Washington Post

November 17, 2004

U.N. Prober Blocks Senate Request For Testimony

Investigator Will Not Strip Oil-for-Food Officials' Immunity; Audits, Confidential Documents to Be Released

By Colum Lynch and Justin Blum, Washington Post Staff Writers

UNITED NATIONS, Nov. 16 -- A U.N.-appointed investigator probing corruption in Iraq's oil-for-food program has rejected a request by a Senate committee to strip U.N. officials of their immunity so they can testify before Congress. The U.N. official agreed to release, at a time of his choosing, internal audits of the program and other confidential documents sought by Congress.

Paul A. Volcker, the former chairman of the Federal Reserve Bank, wrote in a letter to Sens. Norm Coleman (R-Minn.) and Carl M. Levin (D-Mich.) that asking U.N. officials to forgo diplomatic immunity and go before Congress "would plainly risk ending prospects of their cooperation with" his investigation.

Coleman, the chairman of the permanent subcommittee on investigations of the Governmental Affairs Committee, and Levin, the subcommittee's ranking Democrat, wrote to U.N. Secretary General Kofi Annan on Nov. 9 to ask that he reconsider barring release of more than 55 internal audits of the program and allow U.N. officials to testify to Congress. They criticized Annan for "hindering" their efforts to obtain documents from Lloyd's Registry Inspection Ltd., a British company that inspected goods imported into Iraq through the U.N. program.

Annan's spokesman, Fred Eckhard, said the U.N. chief intends to respond to Coleman and Levin but feels "bound to respect Volcker's position." Coleman was unavailable to comment Tuesday night, a spokesman said. Levin declined to comment through a spokeswoman.

The U.N. oil-for-food program was established in December 1996 to allow Iraq to sell oil and buy food, medicine and other humanitarian goods to ease the strain of economic sanctions.

Iraqi leader Saddam Hussein allegedly skimmed billions of dollars in illegal kickbacks and payoffs through the $64 billion program, triggering investigations by the United Nations, federal prosecutors and Congress. Charles A. Duelfer, a senior adviser to the CIA, alleged in a report last month that the program's director, Benon Sevan, received vouchers to purchase millions of barrels of Iraqi oil at a favorable rate. Sevan has denied any wrongdoing.

In defining his disclosure policy, Volcker said that all reports on malfeasance or mismanagement would be accompanied by "evidence bearing on those findings." He said, "We anticipate these disclosures will include the documentary evidence explicitly mentioned in the Senate letter, certainly including the internal and external audit reports." But he provided no timetable for releasing the documents.

Volcker said he plans to release his first interim report in January on "allegations of bribery and undue influence" in the United Nations' hiring of banks and inspection companies to monitor trade with Iraq. He said he aims to complete a "definitive report" on the United Nations' management of the program "by the middle of next year."

Volcker defended the U.N. decision to withhold documents, saying it had to balance the benefits of "transparency and disclosure" with its "need to maintain confidentiality in its internal deliberations." He pledged to respond to "specific requests" for cooperation.

Rep. Henry J. Hyde (R-Ill.), chairman of International Relations Committee, said in a statement that a French bank, BNP Paribas, that handled program funds may have failed to follow U.S. regulations. "Evidence seems to indicate that in some cases, payments in the oil-for-food program were made by BNP at times with a lack of full proof of delivery for goods and other necessary documents," Hyde said.

The bank's Washington-based attorney, Robert S. Bennett, disputed Hyde's allegations and said the bank followed federal regulations.

Investigators for Hyde's committee said Hussein manipulated the oil-for-food program to generate kickbacks that he may have used to pay as much as $25,000 each to families of Palestinian suicide bombers in Israel.

The committee, which will hold a hearing Wednesday on the program, is investigating how much money was involved, officials said.

Washington Times

November 17, 2004

U.N. Deserted Leads In Oil-For-Food Investigation

By Bill Gertz, The Washington Times

A private intelligence firm hired by the United Nations to look into corruption in the oil-for-food program provided valuable leads to U.N. investigators, but they were ignored, the company's director says.

"We found it extremely frustrating to be in a position where we could do something significant to dramatically assist the investigation into the oil-for-food fraud and not be allowed to proceed," said Derek Baldwin, director of operations for IBIS Risk Management Services Inc.

Meanwhile, a U.N. panel investigating the humanitarian program yesterday refused to release documents to two U.S. senators, who last week accused U.N. Secretary-General Kofi Annan in a letter of blocking their subcommittee's probe into the matter.

In his reply to the letter sent by Sens. Norm Coleman, Minnesota Republican, and Carl Levin, Michigan Democrat, obtained by Agence France-Presse, U.N. panel chief Paul Volcker pledged to release "all evidence" bearing on its reports and findings but insisted that now was not the time to do so.

Mr. Baldwin said Mr. Volcker's panel, the Independent Inquiry Committee (IIC), tasked his company in June to use its intelligence sources in the Middle East and Europe to assist the probe of the $64 billion program.

In a report produced for the IIC, the company uncovered new information and people with knowledge about the oil-for-food activities in Iraq, Cyprus, Jordan, Kuwait, Iran, Dubai, Egypt, Switzerland and France. U.N. investigators asked IBIS to reveal its sources for the data and then said they wanted to limit the scope of the company's work to Jordan, Kuwait and Cyprus, Mr. Baldwin said.

"We don't reveal our sources and methods," he said, noting that the company has had agents in Iraq since the early 1990s, including former Iraqi intelligence and oil ministry officials.

Three of the company's sources were killed recently in terrorist violence, he said.

Mr. Baldwin said new information related to the U.N. oil-for-food program uncovered by the company includes:

•A network of Iranians who were involved in smuggling oil under the U.N. program.

•Connections between the U.N. program and a French organized crime figure who U.S. officials said was a conduit for oil-for-food-related payments to French President Jacques Chirac.

•Information on the Swiss-based company Cotecna, which was involved in border inspections of oil-for-food goods. Cotecna at one point during the oil-for-food program hired Mr. Annan's son as a consultant.

•Data on the activities of an Egyptian oil broker who took part in illegal activities related to the oil-for-food program.

"As an experienced investigator, it became clear to me that the U.N. is failing to act on the leads and intel streams developed by us in specific areas where we were asked to develop leads and intel streams," said Mr. Baldwin, a fraud investigator and former intelligence official. "That is inexplicable."

A spokesman for the IIC did not return telephone calls seeking comment on Mr. Baldwin's statements.

Mr. Baldwin said he could only guess why the U.N. investigation panel did not pursue the leads. He said it was either the result of incompetence or because the U.N. wants to ignore information that could pose problems for the world body.

He said his company pulled out of its agreement to work with the U.N. panel after the IIC kept asking the company to reveal its sources.

"They kept telling us they were going to hire us. We had some very, very good sources and directions to go in, and they just kept stalling," Mr. Baldwin said. "It's the strangest investigation we've ever been involved in, and we withdrew in order to preserve our own credibility with our own sources and our people."

He said it was clear from his experience that the IIC is not aggressively pursuing the investigation of corruption in the humanitarian program.