U.N.’s good name tarnished

LONDON - Is the United Nations damaged beyond repair? Evidence of double-dealing in the Iraq oil-for-food scandal is stacking up by the week, and more and more of the organization’s officials are being implicated.

It was just two weeks ago, in a rented suite of offices on the 15th floor of an anonymous Manhattan office block, that Benon Sevan finally discovered that his story would not hold. For months, the burly, bristling Armenian-Cypriot, known within the United Nations for both his bonhomie and bad temper, had insisted that the talk of oil deals with Iraqi dictator Saddam Hussein and strange petroleum companies in Panama had nothing to do with him.

On Jan. 21, however, the former head of the U.N. oil-for-food program in Iraq was confronted by proof of his deception by Paul Volcker. The former Federal Reserve chairman is leading the U.N. investigation into a scheme from which Saddam skimmed off about $2 billion and bribed foreign allies.

Mr. Volcker’s interim report, delivered last week, not only contained a damning verdict on the behavior of Mr. Sevan, an official long defended by U.N. Secretary-General Kofi Annan, it also threw an unexpected new focus on the role of Mr. Annan’s predecessor, Boutros Boutros-Ghali, as the unraveling scandal dragged in new names.

The meeting was the 13th between Mr. Sevan and the investigators since accusations of financial abuse were first raised by Claude Hankes-Drielsma, a British banker who was advising the interim Iraqi government in Baghdad. Although it was an open secret at the United Nations that the oil-for-food scheme had been subject to surcharges and kickbacks for years, Mr. Annan initially refused to order an investigation.

On his first 12 visits, Mr. Sevan refused to discuss the specifics of the accusations against him. But by this trip, the investigators had obtained his full telephone records after clearing his office files and computer disks. (Mr. Sevan already had provided the “clean” telephone data from his home). These records proved that Mr. Sevan’s claim to have spoken with Fakhry Abdelnour, the man who ran the African Middle East Petroleum Co. (AMEP), the Panamanian oil dealership, only once, by chance at an Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria, in 1999, was false.

Senior former Iraqi officials already had told the commission that Mr. Sevan had solicited contracts for AMEP — statements Mr. Sevan denied, saying he barely knew Mr. Abdelnour, who is a nephew of Mr. Boutros-Ghali. This new set of telephone numbers showed several calls between the two men, who sometimes conducted back-to-back conversations with Fred Nadler, Mr. Boutros-Ghali’s brother-in-law.

Relative trouble

The spotlight thrown on the relatives of Mr. Boutros-Ghali was one of the surprises of the report released Thursday. The former secretary-general’s role in pushing the French bank preferred by the Iraqi authorities to administer the program’s accounts also comes in for close scrutiny.

But Mr. Volcker and his fellow commissioners have become accustomed to digging into the activities of secretaries-general and their relatives. Their second report, due next month, will focus on the business links of Mr. Annan’s son Kojo with Cotecna, the Swiss company that won the U.N. contract to oversee oil-for-food imports into Iraq in 1998.

Kojo Annan has said he played no part in Cotecna’s Iraq work, and his father said he had no idea that Kojo Annan remained on Cotecna’s payroll until a year ago.

Although the secretary-general had avoided ordering an inquiry, the Volcker findings might help save his job — for now, at least. The United Nations is not a body in which the buck stops with the boss, and now, in Mr. Sevan, there is a senior official to blame.

Defiant diplomats

He was not, however, the only U.N. official singled out for criticism in the report and now subject to disciplinary proceedings. So was Joseph Stephanides, a fellow Cypriot who oversaw the selection of the program’s major contractors. The report said the United Nations broke its own competitive-bidding rules when it chose Lloyd’s Register of London, the French Banque Nationale de Paris (BNP) and Saybolt, a Dutch company, to implement the program.

In particular, Mr. Stephanides is criticized for cooperating with British diplomats at the United Nations to ensure that Lloyd’s Register, the 245-year-old inspection and risk-management group, won the contract to oversee imports into Iraq. A lower bid was submitted by a French rival, but the United Nations decided the deal should go to Lloyd’s because BNP had been awarded another key contract.

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