UN takes action against Iraq oil scam suspect

UN Secretary-General Kofi Annan has ordered disciplinary action against the head of the UN oil-for-food program in Iraq, who was sharply criticised in an investigation that accused him of a “grave conflict of interest” and “undermining the integrity” of the UN.

The investigation report said oil-for-food chief Benon Sevan solicited oil allocations from Saddam Hussein’s regime on behalf of a trading company between 1998 and 2001, and it raised concerns he may have received kickbacks for the help.

Based on the report, Annan has decided to discipline Sevan and another UN official, Joseph Stephanides, who was chief of the UN Sanctions Branch, said Mark Malloch Brown, Annan’s new chief of staff.

Brown said the type of disciplinary action would be announced early next week but gave no details.

In its report released yesterday, the investigation led by former US Federal Reserve Chairman Paul Volcker accused Stephanides of “tainting” bidding for an oil-for-food contract. Stephanides now heads the Security Council Affairs Division in the UN Department of Political Affairs.

Allegations of corruption in the oil-for-food program – which allowed sanctions-bound Iraq to sell oil to buy humanitarian supplies – have raised steady criticism from members of the US Congress.

Despite Sevan’s claims that he never recommended any oil companies, Volcker’s Independent Inquiry Committee said it had evidence that Sevan asked Iraq to give a small Swiss-based oil company, African Middle East Petroleum, known as AMEP, the opportunity to buy oil. The company received the allocations and earned $1.5m (€1.1m) from them, it said.

Volcker’s panel said it is still investigating “the scope and extent of benefits” that Sevan received for his requests.

The report did not say Sevan received kickbacks, but expressed concern at 160,000 in cash which he said he received from his aunt in his native Cyprus from 1999-2003. The report questioned this ”unexplained wealth”, noting that his aunt, who recently died, was a retired Cyprus government photographer living on a modest pension.

“The most disturbing finding is the accumulation of evidence that the executive director of the program, Benon Sevan, did in fact solicit oil allocations for a small trading company,” Volcker told a news conference in releasing the report. “The Iraqis, who were assigning such allocations, certainly thought they were buying influence.”

He said Sevan had not been entirely co-operative and had not responded to interview requests in a timely way.

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

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