March 23, 2005
UN Rapped for Legal Fee Offer in Oil, Food Probe
By REUTERS 


Filed at 11:15 p.m. ET
UNITED NATIONS (Reuters) - Iraq and the United States questioned on Wednesday why the United Nations offered to use Iraqi oil money to pay legal fees of the U.N. official in charge of the scandal-tainted oil-for-food program.
At issue is a U.N. announcement on Tuesday saying it had offered to pay Benon Sevan, the former head of the program, reasonable legal fees to ensure his cooperation with a probe conducted by Paul Volcker, former head of the Federal Reserve.
``The misappropriation of Iraqi money is scandalous anddisservice the United Nations at a time when it urgently needs to show it can be trusted with the management of funds,'' said Iraq's U.N. ambassador, Samir Sumaidaie.
And a spokesman for the U.S. mission to the United Nations, said, ``We are disappointed that the arrangement was not made public earlier.''
``It may be appropriate to cease advancing additional fees and seek the return of fees advanced if there have been any disbursed,'' said spokesman Richard Grenell.
No money has yet been paid to Sevan. The United Nations said it was questioning some of his reimbursement claims and would not pay anything after Feb. 3 when the Volcker commission accused Sevan of steering oil contracts to an Egyptian trader.
Mark Malloch Brown, the new U.N. chief of staff, told a news conference the decision to pay the fees was made because of Sevan's responsibilities as head of the program and before any allegations were made against him.
The Volcker commission also disputed a U.N. statement that it had offered to pay legal fees to Sevan to get his cooperation, saying Sevan was permitted to have an attorney because of the seriousness of the allegations against him.
``This exception was not motivated, as suggested by the United Nations's statement, by a desire to induce Mr Sevan to cooperate,'' the inquiry committee said.
``We booped. We got it wrong,'' Malloch Brown admitted. He said the U.N. statement ``misrepresented the position of the panel through poor syntax and juxtaposition of sentences.''
Under the $67 billion oil-for food program, which began in December 1996 and ended in November 2003, Iraq was allowed to sell oil to buy civilian goods in order to ease the impact of 1990 U.N. sanctions on ordinary Iraqis.
Former Iraqi President Saddam Hussein's government siphoned nearly $2 billion in kickbacks from companies conducting business under the program, a key U.S. report showed. 
VOLCKER REPORT ON ANNAN DUE
The Volcker committee will release another report on Tuesday on U.N. Secretary-General Kofi Annan's son, Kojo, who worked for the Swiss firm Cotecna, which was awarded a major contract in Iraq in late 1998.
Malloch Brown said the secretary-general would be ``fully vindicated'' regardless of the actions of his son, who has admitted that he ``misled his father.''
But Malloch Brown confirmed a report in The Financial Times that Kofi Annan had met twice with Cotecna officials before the contract was awarded and once afterward.
He said Cotecna officials approached the secretary-general at a public event and then saw him by way of a courtesy call through an acquaintance to talk about U.N. participation in a ``national lottery'' and not the oil-for-food program.
A Cotecna spokesman told Reuters that the company itself had told the Volcker probe about meetings with the secretary-general. He said the younger Annan's work was limited to Nigeria and Ghana and not Iraq.
Kojo Annan at first said he was a trainee at Cotecna and left the firm in 1997. But money continued well afterwards and The Financial Times said payments reached $300,000.