INTERVIEW WITH PRIME MINISTER

Azat Artsakh – Nagorno Karabakh Republic (NKR)
04 Feb 05

Mr. Prime Minister, at the last meeting of the government you made
several interesting statements. You also mentioned the necessity of
reconsidering several programs of the government. What are the reasons
for this? – As you know, in 2000 the government worked out the program
of reforms of economic development which included tax, investment, as
well as structural, sphere, regional and several other components. The
program was confined to concrete terms: 2000-2002 years of intensive
reforms, 2003-2005 years of steep economic growth and 2006-2010 years
of potential development of the economy. Today I may state that the
two stages are literally coming to an end and now we not only give an
assessment to the past years of reforms but we have also set new
milestonesbefore the decisive stage taking into account past
achievements and mistakes. – Would you give details? For instance,
the government had estimated a 25-30 per cent growth of the GDP in
2002-2004. In 2002 the growth of the GDP was 36.2 per cent, in 2003
43.8 per cent and in 2004 56 per cent. The estimated indices were
significantly surpassed in foreign trade. Especially good achievements
were reported in the export of goods. It suffices to mention that the
export of 1.1 billion drams in 2000 reached 19.2 billion in 2004. That
is, it grew 17.4 times in the result of which the negative trade
balance of the country was reduced from 14 times to 2 times (export
19.2 billion, import 58.7 billion). Naturally the growth of income
also surpassed the expected rates, which I consider one of the chief
achievements of the economic reforms. For the years 2003-2005 we had
estimated a growth of income by 30 per cents which is indeed a high
rate but in 2003 the rate of growth was 42 percent, in 2004 44.8 per
cent. It is notable that in the budget of 2005 we have already
maintained 42 per cent of growth of income. The government announced
that owing to the reforms the rate of the GDP in 2001 (23.8 billion
drams) would double in the next five years (reaching 47.6 billion
drams in 2006). However, taking into account the high rates of
economic growth, the government planned to increase the volume of the
GDP in the state budget of 2005 up to 48 billion. And this means that
already in 2005 the volume of the GDP of 2001 will have doubled, and
not in 5 but 4 years. By the way, the government kept another
important vow. In two years the volume of income of 2002 doubled in
2004. The planned rates were surpassed as wellin reference to the
minimum and average salaries, allowances and other spheres. The steep
growth of macroeconomic rates once again confirmed that the economic
reforms implemented in the republic are on the right way and proved
their viability. Taking into account these facts the government worked
out a new program of economic development last October, which will
cover the period between 2006-2010 and will mainly be based upon the
rates of the previous years.- By the way, in the meeting of the
government you said that working out of the programs will be over in
the first semester of the current year. At the same time you mentioned
indices which will be a milestone for further macroeconomic rates. I
wonder in what directions the program will develop. – I may say that
the macroeconomic part of the program is ready. At the same time, the
major part still remains. The new program will in fact differ from the
others; besidesthe sums to be provided to spheres and regions and
their sources also the estimated value of each object, the source of
financing and the date will be recorded. Moreover, besides the
material aspect the program will also involve components grounded from
the structural, infrastructure, regional development and economic
aspects of the management system. – Mr. Prime Minister, which will be
the main estimated macroeconomic indices of the NKR development
program for 2006-2010? – You know, while commenting on economic topics
certain journalists mix the numbers and the reader has difficulties in
getting a true idea. In order for it to be easier for you, today I
will mention only one number which will be easy to remember –
100. However, this number refers to the three directions of economic
development. In 2006-2010, that is in five years, it is planned to
double the GDP increasing it once again up to 100 billion drams. The
secondgoal is to double the budget of the country in the mentioned
period. That is to say, in 2010 it will total almost 100 million US
dollars. And third, according to the program, in 2010 the average
salary in the republic will total about100 thousand drams. – Thank
you. We wish to the second program of development of Artsakh worked
out by the government to be as successful as the program for 2000-2005′

