concealing
evidence from him, relying on secret interviews with jailed members of
Saddam’s former regime and questioning his integrity when he couldn’t
remember phone calls that took place years before.

He said it was trying to look tough and appease critics in the United
States who have accused it of bungling the investigation.

“The IIC wants cartoon villains, not the truth,” Lewis said in the
statement. “Mr. Sevan has now reached a point in his dealings with
the IIC where he questions the Committee’s commitment to objective
and evenhanded fact-finding and doubts he can receive a fair hearing
in this forum.”

After the February report, U.N. Secretary-General Kofi Annan announced
disciplinary proceedings against Sevan but said he would wait until
the report came out before making a decision.

It is almost certain that Sevan would be fired if the United Nations
accepts the Volcker committee claims. Sevan is also being investigated
by Manhattan District Attorney Robert Morgenthau.