Replies

Iraq welcomes Oil-for-Food report

http://www.bakersfield.com/24hour/world/story/2086608p-10150970c.html

MARIAM FAM, Associated Press Writer

BAGHDAD, Iraq (AP) - Iraq's human rights minister welcomed the report on the sweeping investigation of the U.N. oil-for-food program, saying those responsible for management should be brought to justice and Iraqis should be financially compensated.

"Through the report it has become clear to us that some of those who were shedding crocodile tears for Iraqi children shamelessly, showed their ugly face by stealing Iraqi children's bread," Human Rights Minister Bakhtiyar Amin told The Associated Press.

The report accused program chief Benon Sevan of a "grave conflict of interest," saying his conduct in soliciting oil deals was "ethically improper and seriously undermined the integrity of the United Nations."

Despite Sevan's claims that he never recommended any oil companies, the investigation by former U.S. Federal Reserve Chairman Paul Volcker concluded that the official repeatedly solicited allocations of oil from Iraq under the program and "created a grave and continuing conflict of interest."

"We expect that there will be a wider and a deeper investigation continuously until those who benefited from the coupons will be all brought before justice and the resources stolen be returned back to the Iraqi people," Amin said. "This money should be paid back."

He added that the findings shouldn't be used to tarnish the whole United Nations, which he said was a big organization of "decent people."

He asked that a better monitoring system be put in place to prevent and deal with corruption.

The oil-for-food program, launched in December 1996 to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait, quickly became a lifeline for 90 percent of the population.

aticle update..

http://story.news.yahoo.com/news?tmpl=story&cid=514&e=1&u=/ap/20050203/ap_on_re_mi_ea/oil_for_food_investigation_18

-------

UNITED NATIONS - Secretary-General Kofi Annan (news - web sites) is taking disciplinary action against the head of the U.N. oil-for-food program in Iraq (news - web sites) following an investigation of alleged corruption in the humanitarian program, a senior U.N. official said Thursday.

The decision came after a report by former Federal Reserve (news - web sites) Chairman Paul Volcker accused program chief Benon Sevan of unethical conduct and Joseph Stephanides of manipulating an oil-for-food contract, according to Mark Malloch Brown, Annan's chief of staff.

At the time the contract was awarded, Stephanides was chief of the U.N. Sanctions Branch and deputy director of the Security Council Affairs Division in the U.N. Department of Political Affairs. He now heads the division. Malloch Brown did not say what disciplinary steps would be taken but said they would be announced early next week.

Although Sevan said he never recommended any oil companies, the investigation led by Volcker concluded that he repeatedly solicited allocations of oil from Iraq under the program and "created a grave and continuing conflict of interest."

Volcker also said there was "convincing and uncontested evidence" that the selection of the three U.N. contractors for the oil-for-food program — Banque Nationale de Paris, Saybolt Eastern Hemisphere BV and Lloyd's Register Inspection Limited — did not conform to established financial and competitive bidding rules.

Sevan denied any wrongdoing, the report said, but it added that evidence from Iraqi officials contradicted those denials. However, a summary of the report's findings did not accuse Sevan of any criminal actions.

Volcker's committee said it investigated allegations that Sevan, while executive director of the oil-for-food program, requested oil allocations from the Iraqi government on behalf of the African Middle East Petroleum Co. Ltd. Inc., a Swiss-based oil trading company known as AMEP.

The committee concluded that Sevan solicited and received several million barrels of allocations on behalf of AMEP in 1998-2001. Those allocations generated $1.5 million in revenues, the report said.

Those solicitations "presented a grave and continuing conflict of interest, were ethically improper, and seriously undermined the integrity of the United Nations (news - web sites)," the report said.

The report said Sevan "was not forthcoming to the committee when he denied approaching Iraqi officials and requesting oil allocations on behalf of AMEP."

In a separate investigation by U.S. arms inspector Charles Duelfer, allegations surfaced that Sevan may have personally profited by receiving vouchers to sell Iraqi oil. According to the Duelfer report — which got its information from the former Iraqi oil ministry — Sevan allegedly received vouchers for 7.3 million barrels of oil through various companies and representatives that he recommended to Iraqi ministries.

The financial take would have been in the range of $700,000 to $2 million, depending on oil prices.

The oil-for-food program, launched in December 1996 to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam Hussein (news - web sites)'s 1990 invasion of Kuwait, quickly became a lifeline for 90 percent of the population.