REGNUM.
04-02-2005

PanArmenian News
Feb 4 2005

AZERI MINISTER OF CULTURE AGAINST COOPERATION WITH ARMENIA

04.02.2005 18:15

/PanARMENIAN.Net/ “The stand of the Azerbaijani Ministry of Culture
is simple. Azerbaijan has never participated and will not participate
in the joint creative and cultural projects, in which Armenian
representatives are engaged”, Azerbaijani Minister of Culture Polad
Bul-bul oglu stated in his interview with Caucasian Knot when
commenting on the recent proposal of German conductor Uwe Berkhemer
on formation of a Transcaucasian chamber orchestra. In the Minister’s
words, he has sent the German director a letter explaining the
reasons of Azerbaijan’s refusal. “We were many times offered
cooperation with Armenia both within the CIS and other international
organizations. However our position is fundamental”, the Azeri
Minister of Culture said.

Europe Information Service
Euro-East
February 3, 2005

EU/SOUTH CAUCASUS: PARLIAMENTARIANS WELCOME FURTHER EAST-WEST
INTEGRATION

The EU’s decision to open membership talks with Turkey and the
European Parliament’s approval of the draft EU Constitution have been
hailed by the South Caucasus Parliamentary Initiative as new
milestones in “the process of building a prosperous and democratic
Europe in which the countries of the South Caucasus aspire to
participate equally and fully”. And delegates from the Parliaments of
Armenia, Azerbaijan and Georgia attending the third Plenary Assembly
of the South Caucasus Parliamentary Initiative in Ljubljana,
Slovenia, from January 17-19 also welcomed the outcome of the
Presidential elections in Ukraine, “a country with which all South
Caucasus states have long historic, economic and political ties”.

BODY:
The final communique of the third Plenary Assembly of the SCPI said
the Southern Caucasus countries looked forward to the further
development of relations with Ukraine. They also welcomed the keen
interest of the OSCE Slovenian Chairmanship to the region of the
South Caucasus and its commitment to the process of reform and
renewal of the Organisation for Security and Cooperation in Europe
and its structures.

But closer to home, things are not so rosy. The Georgian delegation
expressed its concern at the OSCE’s failure, due to a lack of
consensus, to renew the mandate of the Mission monitoring the border
between Georgia and parts of the Russian Federation. The participants
of the 3rd Plenary Assembly of SCPI hoped that an agreement on this
issue can be achieved speedily.

Delegates were also at pains to point out that the South Caucasus is
not making full use of the opportunities offered by the European
integration process. “This is a challenge that the states of the
South Caucasus must take up to ensure better life for the future
generations”, the communique said. The Assembly said it hoped “the
full involvement of the countries of the South Caucasus in the EU’s
New Neighbourhood Policy will be fully utilised by state and society
in the South Caucasus to accelerate the process of economic, social
and political developments in the region”.

Parliamentarians attending the SCPI Plenary Assembly also confirmed
their commitment towards reform and renewal in their countries. They
acknowledged the need to step up efforts to resolve the conflicts in
the region that hinder economic development and political evolution
and welcomed the continued dialogue between the Governments of
Armenia and Azerbaijan in the framework of the “Prague process” in
their effort to find a solution to the Karabakh conflict.

As for the wider initiative, the SCPI welcomed its increasing role in
the region. “The activation of working groups that can dwell in depth
on issues of common interest is in this regard a logical next step”,
the communique said. Delegates called on the SCPI Presidium to move
speedily with the appointment of an Executive Secretary in time to
take office on July 1.

Armenian Court of Appeal upholds ruling to keep nationalist leader in custody

Noyan Tapan news agency
4 Feb 05

YEREVAN

The Court of Appeal for criminal and military cases has rejected the
appeal on changing the restraining measure against the chairman of the
Armenian Aryan Union (AAU), Armen Avetisyan, the member of the AAU,
Mar Martirosyan, has told our correspondent.

He also said that the AAU will appeal to Armenian Prosecutor-General
Agvan Ovsepyan and submit a petition by the deputies of the Armenian
National Assembly, Viktor Dallakyan and Manuk Gasparyan, politicians
and representatives of the intelligentsia, as well as signatures in
favour of changing the restraining measure.

[Avetisyan was arrested under a ruling of the court of Yerevan’s
Kentron and Nork-Marash communities for inciting national, racial and
religious hatred and is being charged with propagating hatred between
Armenians and Jews in public and in the media between 2003 and 2005.]

