UNITED NATIONS, March 28 -- The United Nations reversed a commitment to pay hundreds of thousands of dollars in legal fees for a senior U.N. official who was accused of ethical lapses while administering the $64 billion oil-for-food program in Iraq.
The U.N. decision Monday came after U.S., British and Iraqi officials expressed concern about U.N. plans to use surplus Iraq oil revenue to defend Benon Sevan against accusations that he improperly steered lucrative Iraqi oil contracts to an Egyptian businessman.
Benon Sevan has been accused of steering Iraqi oil contracts to an Egyptian executive.
The U.N. leadership braced for a critical report Tuesday by a U.N.-appointed investigator into Secretary General Kofi Annan's handling of the program. The report will examine whether Annan's son, Kojo Annan, used his family connections to obtain contracts for a Swiss company that once employed him.
Senior U.N. officials said the report by former Federal Reserve chairman Paul A. Volcker will clear Kofi Annan of any personal wrongdoing but fault him for lax oversight of the U.N.'s largest humanitarian aid program.
They also expect Volcker to criticize Kofi Annan for failing to more forcefully address the potential conflict of interest posed by the U.N.'s hiring of Geneva-based Cotecna Inspection Services SA, which paid more than $160,000 in consulting fees to Kojo Annan while it worked for the United Nations.
"The secretary general expects to be cleared of any wrongdoing" in the report, said Fred Eckhard, Annan's chief spokesman.
Seth Goldschlager, a spokesman for Cotecna, which was hired by the United Nations in 1999 to monitor the import of humanitarian goods into Iraq, said the company is confident that Volcker "will find absolutely no connection" between its employment of Kojo Annan and the awarding of the U.N. contract for Iraq. Goldschlager also said that Cotecna has agreed to pay for a Volcker committee auditor to examine the company's books.
But a Cotecna official expressed concern that Volcker may criticize the company for not informing the United Nations that its chief executive, Robert Massey, had been indicted in June 1998 by a Swiss judge investigating a bribery scheme allegedly involving former Pakistani prime minister Benazir Bhutto before it received the U.N. contract.
Cotecna said that Massey was never charged with wrongdoing and that he was being investigated in relation to a bribery probe involving a "local agent" of the company in Pakistan who was convicted of bribery. Cotecna said it had no obligation to inform the United Nations about the matter, which had been widely reported.
The oil-for-food program was established in December 1996 to allow Iraq, which had been subject to Security Council sanctions since its 1990 invasion of Kuwait, to sell oil to purchase food, medicines and other humanitarian goods.
Former Iraqi president Saddam Hussein's government siphoned more than $2 billion in illicit bribes and kickbacks from companies that traded with Iraq through the U.N.-administered program, according to a report by CIA adviser Charles A. Duelfer.
Annan appointed Volcker head of the Independent Inquiry Committee last April to probe allegations that Sevan and other foreign officials and dignitaries received rights to buy large amounts of Iraqi crude at steeply discounted prices. Volcker concluded in a Feb. 3 report that Sevan engaged in "a grave conflict of interest" that "seriously undermined the integrity of the United Nations," a ruling that triggered a U.N. disciplinary proceeding against the veteran U.N. official.
Mark Malloch Brown, the United Nations' chief of staff, last week defended the body's decision to cover Sevan's legal fees through Feb. 3, saying that the cost of financing a defense was too high for an official working on a U.N. salary. But he subsequently informed Sevan that the United Nations would not pay for legal services provided after Feb. 3.
Samir S.M. Sumaidaie, Iraq's U.N. ambassador, said in a statement that he "was shocked and dismayed" that the United Nations had agreed to pay any of Sevan's legal fees "from assets belonging to the people of Iraq." Citing Volcker's report, he said, Sevan "appears unable credibly to account for the source of $150,000 he received over a five-year period."
Eckhard said in a statement that the decision to not reimburse Sevan's legal bills "would be reviewed if he is later cleared of both internal breaches of U.N. rules and regulations and of any criminal wrongdoing."
Sevan has denied any wrongdoing. "We will have no public comment at this time," said Eric Lewis, Sevan's attorney.