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UN report condemns Oil-for-Food head for taking $ 150,000 kickback
by James Bone
The Times (London)
August 9, 2005, Tuesday
The UN is left reeling by revelations that its largest humanitarian
aid project had been corrupted, reports James Bone
The United Nations' own inquiry into the Oil-for-Food scandal concluded
yesterday that the head of its largest humanitarian programme took
nearly $ 150,000 (£84,000) in kickbacks, most of it in stacks of
$100 bills.
Benon Sevan was accused of receiving the cash for steering Iraqi oil
contracts to a firm run by a brother-in-law and a cousin of Boutros
Boutros Ghali, the former UN chief.
The charge of outright corruption came in the report by the UN inquiry
led by Paul Volcker, the former chairman of the US Federal Reserve. The
findings rocked the UN, where officials initially dismissed the
Oil-for-Food scandal as a vendetta by right-wing American politicians
angered by UN opposition to the war in Iraq.
Mr Volcker's findings suggest that Saddam Hussein's government
was successful in effectively bribing the head of the Oil-for-Food
programme for the entire six years of its existence. The Volcker
commission said that Mr Sevan, who had been struggling after losing
on the stock market, received $ 147,184 in cash from December 1998 to
January 2002. The money came from oil sales by a Panama-based company,
African Middle East Petroleum (AMEP), which was run by Dr Boutros
Ghali's relatives.
But the company was only able to get the contracts -and pay the
kickbacks - because Iraq had allocated the oil to Mr Sevan. The
report found that Mr Sevan had conspired with AMEP's owner, Fakhry
Abdelnour, a cousin of Dr Boutros Ghali, and an AMEP officer, Fred
Nadler, the brother of Dr Boutros Ghali's wife, Leia.
It concluded that "Mr Sevan corruptly benefited from his request
and receipt of Iraqi oil allocations and that Mr Nadler and Mr
Abdelnour financially benefited from and assisted in Mr Sevan's
corrupt activity".
The report did not mention Dr Boutros Ghali but said there was no
evidence that other members of the Sevan or Nadler familes "acted
in a way that was wrong or improper". According to the report, AMEP
bought and resold 7.3 million barrels of Iraqi oil allocated to Mr
Sevan for a $ 1.5 million profit.
About $ 580,000 was then transferred from AMEP to Mr Nadler's account
under the name of Caisor Services in Geneva. Nearly $ 150,000 was
deposited in cash in theSevans' New York bank accounts.
According to one witness, Mr Nadler allegedly told his money managers
that, in the words of the report, "there was no possibility that
anybody would prove that he had given any money to Mr Sevan as it
was all cash withdrawals -there was no paper trail".
Mr Sevan denies any wrongdoing and said that the cash deposits came
from an aunt in his native Cyprus and that he declared them on his UN
tax returns, a claim the Volcker inquiry rejects. Now in Cyprus, Mr
Sevan resigned on Sunday from the $ 1-a-year retainer he has received
from the UN since retiring in 2003.Mr Volcker said that Mr Sevan was
the subject of a criminal inquiry and that he should be stripped of
diplomatic immunity.
Separately, the Volcker committee also found that Alexander Yakovlev,
a key UN procurement officer, had received more than $ 950,000 in
a bank account in Antigua from companies that won more than $ 79
million in UN business.
He was accused of soliciting a bribe from a company seeking an
oil-inspection contract in Iraq, although it is not clear the money
was paid. Mr Yakovlev, a Russian, resigned after it emerged that he
had got his son a job with a UN contractor.
He was arrested yesterday after the UN agreed to waive his diplomatic
immunity and pleaded guilty to three counts of money laundering, wire
fraud and conspiracy that each carry a maximum sentence of 20 years.
The guilty plea suggests that Mr Yakovlev could strike a bargain to
give information about other UN officials in return for a reduced
sentence.
Mr Yakovlev is the first UN official to plead guilty to fraud in
the Oil-For Food scandal because one of the US charges against him
relates to providing inside information to a company seeking a UN
oil-inspection contract in Iraq.
A report is due next month on the business dealings of Kojo Annan,
the son of Kofi Annan, the UN Secretary-General.
