U.N. rebukes oil-for-food chief's conduct

NEW YORK -- A sweeping investigation of the U.N. oil-for-food program accused program chief Benon Sevan of a conflict of interest, saying Thursday his conduct in soliciting oil deals was "ethically improper and seriously undermined the integrity of the United Nations."\nAlthough Sevan said he never recommended any oil companies, the investigation led by former U.S. Federal Reserve Chairman Paul Volcker concluded that he repeatedly solicited allocations of oil from Iraq under the program and "created a grave and continuing conflict of interest."\nVolcker also said there was "convincing and uncontested evidence" that the selection of the three U.N. contractors for the oil-for-food program -- Banque Nationale de Paris, Saybolt Eastern Hemisphere BV and Lloyd's Register Inspection Limited -- did not conform to the established financial and competitive bidding rules.\nSevan denied any wrongdoing, the report said, but it added that evidence from Iraqi officials contradicted those denials. However, a summary of the report's findings did not accuse Sevan of any criminal actions.\nVolcker's committee said it investigated allegations that Sevan, while executive director of the oil-for-food program, requested oil allocations from the Iraqi government on behalf of the African Middle East Petroleum Co. Ltd. Inc., a Swiss-based oil trading company known as AMEP.\nThe committee concluded that Sevan solicited and received several million barrels of allocations on behalf of AMEP in 1998-2001. Those allocations generated $1.5 million in revenues, the report said.\nThose solicitations "presented a grave and continuing conflict of interest, were ethically improper, and seriously undermined the integrity of the United Nations," the report said.\nThe report said Sevan "was not forthcoming to the committee when he denied approaching Iraqi officials and requesting oil allocations on behalf of AMEP."\nIn a separate investigation by U.S. arms inspector Charles Duelfer, allegations surfaced that Sevan may have personally profited by receiving vouchers to sell Iraqi oil. According to the Duelfer report -- which got its information from the former Iraqi oil ministry -- Sevan allegedly received vouchers for 7.3 million barrels of oil through various companies and representatives that he recommended to Iraqi ministries.\nThe financial take would have been in the range of $700,000 to $2 million, depending on oil prices.\nThe oil-for-food program, launched in December 1996 to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait, quickly became a lifeline for 90 percent of the population.\nUnder the program, Saddam's regime could sell oil, provided the proceeds went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War. Saddam's government decided on the goods it wanted, who should provide them and who could buy Iraqi oil. But the Security Council committee overseeing sanctions monitored the contracts.\nThe program ended in November 2003, after the U.S.-led war that toppled Saddam. Allegations of corruption first surfaced in late 2000, with accusations that the Iraqi leader was putting surcharges on oil sales and pocketing the money.\nThe report by Volcker's committee said the budgeting, accounting, auditing and administration of the program was relatively disciplined, although there were isolated violations.