Agence France Presse — English
February 4, 2005 Friday 1:01 PM GMT

US consular worker in Armenia arrested for bribe-taking

YEREVAN

A US consular worker in Armenia has been arrested in Washington and
faces up to 15 years in jail for allegedly taking bribes for entrance
visas issued to Armenians wishing to travel to the United States,
officials said Friday.

The US State Department accuses Piotr Zdzislaw Parlej, a US national,
of taking bribes of up to 10,000 dollars (7,700 euros) for issuing
entry visas to unqualified candidates, according to the inidctment.

It is unclear how many improper visas Parlej issued or how much money
in bribes he had received. The United States has a thriving Armenian
diaspora, with families frequently traveling between the two
countries.

ARKA News Agency
Feb 4 2005

Arthur Baghdasaryan: the year 2005 must turn for Armenia a year of
parliamentary solidarity

Since the middle of February Armenia will start negotiations with IMF
and WB on middle-term programs in the frames of new cooperation

Presentation of new internet site of US Embassy to Armenia took place
in Yerevan

Regional Group of Basel Committee for banking control adopts
resolution in Yerevan

OSCE monitoring group to check facts visits Zangelan region under
control of NKR defense Army

The Commission of the jury of the District of Columbia (the USA)
brings an accusation of bribery and visas falsification against the
former consular officer of the US Embassy to RA

Armenian-Russian relations develop in normal course

*********************************************************************

ARTHUR BAGHDASARYAN: THE YEAR 2005 MUST TURN FOR ARMENIA A YEAR OF
PARLIAMENTARY SOLIDARITY

YEREVAN, February 4. /ARKA/. The year 2005 must turn for Armenia a
year of parliamentary solidarity, as Arthur Baghdasaryan, Speaker of
the Armenian Parliament stated today on press conference on the eve
of start of the spring session. He stressed that this year will b the
15th anniversary of foundation of the Parliament and 10 years of the
National Assembly. In this context he attached importance to solution
of the set tasks by the political streams presented in the
Parliament. In his words, the task number one is must be achieving of
constructive cooperation and tolerance when discussing important
issues. `Today’s serious problems are elements of intolerance, envy,
malice, self-admiration that prevent cooperation, therefore the
current year must be marked by parliamentary tolerance’, Baghdasaryan
said. T.M. -0–

*********************************************************************

SINCE THE MIDDLE OF FEBRUARY ARMENIA WILL START NEGOTIATIONS WITH IMF
AND WB ON MIDDLE-TERM PROGRAMS IN THE FRAMES OF NEW COOPERATION

YEREVAN, February 4. /ARKA/. Since the middle of February Armenia
will start negotiations with IMF and WB on middle-term programs in
the frames of new cooperation, CBA Chairman Tigran Sargsian stated
today. According to him, special attention will be paid to influence
of USD rate on CBA policy.
Talking about USD rate variations, Sargsian said that Armenian policy
in financial sphere will not be changed and it is more import how
changes the policy of basic players of the market – EU, Russia, China
and IMF and WB. He said that variations of USD rate depend on
numerous factors, including on US state budget deficit and
refinancing rate in America.
As RA Minister of Finance and Economy Vardan Khachatrian stated
earlier, RA Government will start negotiations on IMF program which
will start since autumn 2005. L.D. –0 –

*********************************************************************

PRESENTATION OF NEW INTERNET SITE OF US EMBASSY TO ARMENIA TOOK PLACE
IN YEREVAN

YEREVAN, February 4. /ARKA/. Presentation of new internet site of US
Embassy to Armenia () took place in Yerevan, US Ambassador
Extraordinary and Plenipotentiary to Armenia John Evans stated today.
The new site testifies to democracy and transparency of American
embassy at the line of US politics and American assistance programs
in Armenia. Namely, it contains information in Armenia on assistance
program conducted in Armenia, the site has different parameters of
search, news of American politics, periodically renewed information
of Washington File edition and big data base with broad search
opportunities. According to Evans, today world is on the verge of
digital revolution, which is democratic step. According to the
Ambassador, `God gave law to Jews, alphabet to Armenians and Internet
to Americans’. `Today we managed to unite two of these events –
Internet and Armenian language’, Evans said.
New site of the embassy includes Latest News division placed on
homepage, which covers activities organized by the Embassy. L.D. –0 –

