Heads Roll In Iraq Oil-For-Food Probe

by Haider Rizvi

(IPS) UNITED NATIONS -- After spending some $35 million probing wrongdoing in Iraq's Oil for Food Program, UN investigators have accused the former head of the humanitarian project of taking nearly $150,000 in cash bribes.

"Our findings are based on reasonably sufficient evidence," Paul Volcker, chairman of the Independent Inquiry Committee, told reporters Monday, referring to Benan Sevan, who supervized the program for several years.

The Committee was established by UN Secretary-General Kofi Annan last year after stories began surfacing in the media claiming massive corruption in the management of the UN-run Oil for Food Program.

In addition, Alexander Yakovlev, a former procurement officer accused of passing secret bidding information, was taken into custody in New York this afternoon after Annan waived his diplomatic immunity.

Yakovlev pleaded guilty Monday to fraud and money laundering, according to a statement by U.S. Attorney David Kelley. He is the first person to be convicted in the scandal.

Yakovlev was charged with taking "at least several hundred thousand dollars from foreign companies in connection with the performance of his duties," the U.S. attorney's statement said.

In its third interim report, the Committee also recommended that Annan "accede to any properly supported request from an appropriate law enforcement authority for a waiver of Sevan's immunity and for a possible investigation and prosecution."

Sevan, a Cypriot national who served the UN for 40 years, has consistently denied the charges of corruption and asserts that he never took a single penny from the oil proceeds.

"It is simply not credible and that after running a 64-billion-dollar program, he would have compromised his career for $160,000, which represented gifts that he reported on his public disclosure forms," said Sevan's aide, Eric Lewis, in a statement on Aug. 7.

In a personal letter to the UN chief, Sevan said he was disappointed with Annan's failure to defend the historic achievements of the Oil for Food Program, as well as his "expedient abandonment in the face of a politically motivated investigation."

"As I predicted, a high-profile investigative body invested with absolute power would feel compelled to target someone, and that someone had turned out to be me," said Sevan. "The charges are false and you, who have known me all these years, should know that they are false."

The Oil for Food Program was created in 1996 to purchase and manage humanitarian assistance by selling Iraqi oil. At the time, Iraq was facing sanctions as a punishment for invading neighboring Kuwait and for trying to develop weapons of mass destruction.

In the 1990s, hundreds of thousands of Iraqi children died from disease and malnutrition caused by shortages of food and medicine resulting from the economic sanctions.

Noting that the secretary-general and the Security Council were fully briefed on the program, Sevan also raised questions about the status of over $10 billion that the UN turned over to the Development Fund for Iraq after the U.S. invasion of that country in 2003.

"Sevan contrasted the UN's transparent management of the program funds with the substantial waste and loss of funds under the management of the Coalition Authority (headed by the United States)," said Lewis.

In answer to reporters' questions, Volcker, who is a former chairman of the U.S. Federal Reserve, said, "We have not investigated what happened to that money."

Mark Malloch Brown, Annan's chief of staff, elaborated: "That's outside the mandate of the (Committee)."

Volcker also said the evidence was "not reasonably" sufficient to show that the secretary-general knew during the bidding in 1998 that Contecna, a Swiss company that won a key UN contract for the oil-for-food program in 1998, and which also employed Annan's son, was a candidate for the humanitarian inspection contract.

The Committee found "no conclusive evidence that Annan's son Kojo assisted Cotecna in the bidding process," but added that its investigation would continue.

Volcker said the next report, due in early September, would focus on the program's management by various UN agencies, the role of the Security Council, and the Secretariat. The Committee also plans to publish a report on the activities of the companies that purchase Iraqi oil and that supplied Iraq with humanitarian goods under the program.

In their October report, investigators will provide the final list of more than 4,500 private contractors that did business related to the program. Volcker said private-sector parties are being notified of their anticipated appearances before the Committee.

Both Volcker and Malloch-Brown said that the ongoing investigation would prove to be a catalyst for UN management reforms, a demand that has come most strongly from the United States.

"This investigation was triggered by failings," said Annan's chief of staff. "This is an organization which needs major management reforms."

The question of UN reforms will come under consideration by the high-level meeting of the General Assembly in September, about a week after the final Volcker report is due.

Meanwhile, Sevan, who resigned Sunday, is believed to be living in his native Cyprus. No criminal charges have been filed against him so far.