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Weapons of Mass Destruction (WMD)

08 August 2005

Former Oil-for-Food Officials Accused of Taking Bribes

Volcker Panel issues third report on U.N.'s Iraqi oil sales program

By Judy Aita
Washington File United Nations Correspondent

New York -- The Independent Inquiry Committee into the U.N. Oil-for-Food program has accused Benon Sevan, former head of the program, of taking nearly $150,000 in bribes related to Iraqi oil sales and recommended that U.N. Secretary-General Kofi Annan lift his diplomatic immunity.

In its 127-page third interim report released August 8, the three-person Independent Inquiry Committee, which is headed by former U. S. Federal Reserve Chairman Paul Volcker, analyzed the illicit activities of Sevan and U.N. procurement officer Alexander Yakovlev. 

The panel said that it found "reasonably sufficient" evidence against the two former U.N. employees to recommend that Annan "grant properly supported request or requests by law enforcement authorities which are pursuing active investigations within their jurisdictions, to waive their immunity for purposes of criminal investigations and prosecution."

Calling the report "significant and troubling," Volcker said that "Mr. Sevan corrupting in concert with Messers. (Efraim) Nadler and (Fakhry) Abdelnour derived personal pecuniary benefit from the program through cash receipts from the sale of oil allocated by Iraq to Mr. Sevan and bought by African Middle East Petroleum Co. Ltd. (AMEP)."

Yakovlev, who was responsible for the selection of an independent oil inspection company for the program in 1991 "purposefully, and in concert" with French businessman Yves Pintore participated in a corrupt scheme to solicit a bribe from Societe Generale de Surveillance (SGS) which was bidding for the contract, Volcker said at a news conference releasing the report.

"On pursuing this scheme, Mr. Yakovlev, again in concert with Mr. Pintore, provided confidential bid information, internal assessments, and selection considerations to SGS in violation of the Charter of the United nations, and U.N. regulations and rules," he said.

Soon after the report was released Annan waived Yakovlev's immunity at the request of the U.S. attorney for the southern district of New York, Chef de Cabinet Mark Malloch Brown said at a separate press conference at U.N. headquarters.  "We believe Mr. Yakovlev is already in custody."

Malloch Brown added that the secretary-general "is deeply concerned" by the report's conclusions and "has made clear many times" that he would waive immunity from criminal prosecution for both men if requested by appropriate law enforcement authorities.

In a press release issued by his attorney August 7, Sevan said that the charges by the "politically motivated investigation" are false.

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

Volcker called Sevan’s assertion "ridiculous" and added that Sevan has not cooperated with the inquiry for the past six months.

The report traces the trail of proceeds from AMEP's sale of about 7.3 million barrels of Iraqi oil, and its payment of between five and ten cents per barrel of oil to a Swiss bank account controlled by Nadler, a close friend of Sevan. 

The report describes how $257,500 in cash withdrawals were made from the account on various dates between 1998 and 2001 and how, along with very frequent meetings and telephone conversations, the withdrawals from that account were soon followed by a total of $147,184 in cash deposits into the bank accounts of Sevan and his wife in New York.

The withdrawal dates coincided with periods when Sevan and/or Nadler were in Geneva and returning soon to New York.  The deposits did not coincide with New York visits by Sevan's aunt, whom he claimed gave him the cash for expenses during her stays with his family, the investigation said.

The report also says that one transaction from that Swiss account financed Abdelnour's payment of an illegal surcharge to the Iraqi regime.

The evidence against Yakovlev includes a handwritten note by him urging Pintore to alert SGS about confidential bidding information.  The panel said it did not have evidence that SGS paid a bribe.  However, its investigation revealed evidence of other corrupt activity by Yakovlev, including his receipt from various U.N. contractors of more than $950,000 in payments to an offshore bank account.

The report did not cover the continuing investigation of the role of the secretary-general and his son, Kojo Annan, in the selection of his employer Cotecna to oversee Oil-for-Food humanitarian contracts.  In its second interim report issued in March, the inquiry said that the evidence was not reasonably sufficient to show that the secretary-general knew during the bidding and award process that Cotecna was a candidate.  However, since the report was released further evidence has come to light and is being investigated.

Volcker said that the panel expects to issue two more reports.  One, planned for early September, will provide a broad review of the Oil-for -Food management by the U.N. secretariat under the leadership of Annan, the Security Council and its Sanctions Committee, and the nine U.N. agencies operating in northern Iraq.  

Another report is planned for early October on the activities of more than 4,500 private contractors that purchased Iraqi oil or supplied Iraq with humanitarian goods and will include information on known or alleged beneficiaries of oil allocations or oil purchase contracts, the payment of illicit surcharges on oil contracts, and kickbacks on humanitarian contracts.

Other panel members are: Justice Richard Goldstone of South Africa, who was the first chief prosecutor of the U.N. International Criminal Tribunals for the former Yugoslavia and Rwanda, and Mark Pieth of Switzerland, a University of Basel professor of criminal law and criminology with expertise in international bribery and money laundering. They are assisted by a staff of experts from 28 nations.

The Oil-for-Food Program, which started in 1996 and ended in November 2003, when it was handed over to the Coalition Provisional Authority, was intended to allow Iraq to sell oil under U.N. supervision with the proceeds to be used primarily for humanitarian supplies for Iraqi civilians and reparations to victims of Iraq's invasion of Kuwait.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)



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