Wednesday, February 16, 2005


UN Oil For Food Troubles

Chairman Coleman urges U.N. to waive immunity to clear way for potential prosecution of Benon Sevan, former Executive Director of the U.N. Office of the Iraq Programme
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Witnesses being sworn in by Chm. Coleman at 2nd PSI Hearing regarding OFF
Witnesses being sworn in by Chm. Coleman at 2nd PSI Hearing regarding OFF
February 15th, 2005 - Washington, DC - In the second hearing by the Senate Permanent Subcommittee on Investigations (PSI) on the United Nations Oil-for-Food Program, Chairman Senator Norm Coleman (R-MN) said new evidence suggests Benon Sevan, former Executive Director of the U.N. Office of the Iraq Program, personally received oil allocations worth $1.2 million and called for the United Nations to waive Sevan’s diplomatic immunity from criminal prosecution immediately. The Oil-for-Food program (OFF) was instigated in 1996 to provide food, medicine and humanitarian goods for the Iraqi people through the controlled sale of Iraqi oil, but ultimately generated an estimated $21.3 billion in illegal revenue for Saddam Hussein through smuggling, kickbacks, and other schemes in contravention of U.N. sanctions regimes.

“I believe that Mr. Sevan’s misconduct goes well beyond a mere conflict of interest – instead, these documents, when combined with the evidence presented in the Volcker report, certainly establish probable cause that Mr. Sevan’s actions rose to the level of criminal liability,” Senator Coleman said in his opening statement. “Accordingly, I call upon Secretary-General Kofi Annan to strip Mr. Sevan of his diplomatic immunity so that a criminal prosecution against him may proceed unfettered.”

Several additional disclosures at today’s hearing, The United Nations Management and Oversight of the Oil-for-Food Program, provided new details of bribery, conflicts of interest and mismanagement on an unprecedented scale at virtually every level of the scandal-plagued U.N. program. PSI investigators uncovered and presented extensive evidence that:

- A U.N. oil inspector, Armando Carlos Oliveira, a Portuguese national working for Saybolt, received a bribe of more than $105,000 to facilitate smuggling of $9 million worth of oil in contravention of U. N. sanctions.

- A clear and unresolved conflict of interest existed at the time that Cotecna Inspection S.A. was awarded a multi-million dollar contract to inspect humanitarian goods under the program, during the time Kojo Annan was employed by Cotecna as a paid consultant. Evidence suggests that Kojo Annan did not restrict his activities only to Nigeria and Ghana as purported by Cotecna. Kojo Annan’s activities in New York during the 1998 U.N. General Assembly have not been sufficiently explained.

- The U. N. Secretary General and the Office of Iraq Program’s oversight of Cotecna Inspection S.A. during the OFF program failed to account for overpricing of humanitarian contracts and kickbacks procured by the Hussein regime. OIP mandated only a limited quality and quantity analysis, which may have facilitated the use and enforcement of kickbacks by the Hussein regime under the program.

- Cotecna was not required to test medicines for quality, and foodstuffs were tested only under a “fitness for human consumption” standard, despite concerns expressed by Cotecna inspectors. OIP defined this to mean “if you eat it and don’t die, it passes the test.” These oversights may have resulted in the procurement of substandard goods and medicine at the expense of the Iraqi people. One Iraqi official told PSI of tainted imported blood that infected 150-180 children with HIV.

- Waste, abuse, and mismanagement by the U.N. in relation to the OFF program amounted to over $690 million based on a PSI analysis of the 58 Office of Internal Oversight Services (OIOS) audit reports released in January, 2005.

“The gross mismanagement of almost every aspect of the Oil-for-Food program is simply inexcusable and wasted over $690 million,” Coleman said. “Every organization has its shortcomings, but I cannot recall any organization where the scope of its problems encompassed every basic management skill needed to ensure an effective program. American taxpayers pay close to 22 percent of the U.N.’s operating costs. They need assurances that their tax dollars are well spent, especially in light of the fact that sanctions will likely be imposed upon rogue nations in the future.”

Witnesses included Robert M. Massey, CEO, Cotecna Inspection S.A., Andre E. Pruniaux, Former Senior Vice President, Cotecna Inspection S.A., John Denson, General Counsel, Saybolt Group, Verne Kulyk, Former Customs Officer, U.N. Office of Iraq Program, Joseph A. Christoff, Government Accountability Office, Stafford Clarry, Former Humanitarian Affairs Advisor, U.N. Oil-for-Food program, The Honorable Patrick F. Kennedy, U.S. Ambassador to the United Nations for Management and Reform..

Coleman reiterated his call for U.N. Secretary General Kofi Annan to take responsibility for the tainted Oil-for-Food program by resigning his post, an essential step in restoring accountability, transparency and credibility to the important world body. The PSI chairman also indicated he expects to hold more hearings on the OFF scandal as new evidence and developments warrant.
Tom Steward

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