*********************************************************************

REGIONAL GROUP OF BASEL COMMITTEE FOR BANKING CONTROL ADOPTS
RESOLUTION IN YEREVAN

YEREVAN, February 4. /ARKA/. Regional Group of the Basel Committee
for banking control of South Caucasus, Central Asian states and
Russia adopted a resolution of its 15th conference in Yerevan, as
current Chairman of the Group, Deputy Chairman of National Bank of
Tajikistan Juma Eshov said. In his words, the resolution mentions the
necessity of ratifying international convention as well as adoption
and application of law against legalization (laundering) of illegal
incomes or money received through financing of terrorism. At that he
stressed that in regard of this issue, information and experience of
the Central Banks of Armenia, Georgia and Russia in creation of
system targeted against using of credit funds for laundering money
and financing of terrorism should be considered. In Eshov’s words,
the document also points out to the necessity of adequate control
over non-banking financial institutions activity, amending of the
banking legislation and implementation of demands of legal protection
of the banking control and corporate management employees. The
resolution similarly mentions the necessity of exchange of
information on undertaking measures aginst use of banking systems for
the purpose of legalization of illegal incomes on bilateral basis.
T.M. -0–

*********************************************************************

OSCE MONITORING GROUP TO CHECK FACTS VISITS ZANGELAN REGION UNDER
CONTROL OF NKR DEFENSE ARMY

YEREVAN, February 4. /ARKA/. OSCE motoring group to check facts
visited Zangelan region under control of Nagorno Karabakh Republic
Defense Army. As ARKA’s own correspondent reports from Stepanakert,
the mission joined by French and Russian Co-Chairs of the OSCE Minsk
Group Bernard Facier and Yuri Merzlyakov headed for Araxes river
bank. In towns of Mijnavan (former Minjevan) and Kockasan (former
Zangelan) and nearby settlements the mission members undertook a
detailed study of the situation.
The monitoring group will leave NKR after few days and while back in
Europe will prepare a report for the OSCE Minsk Group. The NKR
authorities provided all necessary conditions for mission’s activity.

Today the monitoring group to check facts is monitoring in Kubatli
region. T.M. -0–

*********************************************************************

THE COMMISSION OF THE JURY OF THE DISTRICT OF COLUMBIA (THE USA)
BRINGS AN ACCUSATION OF BRIBERY AND VISAS FALSIFICATION AGAINST THE
FORMER CONSULAR OFFICER OF THE US EMBASSY TO RA

YEREVAN, February 4. /ARKA/. The Commission of the jury of the
District of Columbia (the USA) brought an accusation of bribery and
visas falsification against the former consular officer of the US
Embassy to RA Peter Zdislo Parle, as stated the US Attorney for the
District of Columbia Kenneth Wainstein and Assistant Secretary of
Bureau of Diplomatic Security of US Department of State Frank Taylor,
according to the US Embassy to RA. Parle was arrested, and world
judge Alan Key will consider his case. In case Parle is found guilty,
he may be sentenced to imprisonment from 5 to 15 years and fined a
sum not exceeding $250 thsd for each case.
According to the press-release, Parle is accused of being involved in
bribery and visas falsification together with his accomplice in
Yerevan from April 2004 to January 13, 2005 and of impeding by means
of `contrivance, falsification, cheating and illegal methods’ the
legal activity of US Department of State in respect of emission of
visas to authorized foreign citizens and exertion of control over
emissions. The accusation brings 6 cases of accept bribe in the
amount of $10 thsd in cash by Parle for giving visas, irrespective of
competence of applicants. `Fair and due application of laws on
immigration is the right of the US people’, the attorney said.
Wainstein added that a consular officer violating laws for individual
purposes undermines objectivity in the issue of filing applications
for visas and their consideration and undermines trust in personnel
of American consular departments all over the world.
Wainstein and Taylor expressed their gratitude to special agents of
the bureau of diplomatic security service US Department of State, to
the personnel of the US Embassy to RA as well as to Armenian
law-enforcing authorities for support in investigation of the case.
The US Embassy to RA and US Department of State assure that
everything will be done to ensure objectivity in the process of visas
emission and to avoid falsifications. Armenian National Security
Service is acknowledged by the US Embassy for their support in that
issue. A.H. – 0 –

