U.N.’s good name tarnished

Washington Times, DC
Feb 7 2005

U.N.’s good name tarnished
By Philip Sherwelland, Charles Lawrence

LONDON – Is the United Nations damaged beyond repair? Evidence of
double-dealing in the Iraq oil-for-food scandal is stacking up by the
week, and more and more of the organization’s officials are being
It was just two weeks ago, in a rented suite of offices on the
15th floor of an anonymous Manhattan office block, that Benon Sevan
finally discovered that his story would not hold. For months, the
burly, bristling Armenian-Cypriot, known within the United Nations
for both his bonhomie and bad temper, had insisted that the talk of
oil deals with Iraqi dictator Saddam Hussein and strange petroleum
companies in Panama had nothing to do with him.

On Jan. 21, however, the former head of the U.N. oil-for-food
program in Iraq was confronted by proof of his deception by Paul
Volcker. The former Federal Reserve chairman is leading the U.N.
investigation into a scheme from which Saddam skimmed off about $2
billion and bribed foreign allies.
Mr. Volcker’s interim report, delivered last week, not only
contained a damning verdict on the behavior of Mr. Sevan, an official
long defended by U.N. Secretary-General Kofi Annan, it also threw an
unexpected new focus on the role of Mr. Annan’s predecessor, Boutros
Boutros-Ghali, as the unraveling scandal dragged in new names.
The meeting was the 13th between Mr. Sevan and the investigators
since accusations of financial abuse were first raised by Claude
Hankes-Drielsma, a British banker who was advising the interim Iraqi
government in Baghdad. Although it was an open secret at the United
Nations that the oil-for-food scheme had been subject to surcharges
and kickbacks for years, Mr. Annan initially refused to order an
On his first 12 visits, Mr. Sevan refused to discuss the
specifics of the accusations against him. But by this trip, the
investigators had obtained his full telephone records after clearing
his office files and computer disks. (Mr. Sevan already had provided
the “clean” telephone data from his home). These records proved that
Mr. Sevan’s claim to have spoken with Fakhry Abdelnour, the man who
ran the African Middle East Petroleum Co. (AMEP), the Panamanian oil
dealership, only once, by chance at an Organization of Petroleum
Exporting Countries (OPEC) meeting in Vienna, Austria, in 1999, was
Senior former Iraqi officials already had told the commission
that Mr. Sevan had solicited contracts for AMEP — statements Mr.
Sevan denied, saying he barely knew Mr. Abdelnour, who is a nephew of
Mr. Boutros-Ghali. This new set of telephone numbers showed several
calls between the two men, who sometimes conducted back-to-back
conversations with Fred Nadler, Mr. Boutros-Ghali’s brother-in-law.
Relative trouble
The spotlight thrown on the relatives of Mr. Boutros-Ghali was
one of the surprises of the report released Thursday. The former
secretary-general’s role in pushing the French bank preferred by the
Iraqi authorities to administer the program’s accounts also comes in
for close scrutiny.
But Mr. Volcker and his fellow commissioners have become
accustomed to digging into the activities of secretaries-general and
their relatives. Their second report, due next month, will focus on
the business links of Mr. Annan’s son Kojo with Cotecna, the Swiss
company that won the U.N. contract to oversee oil-for-food imports
into Iraq in 1998.
Kojo Annan has said he played no part in Cotecna’s Iraq work, and
his father said he had no idea that Kojo Annan remained on Cotecna’s
payroll until a year ago.
Although the secretary-general had avoided ordering an inquiry,
the Volcker findings might help save his job — for now, at least. The
United Nations is not a body in which the buck stops with the boss,
and now, in Mr. Sevan, there is a senior official to blame.
Defiant diplomats
He was not, however, the only U.N. official singled out for
criticism in the report and now subject to disciplinary proceedings.
So was Joseph Stephanides, a fellow Cypriot who oversaw the selection
of the program’s major contractors. The report said the United
Nations broke its own competitive-bidding rules when it chose Lloyd’s
Register of London, the French Banque Nationale de Paris (BNP) and
Saybolt, a Dutch company, to implement the program.
In particular, Mr. Stephanides is criticized for cooperating with
British diplomats at the United Nations to ensure that Lloyd’s
Register, the 245-year-old inspection and risk-management group, won
the contract to oversee imports into Iraq. A lower bid was submitted
by a French rival, but the United Nations decided the deal should go
to Lloyd’s because BNP had been awarded another key contract.
John Weston, then head of the British mission, said Friday that
he had been operating under “ministerial instructions” from London
when he advised Lloyd’s on the best tactics to win the contract.
Suggestions that there was any improper behavior are based on
“ignorance of the practices of diplomatic missions,” he added.
Lloyd’s is furious that it has been dragged into the row and says
its reputation has been badly damaged by the release of U.N. audits
that suggested it overcharged. David Moorhouse, executive chairman of
the group, also said it was customary for British diplomats to be
helpful to British companies seeking overseas contracts.
Carne Ross, the British diplomat in charge of Iraq policy at the
United Nations at the time, said the program was “deeply politicized”
and “carved up” between member states.
