Opponents of the UN are having a field day over allegations ofcorruption at the organisation,writes Deagláde Bréadún
There is a subdued air in Turtle Bay these days. That's the historic area of New York City where UN headquarters is located. But an organisation that should be focusing on world peace and the Millennium Development Goals for the elimination of poverty and disease is having to cope with grubby allegations of scandal involving kickbacks, bribery and corruption in high places. The Secretary-General, Kofi Annan, described last year as an "annus horribilis" for the UN, but the current imbroglio makes the difficulties of 2004 look relatively minor. Right-wing critics of the world body, especially in the US Congress, are having a field day. And there could be worse to come.
Two UN staff members were suspended with pay at the end of last week following the publication of an interim report into allegations of corruption and mismanagement in the $64 billion Oil-for-Food Programme, set up in the mid-1990s to ease the impact of UN sanctions on the ordinary people of Iraq. The former head of the programme, Benon Sevan, and another UN official, Joseph Stephanides, have until February 23rd to respond to the accusations made against them.
The interim report was issued by an Independent Inquiry Committee (IIC) headed by the former chairman of the US Federal Reserve Board, Paul Volcker.
According to the IIC report, Sevan repeatedly lobbied the Saddam Hussein regime for allocations of oil for a small Swiss-based oil company, African Middle East Petroleum (AMEP), headed by a cousin of former UN Secretary-General Boutros Boutros-Ghali, and by so doing "created a grave and continuing conflict of interest". The report did not rule on whether Sevan himself had profited from this but, through his lawyers, he has denied any wrongdoing. The lawyers said the 40-year UN veteran from Cyprus was being scapegoated because of "massive political pressure", that he "never took a penny" and that the programme had saved tens of thousands of Iraqis "from death by disease and starvation". Sevan, who had been due to retire, will receive a token salary of one dollar a year for the duration of the inquiry.
Although Volcker did not say that Sevan received improper payments or "kickbacks", the report expressed concern at $160,000 (€124,000) in cash which Sevan claimed to have received from his aunt in Cyprus. The report questioned this "unexplained wealth", noting that the aunt, who died recently, was a retired government photographer who lived on a modest pension.
The findings about Stephanides, which are considered far less serious, concern his involvement in the competitive process to secure the Oil-for-Food Programme contracts, which was "prejudiced and pre-empted" so that the lowest eligible bidder was rejected.
When he receives the responses of Sevan and Stephanides, who also denies any wrongdoing, the secretary-general will decide what action to take, according to a UN spokeswoman. His options, if the complaints are upheld, consist of a range of disciplinary measures, including summary dismissal. But Sevan and Stephanides are each entitled to two appeals, and the process could take months.
There is an added dimension for the secretary-general in all this, because his own son, Kojo, had links with a company monitoring the oil-for-food contracts. As many as 10 investigators from the inquiry team are reportedly scrutinising the Secretary-General's e-mail and phone records, to determine whether he exerted influence in securing a contract for a Swiss company that employed his son; Cotecna Inspection SA was hired to monitor arrangements for humanitarian supplies which were imported by Iraq under the Oil-for-Food Programme. The UN chief, who denies any wrongdoing, is also reported to have been interviewed at least three times by the inquiry team.
Kojo Annan (31), worked for Cotecna from 1996 to 1998, leaving around the time the company received the UN contract. He has denied any involvement in its oil-for-food dealings. It has emerged that he received an annual payment of $30,000 (€23,300) for five years after he left, as compensation for agreeing not to work for other companies.
Speaking after the release of the interim Volcker report and the suspension of Sevan and Stephanides, Kofi Annan said: "I think we acted on the report as soon as it came out. And this is not the end. It's the beginning. And we will act on the other reports, other tranches of the report, as they come out." When Volcker has finished his inquiry into the conduct of UN officials, he is expected to investigate the role of Security Council members in the whole affair. In addition to the Volcker inquiry, there are several other investigations taking place under the auspices of the US Congress, and some Republicans are pressing for an audit of the entire organisation.
Under the programme, Saddam Hussein's regime could sell oil, provided the proceeds went primarily to buy humanitarian goods and compensate victims of the 1991 Gulf War. The regime decided on the goods it wanted, who provided them, and who could buy Iraqi oil. A Security Council committee overseeing sanctions had the responsibility of monitoring the contracts. In an attempt to win international political support, the regime allegedly gave former government officials, political campaigners, journalists and UN personnel vouchers for oil that could be sold on at a profit.
The Volcker report concludes that former UN Secretary-General Boutros Boutros-Ghali arbitrarily, and it appears unfairly, chose the French bank BNP (Banque National de Paris) to serve as administrator of the programme's escrow account, where the oil money was lodged. The report suggests that one reason why BNP was chosen over Credit Suisse for an escrow account was US objections to Swiss banking secrecy. It said the choice of Lloyd's Register to vet goods imports was "tainted" by a UN official tipping off a British diplomat about how much the British company needed to reduce its bid to win the contract. Eventually, Lloyd's was replaced on the contract by the Swiss company Cotecna which had employed Kojo Annan.
The Volcker inquiry's interim report runs to 246 pages. The staff of the inquiry consists of at least 75, including accountants, lawyers and former police officers. They have conducted 400 interviews in 25 countries. The interviewees include 150 current and former UN employees.
The inquiry has set up an office in Baghdad and has interviewed members of the present and former Iraqi administrations. It has electronically scanned more than five million pages of UN documentation for evidence, and has been given access to the computers and e-mails of scores of UN staff, without restriction. Telephone and financial records from numerous member-states and financial institutions around the world have been made available.
Sceptics say that the initial findings by the Volcker team are less than earth-shattering. In truth, all hinges on the next stage, which is the probe into the alleged activities of Kojo Annan. The results of that are due to appear by early summer. Until then, the enemies of the UN will be praying for bad news, while its supporters hope the storm will blow over so that the real issues can come to the fore once again.
Deaglán de Bréadún is the Foreign Affairs Correspondent of The Irish Times
Oil for Food: key events
August 2nd, 1990 Iraq invades Kuwait
August 6th, 1990 UN Security Council imposes sanctions on Iraq
April 14th, 1995 Security Council creates Oil-for-Food Programme to reduce hardship caused by sanctions; Iraq refuses its terms
May 20th, 1996 Iraq accepts programme after getting the right to pick its trade partners
October 1997 Office of the Iraq programme established to run the oil-for-food operation, with UN official Benon Sevan as its chief
March 20th, 2003 Bombing marks start of US-led invasion of Iraq
November 2003 Oil-for-Food Programme terminated