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Oil-for-food chief resigns over scandal

The former chief of the Iraq oil-for-food program resigned just a day before investigators release a report that is expected to accuse him of taking kickbacks under the US$64 billion humanitarian operation.

Benon Sevan announced his decision on Sunday in a scathing letter that lambasted UN Secretary-General Kofi Annan, the UN Security Council, the UN's critics, and the Independent Inquiry Committee investigating the allegations of corruption against him.

"As I predicted, a high-profile investigative body invested with absolute power would feel compelled to target someone and that someone turned out to be me," Sevan wrote in the letter. "The charges are false, and you, who have known me for all these years, should know that they are false."

The resignation is largely symbolic because the UN was paying Sevan just US$1 a year to keep him on payroll so he would cooperate with the committee. But it removes his diplomatic immunity and could leave him open to prosecution.

Sevan, a Cypriot citizen, is also being investigated by the Manhattan District Attorney's office.

Last Thursday, Sevan's lawyer Eric Lewis said the committee would find in its upcoming report that Sevan got kickbacks for steering contracts under oil-for-food to a small trading company called African Middle East Petroleum Co Ltd Inc (AMEP). Lewis said it would also accuse Sevan of failing to cooperate with the investigation.

The amount of money Sevan allegedly took wasn't immediately known -- and may be as little as US$160,000.

In a February report, the committee, led by former US Federal Reserve chairman Paul Volcker, concluded that Sevan solicited oil allocations on behalf of AMEP between 1998 and 2001. It accused him of a "grave conflict of interest."

That report questioned US$160,000 in cash which Sevan said he received from his aunt in Cyprus between 1999 and 2003. The report called the money "unexplained wealth" and noted that the aunt, who has passed away, was a retired photographer living on a modest pension.

The oil-for-food program was launched in December 1996 to help ordinary Iraqis cope with UN sanctions imposed after former Iraqi president Saddam Hussein's 1990 invasion of Kuwait. Saddam's regime could sell oil, provided the proceeds went to buy humanitarian goods or pay war reparations. His 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.

Saddam allegedly sought to curry favor by giving former government officials, activists, journalists and UN officials vouchers for Iraqi oil that could then be resold at a profit.

In his letter, Sevan lashed out at Annan and said the oil-for-food program was far better run than the Development Fund for Iraq (DFI), the US, British and later Iraqi-run operation which replaced it. Auditors have said billions of dollars in DFI money has been mismanaged and contracts were awarded without competitive bidding.

"The real Oil-for-Food `scandal' is in the distortion and misrepresentation of the accomplishments and the record of the program by now well-established UN bashers," Sevan said.

US critics, particularly Republicans in the US Congress, have frequently cited oil-for-food as emblematic of perceived UN bungling and outright corruption. Some have called for Annan to resign.

The UN has fired one staffer over findings made by Volcker's team. Joseph Stephanides was dismissed over accusations that he illegally altered the competitive bidding process for a company to inspect humanitarian goods.
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