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Oil-for-Food Official May Have Blocked Inquiries

Head of U.N. Program in Iraq Accused of Improperly Accepting Purchasing Rights

By Colum Lynch
Washington Post Staff Writer
Sunday, November 14, 2004; Page A26

UNITED NATIONS -- Benon Sevan, the official accused of improperly receiving lucrative rights to purchase oil from Saddam Hussein's government while he was running the U.N. oil-for-food program in Iraq, discouraged his staff from probing allegations of corruption and helped block efforts by the U.N. anti-corruption unit to assess where the program was vulnerable to abuse, according to senior U.N. officials.

Sevan said that such an assessment would prove too costly and that U.N. member governments bore primary responsibility for policing the program, according to senior U.N. officials and other former program members. He did initiate reviews of possible overcharging on some program contracts, reviews on which the U.N. Security Council took no action.

Benon Sevan, executive director of the U.N. oil-for-food program, had said an assessment of the program's vulnerability to corruption would be too costly. (Jassim Mohammed -- AP)

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The disclosures, drawn from interviews with more than two dozen current and former U.N. officials and diplomats, follow a report last month by the top U.S. weapons inspector, Charles A. Duelfer, that Hussein personally approved the allocation of vouchers to Sevan, among about 270 other officials and businessmen, to sell millions of barrels of Iraqi crude at a profit of 10 cents to 35 cents a barrel.

Evidence that Hussein used the program to raise illicit billions and erode economic sanctions emerged over years, drawing strong criticism of the United Nations from U.S. legislators and conservative groups. The new disclosures provide a view into how the United Nations limited scrutiny of the program from within.

China, France, Russia, Syria and other governments, which represented companies competing for billions of dollars' worth of business, stalled measures aimed at ending corruption, U.S. Ambassador Patrick F. Kennedy, who tracked the program for more than three years, told a House subcommittee last month.

The U.N. Security Council established the oil-for-food program to address the humanitarian impact of economic sanctions against Iraq by allowing the country to sell oil so it could purchase food, medications and other essentials. It oversaw the export of $64 billion worth of Iraqi oil between December 1996 and November 2003. Sevan's policy took shape in late 2000, just as Hussein's government stepped up its efforts to siphon money from the program by requiring companies to pay kickbacks for the privilege of purchasing Iraqi oil or selling goods to the government.

Sevan declined to be interviewed for this article. In an e-mail to friends, he said he was the target of an "intense smear campaign" by groups seeking to discredit the United Nations and prevent it from returning to Iraq. He defended the program as making "a real difference in the daily lives of the average Iraqi people."

After Hussein's government fell in April 2003, evidence of corruption in the program spurred investigations in Baghdad, Washington and New York. U.N. Secretary General Kofi Annan appointed former U.S. Federal Reserve chairman Paul Volcker to investigate allegations that U.N. officials, including Sevan, and foreign companies received illegal payoffs. That investigation continues.

During his tenure, which ran from October 1997 to November 2003, Sevan, a Cypriot, opposed some internal efforts to review the program and issued written instructions to employees who had received tips about illegal payoffs to tell whistleblowers to make formal complaints to their governments. The gist of Sevan's orders was, "We can't act on telephone conversations. They should put it in writing and go to their government," according to a U.N. official who served under Sevan and spoke on the condition of anonymity because he had not been authorized to speak publicly on the matter.

The whistleblowers demurred, noting that Iraq could retaliate by barring their companies from future business.

Sevan also disagreed with an effort in late 2000 by the U.N. corruption watchdog, Dileep Nair, to submit the program to a major vulnerability assessment, saying that at a cost of nearly $50 million it would be too expensive, according to two U.N. officials and a senior diplomat.

Sevan was backed by the U.N. deputy secretary general, Louise Frechette. Both Nair and Frechette declined to comment for this article, citing concern that their public remarks might interfere with Volcker's investigation. A U.N. source familiar with Frechette's position said she believed it would be overstepping his role for Nair to oversee a management assessment while he was probing the program for signs of abuse.

Edward Mortimer, U.N. communication chief, said the world body may have deferred too much to the concerns of powerful member states. "Maybe we should have treated it more as a straightforward managerial problem, but we treated it as a very sensitive political matter where we were anxious not to offend the sensibilities of any important member of the Security Council," he said.

Toward the end of July 2000, U.N. officials began receiving tips from Iraq's commercial partners that the Hussein government was demanding kickbacks, according to three U.N. officials, who spoke on the condition of anonymity because of the sensitivity of the matter. In December 2000, one company told U.N. oil experts that Iraq had demanded an illegal surcharge of 50 cents on each barrel of oil, according to the U.N. official who served under Sevan. Shortly thereafter, the tips became the subject of Security Council meetings.

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