Ex-U.N. Officials Accused of Graft Former oil-for-food chief has denied taking any kickbacks. A procurement officer pleads guilty to corruption charges. By Maggie Farley Times Staff Writer August 9, 2005 UNITED NATIONS — An independent panel investigating allegations of corruption in the U.N.'s oil-for-food program for Iraq accused the program's former chief Monday of taking kickbacks and another ex-official of soliciting a bribe. The commission's report says the program's then-chief, Benon V. Sevan, accepted more than $140,000 from an Egyptian oil dealer to steer lucrative Iraqi oil contracts his way. It accuses former senior procurement officer Alexander Yakovlev of asking a French company for a bribe in return for secret information that could help it win an oil-for-food program contract, and it says he received nearly $1 million in kickbacks from contractors on other U.N. programs. The report marks the first time the commission, led by former U.S. Federal Reserve Chairman Paul A. Volcker, has accused U.N. employees of personally profiting from the oil-for-food program. Hours after the report was released, U.N. Secretary-General Kofi Annan waived diplomatic immunity for Yakovlev, 52, and the U.S. attorney's office in New York announced that Yakovlev had pleaded guilty to conspiracy, wire fraud and money laundering, each of which could bring a 20-year prison term. Annan said he would also rescind immunity, if requested, for Sevan, who has denied wrongdoing and formally resigned from the U.N. on Sunday. But it was unclear whether Sevan would face prosecution, because he has returned to his native Cyprus, which does not have an extradition treaty with the United States. Yakovlev resigned from the United Nations in June after revelations that he had helped his son get a job with a company doing business with the world body. Annan's office notified investigators of the separate bribery suspicions last month, said Annan's top aide, Mark Malloch Brown. The 88-page report released by Volcker's panel Monday says there was persuasive evidence that Yakovlev had received nearly $1 million in kickbacks from firms that won about $79 million in U.N. contracts outside the oil-for-food program. Investigators said that Yakovlev had about $1.3 million in a West Indies bank account under the name Moxyco Ltd. and that they had traced about $950,000 so far to companies doing business with the U.N. Yakovlev also allegedly solicited payments from the French inspection company Societe General de Surveillance, offering inside information to help it win a contract. Investigators found no evidence that the firm paid a bribe, and they said it cooperated by passing on correspondence detailing the solicitation. Yakovlev had denied the charge, but a former FBI handwriting analyst said notations on the letters were made by him. The $64-billion oil-for-food program was meant to help Iraqi citizens weather international sanctions after Saddam Hussein's 1990 invasion of Kuwait. Under U.N. oversight, Iraq was allowed to sell oil to buy humanitarian goods. Despite its successes in providing food and medicine, the program's secrecy and complexity provided opportunities for kickbacks and other forms of corruption. In the case of Sevan, Volcker's Independent Inquiry Committee alleged that an Egyptian oil dealer paid the former executive director of the oil-for-food program to steer lucrative Iraqi oil contracts his way. The cash was allegedly routed through a trading company owned by Fakhry Abdelnour, a cousin of former U.N. Secretary-General Boutros Boutros-Ghali. The report says the company, African Middle East Petroleum Co., transferred $580,000 to the account of Fred Nadler, Boutrous-Ghali's brother-in-law. Nadler then deposited $147,184 in New York bank accounts controlled by Sevan and his wife, the report says. Sevan has said the money was a gift from his now-deceased aunt, but Volcker called the claim not credible. Volcker recommended that Sevan's diplomatic immunity be lifted to allow a criminal investigation. The Manhattan district attorney's office has said only that it is looking into the case. In a resignation letter to Annan on Sunday, Sevan declared his innocence and accused his old friend of scapegoating him for political reasons. The charges are false, and you, who have known me all these years, should know they are false, Sevan wrote in the missive released by his lawyer, Eric L. Lewis. I fully understand the pressure you are under, and that there are those who are trying to destroy your reputation as well as my own, but sacrificing me for political expediency will never appease our critics or help you or the organization. In another aspect of his investigation, Volcker said the panel had discovered new e-mails suggesting that Annan was aware that Cotecna Inspection, the Swiss company that employed Annan's son, was seeking a U.N. contract, despite the secretary-general's earlier denials to investigators. Volcker said that the questions would be discussed in another report expected in early September but added that there was no evidence that Annan had influenced the awarding of the contract to Cotecna. Annan created the Volcker commission last year to look into the allegations of corruption and possible conflicts of interest regarding his son's employer. Some U.N. officials say they are concerned that the panel's comprehensive report — due days before a landmark U.N. summit of world leaders — will weaken Annan, especially if it says he lied to investigators. During a news conference Monday, however, Malloch Brown put a positive spin on the timing of the upcoming report and its expected conclusions. Although Annan may have known about Cotecna's bid, he said, Volcker's committee seemed satisfied that he did not seek to influence the contract award. Further, he said, the panel's report may speed action on management reform that some member nations have resisted. But the aide said he regretted the panel's focus on wrongdoing by individuals and recommended a broader look at the faults of the U.N. administration that allowed corruption to occur.