The UN Headquarters, New York City, August 9, 2005

Written following the release Monday, August 8, 2005, of the third report of the Independent Inquiry into the UN Iraq Oil-for-Food program; the press conference by the Investigating Committee; and the press conference held by the UN Department of Public Information.

The report, released at noon in a commercial Hotel, following its presentation at 10:30 am before the UN Secretary General, dealt basically only with the former head of the program, the Cypriot Mr. Bennon V. Sevan who has made about $150,000 by taking bribes (December 1998 - January 2002).

One of his contacts was Mr. Fakhry Abdelnour, who controls the African Middle East Petroleum Company (AMEP) - an Egyptian Company - a cousin of former UN Secretary General Boutros Boutros-Ghali. Also, the man in-between messrs. Sevan and Abdelnour was Mr. Efraim “Fred” Nadler of Egypt and Geneva and New York, who is the brother in law of Mr. Boutros-Ghali. Further names mentioned were two brothers and the mother of Mr. Nadler - only the sister who is Mr. Boutros-Ghali’s wife was not mentioned. AMEP made in profits US$ 1.5 million in the quoted deal. Mr. Nadler accepted his payments from AMEP via a Geneva firm he established - Caisor Services - that seemingly had no other purpose. Caisor Ltd. received $600.000 out of the $1.5 million gains of AMEP; it is not known how Mr. Sevan and Mr. Nadler divided that money, but out of these funds came the close to $150.000 that Mr. Sevan and his wife deposited in New York banks in cash. Mrs Sevan was also a UN employee. Their joint earnings amounted to $200.000 per year.

Mr. Aleksander V. Yakovlev, a UN procurement officer 1993 - 2005, a Russian, who tried unsuccessfully, in June 1996, to obtain from the French Societe Generale de Surveillance a bribe by providing information in the case that eventually allowed Cotecna, the Swiss inspection company, that employed the son of the SG, to win the contract for supervising O-f-F; Mr. Yakovlev was also mentioned though he had no direct involvement with any of the other cases reviewed by the O-f-F program. He had established a front company - Moxyco Ltd. to “facilitate the illicit and secret payments to him by foreign companies”. In his case the UN cooperated in the investigation. It is alleged that from these other extortions, unrelated to O-f-F, he deposited $1.3 millions, in his name, in an Antigua bank, in this unrelated fraud that involved UN contracts for over US$ 79 million. The Volcker Committee recommended that both these UN employees - Mr. Sevan and Mr. Yakovlev - have their diplomatic immunity removed by the SG and be made available to the US Attorney for the Southern District of New York for eventual trial in a US court. The UN Secretary General, Mr. Kofi Annan, acted immediately and Mr. Yacovlev was taken into custody the same day. Thus the first person to be indicted is actually not accused of profiting from the O-f-F program, though he may have tried, but of fraud in the UN procurement office in general.

Also interesting, Mr.Yakovlev, who was earlier this year dismissed from the UN, was not dismissed because of his dealings but because of his finding a job for his son with a company that did business with the UN.

The case of Mr. Sevan is more complicated, because after having stated that the SG appoints him as a $1/year fellow, so he is left with the G4 visa that allows him to stay in the US, he will be available for the investigation. Nevertheless, he did not participate fully in the investigation and went to Cyprus. As from among the European states, only the UK and the Netherlands have extradition agreements with the US, it is to be expected that he will never show up for a trial in a US court and his being allowed to leave left behind a serious cloud on UN credibility in this matter. He was well connected and worked, directly, within the Administration of two UN Secretary Generals and the reporters were eager to know why he was let to escape.

The Volcker Committee had something to say about new material that surfaced in its investigation of the question when did the present SG find out that the company his son was involved with was one of the bidders in the Oil-for-Fod program. Next report - to be released in September - just at the time of the extraordinary High Level Summit planned for the UN, will be the “definitive report” and will touch the questions about the only two African UN Secretary Generals, both having their families, and members of their entourage, involved in the scandal. this fourth report will also list the 4500 private contractors that did business with the O-f-F program, many of them having participated in some kickback scheme. The report will also include findings on entities that established front companies involved in the program. Mr. Richard Goldstone, a prominent lawyer who was the prosecutor in the Yugoslav war crimes trials, now one of the three members of the Volcker Committee, said that many contracts had been accompanied by side letters containing evidence of kickbacks.

At the Investigative Committee’s press conference the journalists were eager to hear more and wondered if the amounts mentioned as siphoned from this program were not pittance when the actual program involved US$ 65 billion and the expected funds siphoned off by Mr. Saddam Hussein amount to over $1.7 billion. Mr. Volcker said yes - but when the alleged culprit was the head of the program, every amount is incriminating. Today, “the day after”, the Wall Street Journal editorial had the title - OIL FOR FRAUD.

In our mind, the press conference held at 2pm with Mr. Mark Malloch Brown, the secretary general’s chief of staff, produced much more important insights.

First, in the language of the UN-DPI Press Release Mr. Malloch Brown is summarized: “We brought the case of Mr. Yakovlev to the attention of the District Attorney for the Southern District more than a month ago, and have already been sharing information we have collected with this office.” Then - “there remained a real need for serious, deep-rooted management reform of our organization, and that does not seem to be yet full ACCEPTED BY ALL MEMBER STATES. Maybe Mr. Volcker can give us what’s needed to lift this issue above politics, to say that this UN that we all believe in badly needs the strengthening of its management system and his report will be an eloquent demonstration and might help to KEY UP THE SUMMIT.”

In fact we have a much higher opinion of Mr. Malloch Brown, the former head of UNDP, then above wording may suggest. We did not have the impression that he was comfortable with his new assignment - the front person in what seems more a chastised board. In effect, under relentless questioning from the press - he was much more forthcoming and visually quite frustrated.

Mr. Malloch Brown actually pinned the problem on the governments of the 191 member states that have interfered with the oversight process. He mentioned the number and he even invited, as the only way out, the establishing of an office of independent internal oversight in each operational area in order to avoid the interference from these 191 governments. If these statements get him fired - not only will he be missed, but actually he would leave with his integrity intact.

Upon questioning, Mr. Malloch Brown said that the ongoing Volcker investigation has cost US$ 35 million from the O-f-F funds - really money taken from the Iraqi people. But he also insisted that 99% of the money that was diverted from the program via kickbacks, waste, favoritism - you name it - was not looked into by the Volcker reports released so far. That money went to Saddam Hussein and his cohorts - in effect the program was so structured that it had to happen - as well as to the consultants, the corporations, the banks. All this latter group was backed by their governments - just let us think of the French Bank that had a monopoly on finances, the US and Russian companies that were mentioned when the case broke, so many third world countries with their share of the pie… a real United Nations of evil. Is there any chance that this body could pick up in full light the shards of a broken organization?

The real upshot from this story is that the High-Level-Summit this September has been broken and nothing but useless statements can be expected on the important issues of human rights, climate change, the global environment, sustainable development, education for the poor, making life in Africa possible for those that are not part of the official loop…and yes, terrorism and the insane posturing when this body gives equal weight to what some call sovereign states and cultural base. And this is a pity when we face indeed a globalization in every conceivable human activity superimposed on the truth that the globe is one.

The delegates coming to New York this September - better be prepared to start the UN Reformation process - because the time for reforming has passed. THIS IS THE REAL TRUTH ABOUT THE UN.