A U.N.-established inquiry into corruption in the $64 billion oil-for-food program will accuse the defunct program's director, Benon V. Sevan, of receiving cash kickbacks for steering lucrative Iraqi oil contracts to an Egyptian oil trader, according to Sevan's lawyer.
Former U.S. Federal Reserve chairman Paul A. Volcker, who is heading the independent inquiry committee, is to release a third interim report Tuesday that the lawyer, Eric L. Lewis, said in a statement will also accuse Sevan, of Cyprus, of refusing to cooperate.
Lewis said Sevan is being made a scapegoat to deflect criticism of Secretary General Kofi Annan. Lewis said that the allegations, which were outlined in a confidential letter from the Volcker committee to Sevan last week, are "flatly false" and that he is going public to get his client's side of the story out before Volcker issues the report. "Mr. Sevan never took anything from anyone," he said.
The Volcker committee has been investigating misconduct in the United Nations' largest humanitarian program for more than a year, and previously accused Sevan of improperly directing business to an associate. But next week's report will represent the first time that the committee will accuse Sevan of benefiting from those activities.
The letter, portions of which were read to The Washington Post, accused Sevan of having "corruptly . . . derived personal pecuniary benefit from the oil for food program." It accused Sevan of receiving "cash proceeds from the sale of oil" from 1998 to 2002 by Iraq to the Africa Middle East Petroleum Co. (AMEP), which is registered in Panama.
The letter alleged that Sevan, working in concert with a friend, profited "with knowledge that some of the oil from which he benefited was purchased by means of payment to Iraq of an illegal surcharge in violation of U.N. sanctions and the oil for food program."
Michael Holtzman, a spokesman for Volcker, declined to comment on the letter's authenticity, saying that the committee will release its findings on Sevan's role in the oil-for-food program as scheduled on Tuesday. But a senior investigator said last week that the report will move "the ball further" on its investigation into suspected payments to Sevan. The investigator said the amounts under scrutiny may appear small to billionaire oil traders but could provide "a nice cushion" for international civil servants.
The committee previously expressed suspicion in a February report about $160,000 deposited into a Cyprus bank account controlled by Sevan's aunt.
Lewis acknowledged that Sevan, who is in Cyprus, has declined Volcker's requests for face-to-face interviews. Lewis said that the committee's investigators had used a previous session to catch Sevan off guard with hard-to-answer questions about events that occurred six years earlier, and then accused him of lying when he did not answer them accurately.
Lewis said the panel had applied a "double standard" in its investigation into allegations that Annan directed business to a Swiss firm that paid Annan's son, Kojo, while it engaged in millions of dollars in business through the oil-for-food program. He noted that investigators gave Annan the benefit of the doubt when he did not report two meetings he had held with the firm's chairman until confronted with records of the meetings.
Lewis insisted that Sevan has been cooperating, providing more than 80 boxes of professional and private documents, as well as bank, real estate and telephone records, and also offering to respond in writing to written questions. Lewis said Sevan "has made his professional and financial life an open book."
Lewis accused the Volcker inquiry of denying Sevan due process in a year-long investigation that has relied heavily on dubious top former Iraqi officials who remain in custody and whose full testimony has not been made available to Sevan. He also said that Volcker's panel has hindered Sevan from cross-examining witnesses or from accessing the documents and testimony he needs to defend himself.
"The committee set out from the beginning of its politically charged investigation to scapegoat him and spare others to whom he reported," Lewis said.
The program was established in December 1996 to allow Iraq, which had been subject to U.N. economic sanctions since its 1990 invasion of Kuwait, to sell oil to buy food, medicine and other humanitarian goods. The program eased the sanctions' burden on ordinary Iraqis, but it also gave the former Iraqi government an opportunity to skim billions of dollars in illicit kickbacks from companies trading with Iraq through the humanitarian program.
The revelations triggered a U.N. investigation and several congressional probes into U.N. management of the program. The U.S. attorney's office of the southern district of New York and the Manhattan district attorney's office have also begun criminal investigations into the program, including Sevan's role.
Annan appointed Volcker in April 2004 to look into allegations that senior U.N. officials, including Sevan, had improperly benefited from the program. A February report by Volcker concluded that Sevan had engaged in "a grave conflict of interest" by soliciting lucrative rights to buy Iraqi oil on behalf of AMEP's Egyptian president, a cousin of former secretary general Boutros Boutros-Ghali. That report also indicated that payments may have been channeled through Boutros-Ghali's brother-in-law. There is no evidence linking Boutros-Ghali, whose role in creating the program is also being scrutinized, to the alleged payoffs.