Report Alleges Oil-For-Food Bribes

Investigators probing claims of wrongdoing in the Iraq oil-for-food program accused its former chief, Benon Sevan, of corruption for taking illegal kickbacks and recommended his immunity be lifted for prosecution.

The investigators also accused a former U.N. procurement official, Alexander Yakovlev, of collecting nearly $1 million in kickbacks outside the oil-for-food program.

Later Monday, U.N. Secretary-General Kofi Annan agreed to lift Yakovlev's immunity after receiving a request from the U.S. Attorney's Office, Annan's Chief of Staff Mark Malloch Brown said.

The U.S. Attorney's Office later said Yakovlev pleaded guilty to charges of conspiracy, wire fraud and money laundering and could face up to 20 years in prison for each charge, the office said in a statement.

The third report by the Independent Inquiry Committee, led by former U.S. Federal Reserve Chairman Paul Volcker, was a new blow to the scandal-tainted program worth $64 billion. For the first time, it gave a motive for Sevan's actions, saying his finances were "precarious" shortly before his alleged misdeeds.

"Our conclusions are obviously significant and troubling," Volcker said at a news conference.

Some critics have accused the United Nations of squandering millions — and even billions — of dollars in its mismanagement of the program. Yet Volcker's team found that Sevan appeared to have gotten kickbacks of just $147,184 from December 1998 to January 2002.

The report touched briefly on Annan and his son, Kojo. It said new e-mails suggesting Annan knew more than he said about his son's involvement in the program "clearly raises further questions" that would be answered in its final report, expected in September.

Yakovlev resigned earlier this year and Sevan announced his resignation on Sunday. He criticized investigators, Annan, the U.N. Security Council and the U.N. critics who have cited oil-for-food as emblematic of perceived U.N. bungling and outright corruption.

"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. "The charges are false, and you, who have known me for all these years, should know that they are false."

"The hardest-hitting part of the report is that it recommends to the secretary-general that he waive the immunity of the two U.N. officials in order for law enforcement agencies to pursue criminal investigations," said CBS News Foreign Affairs Analyst Pamela Falk. "And that sets a precedent that may have vast implications."

"The web will only get wider once criminal convictions begin at the United Nations," said Falk, "guilty pleas usually imply some cooperation and we can expect those involved to begin to name additional names."

Sevan, a Cypriot citizen believed to be in Nicosia, is being investigated by the Manhattan District Attorney's office. There is no known criminal probe against Yakovlev so far.

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, was one of the largest humanitarian programs in history. By most accounts, it achieved what it set out to do, becoming 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 allegedly sought to curry favor by giving former government officials, activists, journalists and others vouchers for Iraqi oil that could then be resold at a profit.

The program has become the subject of several Congressional investigations, as well as probes by a federal grand jury and the Securities and Exchange Commission.

On Thursday, Sevan's lawyer Eric Lewis had revealed that the committee would find conclude that Sevan got kickbacks for steering contracts under oil-for-food to a small trading company called African Middle East Petroleum Co. Ltd. Inc.

The report largely confirmed that, but went further. It described how he and his wife had repeatedly overdrawn their bank accounts before Sevan first sought to steer oil allocations to AMEP.

It found that two men helped Sevan: Fred Nadler, an AMEP director and brother-in-law of former U.N. Secretary-General Boutros Boutros-Ghali; and Fakhry Abdelnour, the president of AMEP.

Volcker's team recommended that the United Nations assist in their possible prosecution as well.

As for Yakovlev, investigators also found that he secretly tried to bribe a company called Societe Generale de Surveillance S.A., which was seeking an oil inspection contract under oil-for-food.

They said Yakovlev passed secret bidding information along to a friend in France, Yves Pintore, who then approached SGS to check if it would "work with" him and "influential people in the UN in New York."

Volcker's team found no evidence that the company agreed to the bribe. However, it noted that Pintore essentially agreed to its characterization of his involvement.

The committee found "persuasive evidence" that Yakovlev took kickbacks outside oil-for-food from other companies that had won some US$79 million in U.N. contracts.

It said it had found that some $1.3 million had been wired to a bank account in Antigua, West Indies in the name of Moxyco Ltd. Of that, more than $950,000 had been traced to those companies so far.