“It was our job to lobby for British companies, and we did so
extremely vigorously. Nobody in Britain would have expected any less
of us,” said Mr. Ross, who resigned from the diplomatic service last
year. “That is the way the U.N. operates, and it seems a little harsh
if Joseph Stephanides is carrying the can for this as a U.N.
Missing money
The Volcker committee’s criticism of Mr. Sevan was scathing. It
concluded that he had solicited and received oil allocations of
several million barrels on AMEP’s behalf, helping the company earn
about $1.5 million. Saddam’s regime apparently thought Mr. Sevan
would help ease economic restrictions in return.
The committee also said Mr. Sevan failed to adequately explain
the source of $160,000 of extra income from 1999 to 2003. He had told
the panel that he was given the money by an aged aunt who died in
Cyprus last year after falling down an elevator shaft.
The committee said it “continues to investigate” whether he
“received personal or financial benefits” for soliciting the oil
deals for AMEP.
Even after the publication of the interim report, Mr. Sevan’s
status with the United Nations remains strangely blurred, and U.N.
officials seem to have remarkable trouble defining it:
Does he still have diplomatic immunity? Yes. Has he retired? Yes,
but he still has the status of a contract employee, at $1 per year,
maintaining his immunity. Does he have a pension? Yes, but it is not
yet being paid.
The U.N. press office had been speaking on Mr. Sevan’s behalf
until last week, when calls were referred to Eric Lewis, a Washington
lawyer who issued a spirited defense. He said, “Mr. Sevan never took
a penny,” adding that the inquiry committee “succumbed to massive
political pressure” to find a scapegoat.
There was no sign of Mr. Sevan at his Manhattan apartment block
on Saturday. When the Sunday Telegraph tracked him down last year
during a visit to see his aunt in hospital in Cyprus, he defiantly
rejected all suggestions of impropriety against him and said he would
be vindicated by the report.
Future fights
Even if Mr. Annan escapes censure in Mr. Volcker’s next report,
he is not out of the woods. There are five U.S. congressional
investigations into the oil-for-food scandal and U.N. mismanagement,
as well as two criminal inquiries being conducted by federal and New
York prosecutors. And in Republican-controlled Washington, where many
politicians consider “United Nations” to be dirty words, the
secretary-general’s role still faces intense scrutiny.
Nile Gardiner, a fellow at the Heritage Foundation, who has
studied the scandal, said: “The U.N. continues to display
breathtaking arrogance with regard to the oil-for-food scandal. The
organization does not seem to recognize the extent to which it has
been damaged by this. Five major congressional investigations are
looking at the role of Kofi Annan, and any of them have the potential
to force his resignation.”
The Volcker findings have provided fresh ammunition for prominent
U.S. critics of the United Nations.
“I am reluctant to conclude that the U.N. is damaged beyond
repair, but these revelations certainly point in this direction,”
said Rep. Henry J. Hyde, the Republican chairman of the House
International Relations Committee, one of the investigating panels.
At the United Nations, the defense is being led by Mark Malloch
Brown, the eloquent British official whom Mr. Annan recently promoted
to chief of staff, with a brief to “renew” the organization.
“Benon Sevan has been a lifelong colleague and a dear, dear
friend,” he said. “But these are extremely serious charges of
wrongdoing, and no one will be shielded from prosecution. If there
are criminal charges, the U.N. will fully cooperate and waive
diplomatic immunity of staff members, whoever they are.”
Mr. Malloch Brown said the Volcker report was “encouraging” and a
“step in the right direction.”
But, he continued, the report showed that the U.N. bureaucracy
would have done better at controlling Saddam’s oil-for-food schemes
if it had been allowed to do its jobs without the interference of the
“member nations,” particularly those on the Security Council.
The report also said the major source of Saddam’s illicit money
was not kickbacks but oil smuggling to Jordan and Turkey, to which
the United States and Britain turned a blind eye because the two
countries were allies.
“Back off — that’s the message to the member states,” Mr. Malloch
Brown declared boldly. “They should look to the mote in their own
eye, because what has been revealed is a process of politicization.”
Mr. Boutros-Ghali was even blunter in his response after the
report detailed how he “acquiesced” to the Iraqi authorities in the
choice of BNP as the program’s banker, despite apparently stronger
bids from others. Mr. Weston said Mr. Boutros-Ghali did not get a
second term because he was not regarded as good enough to deserve it.

Mr. Weston said of Mr. Boutros-Ghali: “I think he was an
honorable public servant. But he had a number of shortcomings. One of
them was that he was a singularly poor manager.”
The former secretary-general, reached by telephone at his Paris
apartment shortly after the interim report was published, insisted
that he had done nothing improper. He called the accusations “silly”
and dismissed the Volcker investigators as “ignorant” about the U.N.
In fact, the investigators have become well-informed about how
the U.N. system operated, and the rest of the world is now learning
• Mr. Sherwell reported from Washington and Mr. Lawrence from New
York, with additional reporting by Ed Simpkins and Damien McElroy in