Oil-for-Food Official May Have Blocked Inquiries
Head of U.N. Program in Iraq Accused of Improperly Accepting Purchasing
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.
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
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
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.
Representatives from about half a dozen other companies that traded with Iraq
informed U.N. officials that Iraq was forcing them to pay illegal commissions
into a secret bank account for the purchase of food, medicine and humanitarian
goods, according to two U.N. officials who worked for Sevan. "The chatter was
that the regime was asking suppliers to agree to sign contracts with a
percentage going to another account," one of the officials said.
Sevan was reluctant to embark on an anti-corruption effort because it would
complicate his relations with Iraq, whose cooperation was essential to the
program's success, several U.N. officials believed. He was also loath to
antagonize key Security Council members, particularly Russia, which routinely
opposed efforts to reform a multibillion-dollar program that served its
political and economic interests.
"He used to say, 'I have to sail between Scylla and Charybdis,' " a senior U.N.
official said, referring to the two sea monsters in Greek mythology who
tormented Odysseus and his crew.
Several U.N. officials, echoing Sevan's view, said they could not investigate
crimes committed in their programs without far more resources and a specific
mandate from the Security Council. Only in rare cases in which irrefutable
evidence of abuses existed would they formally present the council with an
allegation of corruption.
In one case frequently cited by U.N. officials as evidence of their commitment
to fighting corruption, Sevan told the council's sanctions committee in October
2001 that the Greek captain of the oil tanker Essex admitted conspiring with
Iraq to smuggle $10 million worth of crude oil. Sevan's briefing was arranged
after Capt. Chiladakis Theofanis provided a written account of the scheme to
both the United States and the United Nations. "If we got something which was so
clear as the Essex case, we had no choice" but to bring it to the sanctions
committee's attention, said Michel Tellings, one of three U.N. officials who
oversaw Iraqi oil sales. But "we did not feel we had a mandate to go and
Although Sevan declined to pursue allegations of corruption, he took some action
to address the problem, ordering a study of Iraqi imports to determine whether
the costs were inflated. The report, which has not been released, was
"inconclusive," according to the official who served under Sevan. In September
2003, a Pentagon study of 759 contracts valued at $6.9 billion showed "potential
overpricing" by as much as $656 million.
Sevan also instructed U.N. customs experts to review individual contracts to
determine whether the prices were "abnormally high" -- a move that was aimed at
flagging possible wrongdoing to the council, several U.N. officials said.
Over the next 18 months, U.N. officials presented the sanctions committee with
70 contracts that were potentially overpriced, Mortimer said. But "nobody placed
a single contract on hold," he said -- including the United States and Britain,
Baghdad's toughest critics on the Security Council. He said Sevan's office "did
its job by doing some investigation and informing the committee of its doubts."
U.S. and U.N. officials acknowledge that by allowing Hussein's government to
negotiate contracts directly with thousands of foreign companies, the Security
Council provided wide scope for abuses in the program. The council's
decision-making process, which requires consensus among all its 15 members, made
it difficult to impose anti-corruption reforms, U.S. and U.N. officials said.
"Any plan that would have denied the authority of the Iraqi government to select
its own purchasers of Iraqi oil and suppliers of humanitarian products would
have been rejected by a number of key Security Council member states," Kennedy