*********************************************************************

ARMENIAN-RUSSIAN RELATIONS DEVELOP IN NORMAL COURSE

YEREVAN, February 4. /ARKA/. Armenian-Russian relations develop in
normal course, as Arthur Baghdasaryan, Speaker of the Armenian
Parliament said. He reported that on occasion of festival of Russia’s
day to Armenia are envisaged numerous events representatives of
Russian legislative, as well as executive top officials will visit
Armenia. `These visits will attach a new stimuli to the Armenian
-Russian relations’, Armenian Parliament’s Speaker is confident. T.M.
-0–

MONITORING MISSION VISITING ZANGELAN

Azg/arm
5 Feb 05

The OSCE monitoring mission made its way to the bank of Araxes
River. They visited every house and interrogate everyone they met in
the towns of Mijnavan (formerly Minchevan) and Kovsakan (formerly
Zangelan).

Incessant mission was in full swing. They will leave Nagorno Karabakh
in few days to make a report for the Minsk group. The monitoring
mission was provided with everything necessary for a fruitful work

Emily Haber, head of the monitoring mission, met Artur Balasanian, 38,
in the main street of Mijnavan. He lost his home and property that
were in Getashen as a result of the war. Artur looks 50. He moved to
Mijnavan in 1996. Two of his four sons were born here. Before moving
to Mijnavan, Artur and his old parents were given a shelter in the
Hrazdan resort house and Njuvadi village in Meghri. The life in
Mijnavan is not the last station for him, as he will leave for another
place if possible – a place with no name for him. He wishes he could
return to Getashen but realizes that new dwellers have already found
his two-storied house.

Vladimir Gasparian, 25, and his family left Armenikend, a Baku borough
where the Armenians used to live, when he was 9. He left Baku by car,
moved to Ghubatlu then to Kapan. After living in one of the hostels of
Kapan for tenyears, they moved to Mijnavan in 1998.

“There are five children in our family and I am the eldest. We go to
other people’s fields to work there, gathering the harvest and
fertilizing the earth. We will leave this place if it is possible,”
Vladimir said and added that there are other 5-6 cities in the city
that fled from Baku.

Mamikon Yavrumian was born in Kirovabad. He has to live in Kovsakan
town. Mamikon works in the field and is engaged in cattle breeding.
Mamikon and Arpine, his wife, are teachers. They met in Kovsakan and
got married. They have an infant that was born two months ago.

“The life makes us live here, as we have no house in Armenia. We have
no drinking water there are a lot of snakes all around here. We can’t
let our children walk freely in this territory,” he says.

Zangelan administratively belonged to Azerbaijan, formerly. No
wintertime comes here. The weather is mild. It seldom snows
here. Zangelan is the smallest territory under the control of Karabakh
forces. It is situated in the lower parts of the Voghji, the Tsav and
the Hakari rivers.

The OSCE monitoring mission spent a whole day in these places and
spoke with people they met on their way and visited their houses. They
were putting down all the things these people said, so that they can
summarize their statements and find out who are the dwellers of these
territories, when and where they came from.

The official Baku keeps saying that Armenia and NKR are conducting an
official policy of inhabiting and using the territories they control.
While Yerevan and Stepanakert deny this, by stating that no official
inhabiting policy is being conducted there. The Armenians that had to
flee from Azerbaijan and lost their homes there came and inhabited
these regions by their own decision.

By Tatoul Hakobian

Prime-Tass English-language Business Newswire
February 4, 2005

Official sees Armenia’s diamond reexport ban lifted by April

YEREVAN, Feb 4 (Prime-Tass) — Restrictions on the reexport of
Russian uncut diamonds from Armenia are expected to be lifted by
April 2005, Gagik Lazarian, director of the precious stones
department of Armenia’s Trade and Economic Development Ministry, told
reporters Friday.