Under the program, Saddam's regime could sell oil, provided the proceeds went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War (news - web sites). Saddam's government decided on the goods it wanted, who should provide them and who could buy Iraqi oil. But the Security Council committee overseeing sanctions monitored the contracts.

The program ended in November 2003, after the U.S.-led war that toppled Saddam. Allegations of corruption first surfaced in late 2000, with accusations that the Iraqi leader was putting surcharges on oil sales and pocketing the money.

The report by Volcker's committee said the budgeting, accounting, auditing and administration of the program was relatively disciplined, although there were isolated violations.

However, it highlighted flaws in the auditing of the program, saying there was insufficient funding and staff, and poor planning. It stressed that important areas of the program were never reviewed, and it called for greater transparency and accountability.

The interim report did not address questions about Annan or the employment of his son, Kojo, by the Swiss company, Cotecna Inspection SA, which had a U.N. contract to certify deals under the oil-for-food program. It said that topic would be addressed in another report.

Volcker said he intended to issue a definitive report this summer on the entire management and oversight of the program, including the role of the U.N. Security Council, the U.N. Secretariat and the U.N. agencies that administered the program in Iraq.

Volcker said the investigation also will focus on some of the parties involved in selling Iraqi oil or purchasing goods under the program.

U.N. response to oil-for-food probe

The Associated Press

http://www.bakersfield.com/24hour/world/story/2086769p-10151269c.html

Text of U.N. Secretary-General Kofi Annan's reaction to the interim report released Thursday:

As chief administrative officer of the United Nations Organization, I am responsible and accountable to the member states for its management. Last year, in order to fulfill that responsibility, I set up, with the full support of the Security Council, an independent inquiry into the administration and management of the Oil-for-Food Program, including allegations of fraud and corruption so as to get a clear idea of what was wrong, and what remedial actions are needed. I asked Mr. Paul Volcker, Justice Richard Goldstone and Professor Mark Pieth, three men of extraordinary distinction in their respective fields of finance, law and criminology, men whose integrity and competence is beyond doubt to conduct that inquiry.

Today they have presented, to me and to the public, an interim report, which I have immediately passed on to the Security Council. Mr. Volcker has said that "the findings do not make for pleasant reading," and I agree. Indeed, they make especially uncomfortable reading for all of us who love this Organization and have done our best to serve it over the years for two reasons:

First, colleagues alongside whom we have worked face serious accusations. I made clear when I set up the inquiry that appropriate action, with full regard for due process, would be taken against individuals or entities found to have violated the rules or procedures of the United Nations. Accordingly, I have today initiated disciplinary proceedings against Joseph Stephanides, the person named in the report who is still on active duty, and against Benon Sevan, the former head of the Office of the Iraq Program, against whom the report contains extremely troubling evidence of wrongdoing. Mr. Sevan has retired from active duties but has, until now, been kept on staff at a token salary to ensure his availability to the inquiry.

I made clear from the outset that no one found to have broken any laws would be shielded from prosecution. I stand by that pledge. Should any findings of the inquiry give rise to criminal charges, the United Nations will cooperate with national law enforcement authorities pursuing those charges, and in the interests of justice I will waive the diplomatic immunity of the staff member concerned.

Secondly, while I am very glad to note the finding that United Nations budgeting, accounting, and administration were in general disciplined in maintaining the use of funds for program purposes, I must also take note of the findings that the initial procurement process for companies to carry out banking and inspection services fell far short of the standards of fairness, objectivity and transparency required by the Charter and by United Nations rules, and that the management controls and systems set up for the program were, in many cases, inadequate to the task.

Measures have already been taken to remedy some of these defects. Other steps will be announced soon.

Meanwhile I wish to thank the members of the inquiry committee for this report, which I regard as a significant step forward, since it clearly demonstrates their determination to get to the bottom of all the allegations, and to identify deficiencies in the mechanisms that we used to administer the program. I note, in particular, their intention to publish a further interim report dealing with questions related to the procurement of a contractor that employed my son. I hope that report will come soon, and I await its findings with a clear conscience.

Finally, let me also thank the committee for judging the United Nations "against the highest standard of ethical behavior," and for their acknowledgment that "few institutions have freely subjected themselves to the intensity of scrutiny entailed in the committee's work."