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UN in oil-for-food scandal

21/04/2004 13:23 - (SA)

Washington - At least three senior UN officials may have looted millions of dollars from the aid programme that oversaw Saddam Hussein's oil sales in Iraq, ABC news reported on Tuesday, citing US and European intelligence sources.

Documents from Saddam's oil ministry linked the programme's director, Benon Sevan , to a payoff scheme that allowed about 270 foreign officials to deal in Iraqi oil at dramatically reduced prices, ABC news said.

A letter to former Iraqi oil minister Amer Mohammed Rasheed - which UN officials have not yet seen - said that Sevan indicated which company should handle his own oil deal, valued at up to $3.5m.

"It's almost like having coupons of bonds or shares. You can sell those coupons to other people who are normal oil traders," said Claude Hankes-Drielsma , a British adviser to the Iraq

Governing Council.

Sevan has denied the accusations, which came a day before the UN Security Council is set to give its backing for an investigation into alleged fraud and corruption in the programme led by former US Federal Reserve chairman Paul Volcker .

Sevan has been on vacation in Australia since the scandal broke.

"Tomorrow we will officially announce the independent inquiry into the oil-for-food programme. An important aspect of the panel's work is to thoroughly investigate allegations against any UN officials," UN spokesperson Stephane Dujarric said in response to the ABC report.

UN officials said they did not know the identities of the other two officials mentioned in the report. They were not named by ABC.

The United Nations has been struggling to contain a mounting scandal over the now defunct oil-for-food programme, which comes at a sensitive time as the world body prepares to take on a central role in Iraq 's political future.

Humanitarian effort

What started out in 1996 as a humanitarian effort to help ease the effects of international sanctions on ordinary Iraqis evolved into a complex bureaucracy that oversaw $100bn in trade contracts.

Saddam's regime was put under sanctions after invading Kuwait in 1990, and the programme allowed Baghdad to sell oil to buy food and other essential humanitarian supplies.

But by the time oil-for-food was closed last year after Saddam's ouster, an alleged system of kickbacks, fraud and inflated cost figures had developed that critics say allowed officials and friends of the regime to profit. US officials told ABC the lost money could amount to $5bn.
In January, Iraq 's Al-Mada newspaper published a list of hundreds of individuals alleged to have been involved, including Sevan. The allegations have since intensified under the probing of western journalists.

The list included the names of more than 270 people, political organisations and religious figures from more than 40 countries - including Britain , Canada , France , Russia , the United States and several Arab countries - whom it said received free crude oil.