D.A. Pursuing Criminal Probe of Aide at U.N.

The New York Sun
July 11, 2005 

Claudia Rosett

The Manhattan District Attorney's office has opened a criminal investigation into the former head of the U.N. oil-for-food program, Benon Sevan, the DA's office has just confirmed for the first time to The New York Sun. 
The probe, apparently well advanced, involves allegations of commercial bribery related to Mr. Sevan's role as executive director from 1997-2003 of the oil-for-food relief program for Iraq, then under U.N. sanctions against the former regime of Saddam Hussein. Mr. Sevan was picked for the job by Secretary-General Annan.
News of the criminal probe raises prospects that at least one U.N. official may yet face criminal prosecution over activities related to the more than $110 billion worth of Saddam's oil sales and relief purchases that the United Nations oversaw in Iraq from 1996-2003. The probe into Mr. Sevan comes on top of oil-for-food-related indictments of a number of private businessmen issued April 14 by federal prosecutors for the Southern District of New York, along with a federal complaint alleging bribery involving unnamed high-ranking United Nations officials - described in circumstances that suggest these are individuals other than Mr. Sevan. 
A source close to the criminal investigation into Mr. Sevan says that the office of the Manhattan DA, Robert Morgenthau, is working in cooperation with the United Nations-authorized inquiry led by a former chairman of the Federal Reserve Board, Paul Volcker, and the Senate Permanent Subcommittee on Investigations, chaired by Senator Coleman, a Republican of Minnesota.
Mr. Annan has said he is prepared to lift the U.N.-conferred immunity of any staff member, should the facts support criminal charges. He has largely stood behind Mr. Sevan, approving U.N. payment of his legal fees from mid-2004 until February of this year. Mr. Annan revoked that perquisite when the first of two Volcker committee interim reports found that Mr. Sevan, in soliciting lucrative oil allocations from Saddam's regime on behalf of a Panama-registered private company, African Middle East Petroleum, had engaged in a grave and continuing conflict of interest.
But Mr. Annan has kept Mr. Sevan on the U.N. staff, listed as an adviser, with a U.N. office and phone number, and a U.N. salary of $1 a year. The U.N. rationale is that this status allows Mr. Sevan to be on hand to assist in the investigation. But it also allows Mr. Sevan to retain immunity from prosecution. Mr. Sevan has declared throughout that he is innocent, but could not be reached to comment on this latest news that he is the subject of a criminal probe. Messages left on his U.N. voicemail got no response.
Mr. Sevan has also been the subject of a report issued February 15 by Senate investigators, who stated: In contrast to the limited findings of the Volcker report, our evidence suggests that Sevan may have engaged in more serious misconduct. Senate investigators noted they had acquired significant evidence that rather than simply soliciting business from Saddam on behalf of AMEP, Sevan himself was the recipient of the lucrative allocations - receiving an amount that based on Iraqi documents the Senate subcommittee estimated at $1.2 million.
The Volcker committee is expected to issue a report by the end of this month to tie up loose ends, including some of the questions about Mr. Sevan.
Should this saga lead to an indictment, there is then considerable question about what kind of information Mr. Sevan might be able to provide to investigators about other senior U.N. officials, including the overall U.N. official in charge of the oil-for-food program, Mr. Annan himself. It was as part of Mr. Annan's 1997 reform package, orchestrated by Mr. Annan's special adviser, Maurice Strong, that Mr. Annan on October 15, 1997, transformed oil for food from an ad hoc, temporary program into a major U.N. department. Mr. Strong is currently on temporary leave, from his position as Mr. Annan's special adviser, until questions raised in connection with the April federal complaint can be resolved. As for the chain of command established by the 1997 reform of oil for food, a U.N. press release dated October 13, 1997, announcing Mr. Sevan's appointment, stated: Mr. Sevan will report directly to the Secretary-General.
