Ex-Oil-For-Food Chief Quits U.N.

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

Benon Sevan announced his decision Sunday in a scathing letter that lambasted U.N. Secretary-General Kofi Annan, the U.N. Security Council, the United Nations' 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 U.N. was paying Sevan just $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 believed to be in Nicosia, is also being investigated by the Manhattan District Attorney's office.

CBS News Foreign Affairs Analyst Pamela Falk says the Independent Inquiry Committee, headed by former U.S. Federal Reserve Chairman Paul Volcker, "is beginning to get to the heart of the corruption scandal. Along with the criminal investigations by the Department of Justice and the Manhattan District Attorney's office, the IIC's findings are getting more specific about who gained from Saddam Hussein kickbacks."

On 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. 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 $160,000. In a February report, the committee concluded that Sevan solicited oil allocations on behalf of the company, known as AMEP, between 1998 and 2001. It accused Sevan of a "grave conflict of interest."

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

The 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 country's population of 26 million.

Under the program, Saddam's regime could sell oil, provided the proceeds went to buy humanitarian goods or pay war reparations. 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.

Saddam allegedly sought to curry favor by giving former government officials, activists, journalists and U.N. 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, the U.S., British, and later Iraqi-run operation that replaced it after the fall of Saddam's regime in 2003. 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 U.N. bashers," Sevan wrote.

U.S. critics, particularly Republicans in the U.S. Senate and House of Representatives, have frequently cited oil-for-food as emblematic of perceived U.N. bungling and outright corruption. Some have called for Annan to resign.

The United Nations 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.