House Committee Focuses on Role Of French Bank in U.N. Scandal
BY BENNY AVNI - Staff Reporter of the Sun
April 29, 2005

UNITED NATIONS - A new list of people and entities involved as brokers in the oil-for-food program was brought to light yesterday at a Congressional hearing. The hearing focused on the role of BNP Paribas, the French bank that managed most of the U.N.-run program's funds.

Separately, Secretary-General Annan announced yesterday that he would not act against his former chief of staff, Iqbal Riza, who was criticized for shredding documents related to the program in a report by the U.N.-mandated investigation headed by Paul Volcker.

The list of payments that were issued by BNP Paribas under the aegis of the program to agents who received letters of credit from the bank - despite the fact that they had no capacity to deliver humanitarian goods - was compared by observers to the original al-Mada list that described middlemen who received oil vouchers. The publication of the al-Mada list soon after the beginning of the Iraq war opened the floodgate to oil-for-food investigations.

It's obviously a corrupt game, but we don't know yet who the players are, Rep. Dana Rohrabacher, Republican of California, told The New York Sun. He focused specifically on the role of BNP, the French bank at the center of yesterday's hearing by the House subcommittee on international relations oversight and investigations, of which he serves as chairman. You have a lot of wheeling and dealing going around, and the bank is right in the middle of it, Mr. Rohrabacher said.

We have found that in the course of processing assignments and payments, some mistakes were made, the chief executive of the bank's North American operations, Everett Schenck, told the subcommittee in a prepared statement. He added that there was no indication that the third-party payments were evidence of corruption within the program.

Mr. Rohrabacher, however, said that middlemen received upward of 28% over the market value of the goods that they were supposed to deliver. They sent BNP-issued letters of credit to other companies, in a chain of deals that is yet to be explored. Mr. Rohrabacher stressed that it is not clear how much of [the suspected transactions] were transferred as quid-pro-quo, where Saddam Hussein was hoping to receive service.

The congressional investigation is one of several Capitol Hill probes into the oil-for-food program. A hearing in the Senate scheduled for May 10 is expected to concentrate on how Saddam bought influence in the program, an aide to Senator Coleman, Republican of Minnesota, who is one of the U.N.'s toughest critics in Washington, told the Sun.

Separately, a federal investigation in the Southern District of New York is exploring allegations of criminality surrounding the program. And the Volcker committee may extend its U.N.-mandated investigation beyond the summer, when it was scheduled to conclude.

One of those who were criticized by the Volcker Committee, Mr. Riza, the former U.N. chief of staff who was accused of shredding oil-for-food-related documents, was notified by Mr. Annan recently that no U.N. action would be taken against him. In an April 19 letter, Mr. Annan wrote Mr. Riza that he still has great faith in your professionalism and well known integrity.

The letter, which was released yesterday by a U.N. spokesman, Stephane Dujarric, said that Mr. Riza's actions might have been careless, but could not be construed as deliberate attempts to impede the work of the Volcker Committee.

The independent committee wrote in its March 29 interim report that Mr. Riza approved the shredding of his office files for the period of 1997-99, crucial years in the life of the program. The shredding lasted several months, beginning in April 2004. The committee called the timing of the initial approval by Mr. Riza to shred the files striking. It came one day after the Security Council approved the establishment of the Volcker Committee and instructed all U.N. employees to cooperate fully with it.

The files, according to U.N. spokesmen, were all backup copies, and originals were available. But the committee said that not all files were duplicates, and Mr. Volcker told reporters that what was in them might never be known.

Separately, a former head of the program, Benon Sevan, still hopes the United Nations will reimburse his legal fees. In a statement released yesterday, Mr. Sevan's lawyer, Eric Lewis, denied threatening to reveal potentially damaging information against U.N. officials. He acknowledged that Mr. Sevan might be prepared to reveal the U.N.'s original commitments to him in a public forum.