According to Article 5 of the Russian-Armenian intergovernmental
agreement, it is forbidden to reexport Russian uncut diamonds from
Armenia, he said, but negotiations on canceling the prohibition are
currently under way.

According to the agreement, Russia may supply Armenia with up to
400,000 carats of uncut diamonds annually for the country’s own use
in 2002-2004, and up to 450,000 carats in 2005-2006. Russia’s uncut
diamond monopoly Alrosa and Almazyuvelirexport supply the diamonds.

However, in 2003-2004 Armenia did not purchase its full quota of
diamonds from Russia because of the liberalization of the Russian
diamond market, which made Alrosa increase its prices.

Alrosa accounts for 99% of the uncut diamond production in Russia and
produces 20% of the world’s diamonds in terms of mass and 26% in
terms of value. End

PanArmenian News
Feb 4 2005

OSCE FACT-FINDING MISSION TO VISIT KUBATLY

04.02.2005 17:03

/PanARMENIAN.Net/ Accompanied by OSCE Minsk Group Russian and French
Co-Chairs Yuri Merzlyakov and Bernard Fassier the OSCE fact-finding
mission for the territories of security belt around Nagorno Karabakh
will visit the Kubatly region to find out the essential data today,
press service of the NKR Ministry of Foreign Affairs reported. Let us
remind that Foreign Minister Deputy Masis Mailian is also attending
the mission composed of representatives of European states. To note,
the mission members have already visited the Kelbajar, Jebrail,
Fizuli, Aghdam and Zangelan regions.

The Times (London)
February 4, 2005, Friday

Iraqi oil brought these girls food-and the UN its biggest scandal

by James Bone

The head of the $ 64 billion aid scheme is accused of conniving with
Saddam, James Bone reports from New York.

AN EXPLOSIVE report by the UN’s own inquiry into the Oil-for-Food
scandal charged yesterday that the head of the programme secretly
received oil allocations from Saddam Hussein. The report also raised
questions about the role of relatives of the former UN
Secretary-General Boutros Boutros Ghali.

The revelations threw the UN into crisis by adding credence to
allegations of widespread corruption in the largest humanitarian
effort in the organisation’s history.

The three-member commission of inquiry, led by Paul Volcker, the
former Chairman of the US Federal Reserve, accused Benon Sevan, the
head of the programme, of “a grave and continuing conflict of
interest” and said that it was “basically improper” for him to have
solicited oil allocations from Iraq.

“He was positioned to affect matters of substantial interest to the
Government of Iraq, and the Government of Iraq hoped that he would
act favourably in return for the allocations that he was granted,”
the report said.The panel also provided previously unknown details
about the part played by the brother-in-law and a cousin of Dr
Boutros Ghali.

The commission did not, however, answer questions about alleged
pay-offs to political leaders in Russia, France and other countries,
or offer a verdict about the role of Kofi Annan’s son, Kojo.

The investigation found that Mr Sevan had requested and received
allocations of millions of barrels of oil on behalf of a
Panama-registered trading company called African Middle East
Petroleum Co (AMEP), owned by Dr Boutros Ghali’s cousin Fakhry
Abdelnour.

The report stopped short of accusing Mr Sevan of having taken a
bribe, but it did report unexplained cash transfers of $ 160,000 that
he said came from an elderly aunt, who was a retired Cyprus
government photographer living on a modest pension until her death in
Nicosia last year. Mr Volcker’s team said that Mr Sevan was “not
forthcoming” when he denied approaching Iraqi officials to request
oil allocations. Although Mr Sevan originally claimed that he had met
Dr Boutros Ghali’s cousin only once, investigators found phone logs
of numerous conversations and even discovered two of Mr Abdelnour’s
business cards in a search of his UN office.

Mr Sevan and Mr Adbelnour acknowledged having a friendship with Fred
Nadler, Dr Boutros Ghali’s brother-in-law.

Mr Sevan said that he met Mr Nadler at UN receptions or meetings
where Dr Boutros Ghali spoke. Records show that Mr Sevan was in
“close contact on an almost weekly basis” with Mr Nadler from at
least 1998 until last year.

