High U.N. Aide Scored in Volcker Report on U.N. Oil Scandal
BY BENNY AVNI - Special to the Sun
February 4, 2005

UNITED NATIONS - The long-awaited Volcker Commission interim report on the oil-for-food scandal confirmed yesterday the thrust of the allegations against the United Nations official who ran the program, Benon Sevan, and raised new questions about his close contacts with relatives of a former United Nations secretary-general, Boutros Boutros-Ghali.
Mr. Volcker deferred until a later report questions about the current U.N. chief, Kofi Annan, whose son Kojo has been suspected of having a role in helping a Geneva-based company to obtain a contract with the U.N.
That left the newly disclosed connections of Mr. Boutros-Ghali's family to the scandal as the most intriguing part of the 240-page tome released yesterday by Mr. Volcker's U.N.-approved investigation team.
Mr. Volcker's style of reporting - which accused U.N. officials and institutions merely of conduct that failed to adhere to the highest standards of trust and integrity - was quickly seized on by members of Mr. Annan's team. Mr. Annan's chief of staff, Mark Malloch Brown, said that a fair reading of the report would show that it is a critique of the politicization of decision making in this institution by member states, including America, rather than of the U.N.'s management.
He alluded to the responsibility of members of the Security Council, through what was known as the 661 Committee, which supervised the program. Mr. Volcker, while mentioning politicization of the program, nevertheless was not so quick to let Mr. Annan's team off the hook.
Although the Security Council and its 661 Committee exercised combined supervisory and operational oversight, he wrote, the secretariat and the U.N. administered its day to day operation.
The chairman of the House International Relations Committee, Henry Hyde, a Republican of Illinois who heads one of several congressional oil-for-food investigations, said in a statement, I am reluctant to conclude that the U.N. is damaged beyond repair, but these revelations certainly point in this direction.
Mr. Sevan, the official who headed the program for the duration of its existence from 1996 to 2004, seemed to be the biggest target of the committee's interim report. It detailed his dealings with Iraqi oil officials and his solicitation of oil allocations for a Panamanian-based company, which before the scandal was little known even to oil professionals.
African Middle East Petroleum, which according to yesterday's report was enriched to the tune of at least $1.5 million through Mr. Sevan's dealings with the regime of Saddam Hussein, is run by a close relative of Mr. Boutros-Ghali, Fakhry Abdelnour. A new name was disclosed yesterday as a player in the shady dealings: Fred Nadler, who according to the report acted as a middleman between Messrs. Abdelnour and Sevan.
Mr. Nadler, an international businessman of Jewish descent who is based in Alexandria, Egypt, is the brother of Leia Maria Boutros-Ghali, the wife of the former secretary-general, who was one of the first to push for a program to ease the suffering of Iraqis under international sanctions.
Mr. Volcker said yesterday that he has interviewed Mr. Boutros-Ghali and will continue to do so, but that besides questions about the procurement of the services of the French bank BNP during his tenure, Mr. Boutros-Ghali was not otherwise the subject of the report.
Nevertheless, and as was first reported by the New YorK Sun Mr. Volcker's findings seem to place people with close ties to Mr. Boutros-Ghali - who presided over the U.N. while the plans and legal foundations for the oil-for-food program were prepared - at the center of the scandal.
Mr. Sevan, who until now has only expressed blanket denials of any wrongdoing, was the interim report's main target. His lawyer, Eric Lewis, yesterday issued a new denial, saying it was unfortunate that the Volcker committee has succumbed to massive political pressure and now seemed to scapegoat Mr. Sevan.
While Mr. Volcker, a former chairman of the Federal Reserve, stopped short of accusing Mr. Sevan of using Iraqi oil allocations as a bribe, he confirmed that as a direct result of his solicitation in Baghdad, the Panamanian based AMEP was enriched by $1.5 million. There was an accumulation of evidence that Mr. Sevan solicited the oil allocations for AMEP, he said. The Iraqis, who were assigning such allocations, certainly thought they were buying influence.
The report also doubts Mr. Sevan's contention to the committee that some $160,000 in unexplained cash income was given to him by his elderly aunt, Berdjouchi Zeytountsian.
Ms. Zeytountsian died late last year shortly after a mysterious accident - she fell down an elevator shaft in her home in Cyprus. Mr. Sevan's claim that she gave him all that cash served as the basis for a sharp passage in Mr. Volcker's report. Her lifestyle does not suggest this to be so, it said, describing the elderly aunt's income as a retired government photographer in a small Cypriot two-bedroom apartment, never displaying any cash to spare.
Some U.N. officials and American friends of Mr. Annan were quick to express their disapproval. Mr. Annan was said by Mr. Malloch Brown to be shocked by the accusations.
Rep. Tom Lantos, a Democrat of California and a close friend of Mr. Annan, said in a statement he was disgusted and stunned to learn that Mr. Sevan could have so crassly violated the trust that the international community placed in him in the service of his own personal greed.
Reacting to Mr. Sevan's lawyer's new denials, Mr. Malloch Brown said that he was dismayed that a friend for so many years is standing accused of breaching the sort of U.N. code of conduct and staff rules in a manner which appears to be proven in the report.
Mr. Sevan's transgressions, however, were not enough to waive the immunity from prosecution that all U.N. employees enjoy, Mr. Malloch Brown added. Mr. Volcker yesterday said that he could not prove there was intent by Mr. Sevan to obtain personal gain. We are not a criminal tribunal, he stressed.
Mr. Annan said in a statement that he has initiated disciplinary proceedings against Mr. Sevan and another high official named in the report, Joseph Stephanides, a Cypriot who was charged with relations with the Security Council. As for a host of other U.N. failures detailed in the report, Mr. Annan said, Measures have already been taken to remedy some of these defects. Other steps will be announced soon.
Mr. Volcker's report did find major problems in the way the program was run and audited by the U.N. and how the services of contractors with the U.N. were procured. His accusations, however, were mild in comparison, for example, to a recent guilty plea in a Manhattan Federal Court, in which an American citizen of Iraqi descent, Samir Vincent, admitted to illegally taking bribes from Saddam and testified that Iraq had allocated bribe money for a U.N. official as well.
Mr. Volcker yesterday declined to directly answer whether he has had a chance to interview Mr. Vincent, who is said to be cooperating with federal prosecutors.