U.N. Payments to Sevan Came From Iraq Through Oil-for-Food Program
BY BENNY AVNI - Special to the Sun
March 23, 2005

UNITED NATIONS - Iraqi officials are outraged by a U.N. decision to use money collected through the oil-for-food program to reimburse Benon Sevan, the man at the center of the scandal surrounding the program.
Mr. Sevan's legal fees are, in effect, to be paid from the same funds that he has been accused of misusing.
Representatives of the post-Saddam Iraq have complained that the account, a remnant of the oil-for-food era, has been used by the United Nations as its piggybank. Using it to defend the man accused of improprieties in handling Iraqi money as the program's chief is outrageous, Iraq's U.N. deputy ambassador, Faisal Istrabadi, said yesterday.
It's like asking the depositor in a bank to pay for the defense of a bank employee who stole the bank's money, Mr. Istrabadi told The New York Sun yesterday. He said Iraq has demanded several times that the United Nations stop using money from the 2.2% account, as it is known, to finance the investigation led by Paul Volcker and for other expenses. Instead, Iraq said the account should be used to pay Iraq's $19 million debt to the United Nations.
The use of the money for Mr. Sevan's defense was disclosed yesterday in a statement by a U.N. spokesman, Fred Eckhard, who answered questions after yesterday's publication of a story by the Sun that reported the U.N. agreed to reimburse Mr. Sevan for his legal expenses.
The account in question was part of the oil-for-food program, which was established when Iraq was under sanctions mandated by the world body. Under the arrangement, 2.2% of Iraq's oil revenues were designated to cover administrative costs incurred by the United Nations for running the program. After the program ended last year, about $100 million was left in the account, according to information given to the Iraqi U.N. mission, Mr. Istrabadi said.
From the account, $30 million was allocated to pay for Mr. Volcker's panel, and the Iraqis are not sure about the rest. As long as there is money in that account, the U.N. feels it belongs to it, and the Security Council refuses to do anything about that, Mr. Istrabadi said. They use it as easy money, like an Iraqi Express Card.
Mr. Eckhard faced questions from the press about Mr. Sevan's reimbursement at a daily briefing yesterday, including whether this was given to Mr. Sevan as hush money to protect U.N. officials. Mr. Eckhard said the decision to cover Mr. Sevan's legal fees was made by Secretary-General Annan on the advice of his legal team prior to the findings of the Volcker panel. The panel's findings included accusations that Mr. Sevan had solicited allocations from Iraq for which the Saddam regime believed it was buying influence, and that he had unexplained sums of money in his account.
In a written statement handed out by Mr. Eckhard several hours later, though, the name of Mr. Annan was omitted, and the decision was attributed to the former U.N. chief of staff, Iqbal Riza. The U.N. legal team advised Mr. Riza, according to the new statement, that reimbursing legal fees was in the interest of the U.N. that [the Volcker panel's] investigation operate smoothly with the full cooperation of Mr. Sevan.
After Mr. Riza was replaced by Mark Malloch Brown, the new chief of staff wrote to Mr. Sevan informing him that the commitment would be honored, according to the statement. However, given the adverse findings by Mr. Volcker's panel in early February, any legal costs related to Mr. Sevan's appearance in front of the committee after that date would not be reimbursed. The statement did not specify how much Mr. Sevan requested for reimbursement. The Sun reported it was more than $300,000. A source who requested anonymity said yesterday that this sum included legal fees as well as the cost of trips to Mr. Sevan's home country of Cyprus.
All costs are now being questioned, yesterday's statement said, insisting that no payments have yet been made to Mr. Sevan. If, as result of the findings of [Mr. Volcker's panel], charges brought against Mr. Sevan are vindicated, the U.N. also reserves the right to seek recovery of any money transferred, it concluded, indicating that the decision might now be reversed altogether.
Separately, the Financial Times reported on its Web site that Mr. Annan's son, Kojo, received up to $300,000 from the Swiss-based inspection company Cotecna through straw companies. The newspaper also reported that Mr. Annan had met with principals of the company three times, including on occasions prior to the awarding of the contract.