Mr Abdelnour described himself as a “good friend” of Mr Nadler and
said one of his uncles was the Nadler family lawyer.

“On multiple occasions, at key periods in the programme and in AMEP’s
dealings with SOMO (Iraq’s state oil marketing organisation), the
phone records show calls between the numbers for Mr Sevan and Mr
Nadler within a few minutes of calls between the numbers for Mr
Nadler and Mr Adbelnour,” the report said.

The commission said it was continuing to investigate “the full scope
and nature of the involvement of Mr Sevan, Mr Abdelnour and other
individuals”.

At a press conference, Mr Volcker said that Dr Boutros Ghali, who was
UN Secretary-General from 1991 to 1996, had been interviewed by
investigators on several occasions.

Responding to the report, Mr Sevan issued a statement yesterday
denying wrongdoing and asserting that he “never took a penny”.

Mr Annan, the UN Secretary-General, reacted to what he called
“extremely troubling evidence of wrongdoing” by initiating
disciplinary proceedings against Mr Sevan, a retiree who continues to
serve the UN on a dollar-a-year contract.

Mr Annan also plans to discipline a UN official called Joseph
Stephanides, who is accused by the Volcker panel of shortcutting a
competitive bidding process to award a 1996 UN border inspection
contract to the British firm Lloyd’s Register.

The UN chief reiterated his pledge to lift diplomatic immunity in the
event of any criminal charges against UN staff. “No one found to have
broken any laws will be shielded from prosecution,” he said.

Mr Annan has himself been interviewed three times as part of the
commission’s investigation of his son, Kojo, who was employed by a
Swiss company, Cotecna Inspection SA, that won a UN contract in Iraq.

Mr Volcker said that the investigation of Kojo Annan was well
advanced. Kofi Annan said that he awaited its outcome “with a clear
conscience”.

The Volcker commission plans to issue an update on Kojo Annan soon
and to ready its final report by mid-summer.

Lacking subpoena power, Mr Volcker’s team has been struggling to keep
up with rival congressional and criminal inquiries in the United
States.

Federal prosecutors in Manhattan recently made a breakthrough in the
case when they secured a guilty plea and a promise of co-operation
from Samir Vincent, an Iraqi-American businessman who acted as a
go-between for Saddam and had been paid off by Iraq for a role in
drafting the original Oil-For-Food scheme so that it favoured Saddam.

THE KEY MEN

BENON SEVAN

A Cypriot of Armenian descent, Mr Sevan recently retired after a
four-decade career at the UN. He ran the Oil-For-Food programme
throughout its six-year existence, but stands accused of receiving
millions of barrels of “oil allocations” on behalf of a trading
company run by a cousin of the former UN Secretary-General Boutros
Boutros Ghali.

BOUTROS BOUTROS GHALI

A former Egyptian Foreign Office minister who served as UN
Secretary-General from 1991-96. Often outspoken, he fell out with the
United States and was vetoed for a second term. During his tenure,
the UN negotiated the terms of what was to become the Oil-For-Food
programme, including allowing Saddam Hussein to choose which
companies he did business with.

FAKHRY ABDELNOUR

An Egyptian cousin of Boutros Boutros Ghali, Mr Abdelnour is an
oil-trader based in Switzerland. He owns a Panama-based trading
company called African Middle East Petroleum (AMEP). According to the
report, Mr Abdelnour went to Iraq to handle “oil allocations” for Mr
Sevan. It accuses AMEP of lifting about 7.3 million barrels of oil at
a profit of more than $ 1.5 million.

FRED NADLER

The brother-in-law of Boutros Boutros Ghali and a friend of Mr Sevan
and Mr Abdelnour. Mr Nadler was related to Mr Boutros Ghali, a Copt,
through the former UN chief’s Jewish wife, Leah, whose father owned
the Nadler sweets factory Alexandria. Mr Sevan said that he met Mr
Nadler at UN receptions at which Mr Boutros Ghali spoke. Mr Abdelnour
describes him as a “good friend”.

One of Mr Abdelnour’s uncles is the lawyer for the Nadler family. The
report describes Mr Nadler as “the likely intermediary between Mr
Sevan and Mr Abdelnour.”