That chain of command raises the question not only of what Mr. Annan knew about Mr. Sevan's activities, but also of what Mr. Sevan knew about the secretary-general's role in the program. So far, we have heard relatively little from Mr. Sevan on that score.
To date, the chief punitive action taken by Mr. Annan in relation to oil for food has been the firing of a U.N. official, Joseph Stephanides, largely on the basis of testimony to the Volcker committee by another U.N. staffer, Alexander Yakovlev, who resigned last month following allegations that he had his own conflict of interest. Mr. Stephanides has stated he is innocent of any wrong-doing, and the U.N. Staff Union recently condemned his firing. Meanwhile, Mr. Annan's for mer chief of staff, Iqbal Riza, who against Mr. Volcker's express orders, last year shredded documents pertaining to a crucial formative period in oil for food, has been retained on staff on a salary of $1 a year, listed as a special adviser.
Also of interest to the Manhattan district attorney's office, according to a source close to the investigation there, is the owner of AMEP, Fakhry Abdelnour, a cousin of a former secretary-general, Boutros Boutros-Ghali. Mr. Abdelnour is the oil trader alleged to have received fat allocations of oil from Saddam at Mr. Sevan's behest. His company, AMEP, was registered in Panama, but Mr. Abdelnour is described in the Volcker committee's February 3 interim report as maintaining offices in Monaco, while residing in Geneva, Switzerland.
Switzerland figures large in many of the leads in the oil-for-food scandal, and apparently it is a place of great interest to investigators now probing Mr. Abdelnour and Mr. Sevan. The Swiss secrecy law has always made getting records difficult, a source at the Manhattan DA's office said. Other Swiss connections under oil for food go well beyond the hiring by the U.N. Secretariat of the Geneva-based company, Cotecna Inspection - which made non-compete payments throughout the duration of oil for food to Mr. Annan's son, a former Cotecna consultant. Switzerland was also host to a raft of front companies doing U.N.-approved business with Saddam, such as Lakia Sarle - whose Russian owner in a moment of near-farcical directness wrote to both Saddam's regime and the U.N. oil-for-food office in the year 2002, demanding a refund of a bribe he had paid in advance to Saddam's regime - for which the promised oil contract then failed to materialize. Switzerland is home to financier Marc Rich, who was pardoned by President Clinton in 2001, but whose alleged ties to oil for food are also under investigation. Finally, Switzerland was a hub of terrorist funding links alleged to have run through some oil-for-food transactions - money that may be funding terrorists today.
Mr. Volcker's inquiry is presumed to have good connections inside Switzerland, via Swiss investigator Mark Pieth, one of the three members directing the U.N. inquiry, along with the chairman, Mr. Volcker, and a South African judge, Richard Goldstone.
In pursuing a case against Mr. Sevan, the Manhattan DA's office could end up providing insights not only into oil for food, but other aspects of U.N. management as well. Mr. Annan, after consolidating the Iraq program under Mr. Sevan, acquired in 1998, as a further part of Mr. Strong's 1997 reform package, a deputy-secretary general, Louise Frechette. Ms. Frechette - now the point person for Mr. Annan's current reform initiative - appears to have served at times as a go-between for Mr. Sevan and Mr. Annan. She was described in the first Volcker interim report as having backed Mr. Sevan's refusal to allow U.N. auditors to send damning internal reports on oil for food directly to the U.N. Security Council. As it happens, Ms. Frechette, in a prior incarnation as a Canadian diplomat at the United Nations, worked under the former Canadian spy chief Reid Morden, who is now serving as Mr. Volcker's executive director of the U.N.-authorized investigation.
As for Mr. Sevan, who has not been returning messages, the last time this reporter encountered him in person was some weeks ago, across the street from the U.N. main complex, in front of the building where oil for food once had its offices. He was chatting with people as they emerged from the building and, in response to queries about the oil-for-food program, told this reporter: I am tired of the subject.

- Ms. Rosett is a journalist-in-residence with the Foundation for the Defense of Democracies.