Tempting Oil-for-Food Questions

The New York Sun
August 16, 2004 Monday

Tempting Oil-for-Food Questions


Last week Paul Volcker said he would investigate one famous
nonemployee of the United Nations, Kojo Annan, who happens to be the
secretary general’s son.

This is a tempting direction in the Oil-for-Food inquiry. But Mr.
Volcker might do better if instead of poking around Mr. Annan’s
family connections he reaches further back, into the less explored
Boutros-Ghali clan.

The former Fed chairman and his team of investigators are sitting on
top of thousands of boxes filled with U.N. documents, some of which
detail ties to firms devised by operators who know how to daisy-chain
companies in a way that would make true ownership all but

It will be some time, then, before Mr. Volcker produces any bombshell
to credibly refute or confirm what he called “a lot of smoke”:
allegations that already turned the U.N. into a metaphor epitomizing
institutional corruption.

Presenting his first quarterly report, Mr. Volcker told reporters his
priority target is the U.N. and its officials. However, since Kojo
Annan’s employer, the Geneva-based shipping inspection company
Cotecna, was a contractor with the U.N., it would also have to be

As Cotecna noted in a statement quoted by the New York Times’ Judith
Miller last week, the younger Annan worked mostly in Nigeria and
Ghana, not in Iraq. Sure, the 1999 U.N. ditching of the British-based
Lloyd’s shipping inspectors and their replacement with Cotecna’s
smelled to the high heavens. But Mr. Volcker’s team might want to
walk the cat back to an earlier phase of the program.

When the idea for a humanitarian plan to ease suffering in
sanction-burdened Iraq was hatched at the U.N., in 1996, the
then-secretary general, Boutros Boutros-Ghali, was losing favor with
the Clinton administration. He found himself embroiled in a titanic
internal struggle, which eventually was won by the Washington-backed
Kofi Annan.

In the camps that were formed among the top brass, one staunch ally
of Mr. Boutros-Ghali’s was a longtime U.N. bureaucrat named Benon

As an insider speculated once in a casual conversation, that alliance
might have been based on tribal kinship. Mr. Boutros-Ghali is an
Egyptian Copt – an ancient, close-knit Christian sect that has
learned how to squirrel away its acorns for those bad periods when
the Muslim majority around it turns nasty. Mr. Sevan, an Armenian
Cypriot, belongs to a similarly persecuted Mediterranean minority.

Mr. Sevan, the insider told me, was not sure then about his future in
the Annan administration. Rather than being pushed out, however, his
new assignment was to run the recently-born oil-for-food program,
which at the time looked like a dead-end job. In a few years, of
course, this program would turn into the most ambitious enterprise in
the history of the U.N. and Mr. Sevan would oversee more than $10
billion annually, almost 10 times the budget of the U.N. itself.

Mr. Sevan is now the most famous among U.N. officials who is accused
of taking Saddam’s bribes. If the allegations are true – Mr. Sevan
denies any wrongdoing – greasing the pockets of the man running
oil-for-food was one great way for the Iraqi dictator to assure that
all shenanigans in the program were overlooked.

Back in March, the Wall Street Journal’s Therese Raphael described
how millions of barrels of Iraqi oil were allegedly allocated in the
name of Mr. Sevan to a Panamanian-based trading company, Africa
Middle East Petroleum.

That company, according to the Journal, is owned and managed by a
Geneva-based oil trader named Fakhry Abdelnour, a Copt and close
relative of Mr. Boutros-Ghali.

And in one more interesting detail, Cotecna, that same company that
employs Mr. Annan’s son, was also founded by a Copt, Elie Georges

All these ties may never lead to Mr. Boutros-Ghali, but they are
intriguing nevertheless. Did anybody on the secretary-general’s team
that devised the program, in the name of humanitarian necessity,
realize even back in the mid-1990s that it might assume such gigantic
proportions, with billions of loose dollars waiting for exploitation?

Mr. Volcker said last week that at first he would look into how the
program was “formulated and administered within the U.N.”
oil-for-food officially began during Mr. Annan’s tenure, but its
roots are in the Boutros-Ghali era. If investigators want to start at
the beginning, they might as well look there.