Leading article, page 15 Andrew Billen, T2, pages 6, 7
$ 64bn UN-supervised programme allowed Iraq to sell oil to buy food,
medicine and humanitarian supplies while under sanctions after 1990
invasion of Kuwait
THE SCHEME
1. Saddam Hussein allegedly awarded allocations of cutprice oil to
favoured politicians, officials, businessmen and journalists. A CIA
report in 2004 named hundreds of alleged recipients, including leading
officials in France and Russia
2. Allocation holders sold their oil to traders and received payments
for helping oil companies to win Iraqi oil contracts
3. UN oversaw contracts to release Iraqi crude for sale on world
market. Kickbacks were paid to Saddam
THE KEY PLAYERS
BENON SEVAN, right The Cypriot of Armenian descent who ran the
Oil-for-Food programme throughout its six-year existence is 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. Investigators say he took at least $ 160,000
in kickbacks
BOUTROS BOUTROS GHALI, left The former Egyptian Foreign Minister
served as UN Secretary-General in 1992-96, during which time the UN
negotiated the terms of the Oil-for-Food programme, including allowing
Saddam Hussein to choose which companies he did business with
FRED NADLER The brother-in-law of Boutros Boutros Ghali and a friend
of Mr Sevan and Mr Abdelnour, previously described by the UN as the
likely intermediary between Mr Sevan and Mr Abdelnour. One of Mr
Abdelnour's uncles is the lawyer for the Nadler family
FAKHRY ABDELNOUR Swiss-based Egyptian oil trader and cousin of Boutros
Boutros Ghali. He owns a Panama-based trading company called African
Middle East Petroleum (AMEP). The UN has reported that he went to
Iraq to handle oil allocations for Mr Sevan and that AMEP lifted
about 7.3m barrels of oil at a profit of more than $ 1.5m
THE OIL ALLOCATIONS
Oil allocations to Benon Sevan by Iraq:
1 1.8m barrels AMEP took delivery in November 1998
2 1m barrels First half of 1999. Oil not delivered
3 2m barrels AMEP took delivery in October-November 1999
4 1.5m barrels AMEP took delivery in April and June 2000
5 1.5m barrels AMEP took delivery of 951,655 barrels in November 2000
6 1m barrels AMEP took delivery in September 2001
7 2.5m barrels First half 2002. Oil not delivered
8 1.5m barrels Second half of 2002. Oil not delivered
9 1.5m barrels First half of 2003. Oil not delivered
--Boundary_(ID_P5BsCQ56Y+302tn67HMeBw)--
by James Bone
The Times (London)
August 9, 2005, Tuesday
The UN is left reeling by revelations that its largest humanitarian
aid project had been corrupted, reports James Bone
The United Nations' own inquiry into the Oil-for-Food scandal concluded
yesterday that the head of its largest humanitarian programme took
nearly $ 150,000 (£84,000) in kickbacks, most of it in stacks of
$100 bills.
Benon Sevan was accused of receiving the cash for steering Iraqi oil
contracts to a firm run by a brother-in-law and a cousin of Boutros
Boutros Ghali, the former UN chief.
The charge of outright corruption came in the report by the UN inquiry
led by Paul Volcker, the former chairman of the US Federal Reserve. The
findings rocked the UN, where officials initially dismissed the
Oil-for-Food scandal as a vendetta by right-wing American politicians
angered by UN opposition to the war in Iraq.
Mr Volcker's findings suggest that Saddam Hussein's government
was successful in effectively bribing the head of the Oil-for-Food
programme for the entire six years of its existence. The Volcker
commission said that Mr Sevan, who had been struggling after losing
on the stock market, received $ 147,184 in cash from December 1998 to
January 2002. The money came from oil sales by a Panama-based company,
African Middle East Petroleum (AMEP), which was run by Dr Boutros
Ghali's relatives.
But the company was only able to get the contracts -and pay the
kickbacks - because Iraq had allocated the oil to Mr Sevan. The
report found that Mr Sevan had conspired with AMEP's owner, Fakhry
Abdelnour, a cousin of Dr Boutros Ghali, and an AMEP officer, Fred
Nadler, the brother of Dr Boutros Ghali's wife, Leia.
It concluded that "Mr Sevan corruptly benefited from his request
and receipt of Iraqi oil allocations and that Mr Nadler and Mr
Abdelnour financially benefited from and assisted in Mr Sevan's
corrupt activity".
The report did not mention Dr Boutros Ghali but said there was no
evidence that other members of the Sevan or Nadler familes "acted
in a way that was wrong or improper". According to the report, AMEP
bought and resold 7.3 million barrels of Iraqi oil allocated to Mr
Sevan for a $ 1.5 million profit.
