Acting on Oil-for-Food report, Annan takes disciplinary action, further management steps

Acting on Oil-for-Food report, Annan takes disciplinary action, further management steps

Malloch Brown briefs journalists
Reaffirming his pledge to act resolutely on any findings of staff misconduct in connection with the United Nations Oil-for-Food programme for Iraq, Secretary-General Kofi Annan today announced that he had initiated disciplinary proceedings against officials involved in the operation and was taking broader management measures in response to the release earlier in the day of a report by an independent panel looking into the management of the now-defunct relief effort.

Reaffirming his pledge to act resolutely on any findings of staff misconduct in connection with the United Nations Oil-for-Food programme for Iraq, Secretary-General Kofi Annan today announced that he had initiated disciplinary proceedings against officials involved in the operation and was taking broader management measures in response to the release earlier in the day of a report by an independent panel looking into the management of the now-defunct relief effort.

"I made clear from the outset that no one found to have broken any laws would be shielded from prosecution. I stand by that pledge," the Secretary-General said in a statement released within hours after Paul Volcker, the head of by the Independent Inquiry Committee (IIC) and former US Federal Reserve Board Chairman, presented Mr. Annan with the panel's interim report. The Secretary-General immediately forwarded the 240-page document to the Security Council.

"Should any findings of the Inquiry give rise to criminal charges, the United Nations will cooperate with national law enforcement authorities pursuing those charges, and in the interests of justice I will waive the diplomatic immunity of the staff member concerned," Mr. Annan said in the statement, which was read to the press by his Chief of Staff, Mark Malloch Brown.

Disciplinary proceedings have begun against Benon Sevan, the former head the Office of the Iraq Programme, according to the statement, which cited "extremely troubling evidence of wrongdoing."

The panel's report concluded that Mr. Sevan's actions "presented a grave and continuing conflict of interest" and that his conduct "was ethically improper, and seriously undermined the integrity of the United Nations."

Mr. Sevan, although retired from active duty, has, until now, been kept on staff at a token salary to ensure his availability to the Inquiry.

In addition, action will be taken against Joseph Stephanides, who was also named in the report and remains on active duty.

In his statement, the Secretary-General said the findings in the report "make especially uncomfortable reading for all of us who love this Organization and have done our best to serve it over the years."

Commenting on other aspects of the interim findings, the Secretary-General's statement said the initial procurement process for companies to carry out banking and inspection services for the UN "fell far short of the standards of fairness, objectivity and transparency required by the Charter and by United Nations rules, and that the management controls and systems set up for the programme were, in many cases, inadequate to the task."

He said that measures have already been taken to remedy some of these defects while promising that other steps would be announced soon.

Mr. Annan also called the report "a significant step forward, since it clearly demonstrates their determination to get to the bottom of all the allegations, and to identify deficiencies in the mechanisms that we used to administer the programme."

On questions directly relating to the Secretary-General, the statement noted the IIC's intention to publish a further interim report dealing with the procurement of a contractor that employed his son Kojo. "I hope that report will come soon, and I await its findings with a clear conscience," Mr. Annan said.

Responding to questions at a press conference, Mr. Malloch Brown acknowledged that "we're dealing with critical and vital breakdowns in the management of the UN - breakdowns by individual staff and broader management breakdowns."

At the same time, he noted, "they are a subset of a much bigger story."

The Chief of Staff voiced hope that Mr. Volcker's ongoing investigation would provide context on the issue, and pointed out that oil smuggling was the major source of illegal revenue for the former Iraq regime. "Oil smuggling outside the control of the UN but very much in the open sight of members of the Security Council," he said.

This point was first raised earlier Thursday by Mr. Volcker at a press conference held just blocks away from the UN. "There was certainly violation of sanctions, and I say 'what is called smuggling' because much of it went under protocols, trade protocols between Iraq and Jordan, and Iraq and Turkey, that were known to the Security Council, that were at least in one instance noted by the Security Council," he said.

Mr. Malloch Brown said the report showed that the UN's procurement system "was overridden by political considerations," noting that the rules, as they existed in 1996 when the first procurement contracts were awarded, had been bypassed or improperly applied.

In 1999, he said, the UN began undertaking "major procurement reforms" including requiring a written record of any decision to accept a bidder that was not the lowest and who was responsible for that decision.

"We'll need to take a look again to make sure that the rules that we now have in place are sufficient to prevent any future abuse of the procurement system," he said.

On the UN auditing process – which the report described as inadequate – Mr. Malloch Brown noted that the Office of Internal Oversight Services (OIOS) "has been almost the only part of the UN secretariat to enjoy budget increases" in recent years.

"But again it's quite clear in the light of this report that those changes are not enough and that we'll have to look again at what we can do to strengthen the external independence of audit, to strengthen the assurance that it will have the resources it needs to do the task," he added.

Mr. Volcker told reporters at his press briefing that so far there was no evidence that administrative monies were misspent. "I emphasize, we have not found systematic misuse of funds dedicated to the administration of the Oil-for-Food programme.

"It was, in fact, careful budgeting, not all the funds budgeted were spent, and the accounting trail is adequate," he added.

The IIC has acknowledged that "few institutions have freely subjected themselves to the intensity of scrutiny entailed in the Committee's work."

Mr. Malloch Brown welcomed these comments. "This is a much bigger story than the UN, and we wish frankly, that all the actors to this story would show the same openness to investigation that we have shown," he said.

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Video of press conference [44mins]