About $ 580,000 was then transferred from AMEP to Mr Nadler's account
under the name of Caisor Services in Geneva. Nearly $ 150,000 was
deposited in cash in theSevans' New York bank accounts.
According to one witness, Mr Nadler allegedly told his money managers
that, in the words of the report, "there was no possibility that
anybody would prove that he had given any money to Mr Sevan as it
was all cash withdrawals -there was no paper trail".
Mr Sevan denies any wrongdoing and said that the cash deposits came
from an aunt in his native Cyprus and that he declared them on his UN
tax returns, a claim the Volcker inquiry rejects. Now in Cyprus, Mr
Sevan resigned on Sunday from the $ 1-a-year retainer he has received
from the UN since retiring in 2003.Mr Volcker said that Mr Sevan was
the subject of a criminal inquiry and that he should be stripped of
diplomatic immunity.
Separately, the Volcker committee also found that Alexander Yakovlev,
a key UN procurement officer, had received more than $ 950,000 in
a bank account in Antigua from companies that won more than $ 79
million in UN business.
He was accused of soliciting a bribe from a company seeking an
oil-inspection contract in Iraq, although it is not clear the money
was paid. Mr Yakovlev, a Russian, resigned after it emerged that he
had got his son a job with a UN contractor.
He was arrested yesterday after the UN agreed to waive his diplomatic
immunity and pleaded guilty to three counts of money laundering, wire
fraud and conspiracy that each carry a maximum sentence of 20 years.
The guilty plea suggests that Mr Yakovlev could strike a bargain to
give information about other UN officials in return for a reduced
sentence.
Mr Yakovlev is the first UN official to plead guilty to fraud in
the Oil-For Food scandal because one of the US charges against him
relates to providing inside information to a company seeking a UN
oil-inspection contract in Iraq.
A report is due next month on the business dealings of Kojo Annan,
the son of Kofi Annan, the UN Secretary-General.
Leading article, page 15 Andrew Billen, T2, pages 6, 7
$ 64bn UN-supervised programme allowed Iraq to sell oil to buy food,
medicine and humanitarian supplies while under sanctions after 1990
invasion of Kuwait
THE SCHEME
1. Saddam Hussein allegedly awarded allocations of cutprice oil to
favoured politicians, officials, businessmen and journalists. A CIA
report in 2004 named hundreds of alleged recipients, including leading
officials in France and Russia
2. Allocation holders sold their oil to traders and received payments
for helping oil companies to win Iraqi oil contracts
3. UN oversaw contracts to release Iraqi crude for sale on world
market. Kickbacks were paid to Saddam
THE KEY PLAYERS
BENON SEVAN, right The Cypriot of Armenian descent who ran the
Oil-for-Food programme throughout its six-year existence is 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. Investigators say he took at least $ 160,000
in kickbacks
BOUTROS BOUTROS GHALI, left The former Egyptian Foreign Minister
served as UN Secretary-General in 1992-96, during which time the UN
negotiated the terms of the Oil-for-Food programme, including allowing
Saddam Hussein to choose which companies he did business with
FRED NADLER The brother-in-law of Boutros Boutros Ghali and a friend
of Mr Sevan and Mr Abdelnour, previously described by the UN as the
likely intermediary between Mr Sevan and Mr Abdelnour. One of Mr
Abdelnour's uncles is the lawyer for the Nadler family
FAKHRY ABDELNOUR Swiss-based Egyptian oil trader and cousin of Boutros
Boutros Ghali. He owns a Panama-based trading company called African
Middle East Petroleum (AMEP). The UN has reported that he went to
Iraq to handle oil allocations for Mr Sevan and that AMEP lifted
about 7.3m barrels of oil at a profit of more than $ 1.5m
THE OIL ALLOCATIONS
Oil allocations to Benon Sevan by Iraq:
1 1.8m barrels AMEP took delivery in November 1998
2 1m barrels First half of 1999. Oil not delivered
3 2m barrels AMEP took delivery in October-November 1999
4 1.5m barrels AMEP took delivery in April and June 2000
5 1.5m barrels AMEP took delivery of 951,655 barrels in November 2000
6 1m barrels AMEP took delivery in September 2001
7 2.5m barrels First half 2002. Oil not delivered
8 1.5m barrels Second half of 2002. Oil not delivered
9 1.5m barrels First half of 2003. Oil not delivered
--Boundary_(ID_P5BsCQ56Y+302tn67HMeBw)--