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DIPLOMATIC LICENSE
Volcker Reveals Report on Sevan
Aired February 4, 2005 - 21:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This is a painful episode, I think, for everybody in the life of the United Nations.
UNIDENTIFIED MALE: This is a very big story of which the United Nations is one small, sad part.
KOFI ANNAN, U.N. SECY.-GEN.: Let me wait and see and study the report when I -- do I look worried?
(END VIDEO CLIP)
RICHARD ROTH, CNN ANCHOR: You will all want to watch this program to see if your name is issued in the Oil For Food report issued this week.
Welcome to DIPLOMATIC LICENSE. I'm Richard Roth.
The way things are going, I'm worried my name is going to turn up.
He lowered interest rates, he got the low-down on Swiss banks and the Holocaust, and now this man, Paul Volcker, is slowly lowering the boom it seems, as they say, on the U.N. image of integrity.
Volcker appeared at a packed press conference in New York and revealed critical conclusions on the former director of the Oil For Food program.
(BEGIN VIDEO CLIP)
PAUL VOLCKER, U.N. INVESTIGATOR: Mr. Sevan placed himself in a grave an continuing conflict of interest situation that violated explicit U.N. rules and violated the standards of integrity essential to a high-level international civil servant.
(END VIDEO CLIP)
ROTH: Sevan is Benon Sevan, who says he never took a penny and is being used by Volcker as a scapegoat because of massive political pressure.
Sevan's boss, Secretary-General Kofi Annan, sounded a bit like the French police inspector in the movie "Casablanca."
(BEGIN VIDEO CLIP)
ANNAN: I think I'm not the only one who was shocked by what we read in the report. I mean, he's been here working with many of us for quite a time, and we had not expected anything of this sort.
(END VIDEO CLIP)
ROTH: There was so much focus on Sevan on this interim Volcker report that U.N. officials and their former colleagues breathed easier believing that widespread scandal was not discovered as yet.
(BEGIN VIDEO CLIP)
JOHN RUGGIE, FMR. U.N. ADVISOR: My sense is that this was probably not a good day for U.N. haters and for U.N. bashers, because we're getting the story back to the basic facts of the matter rather than the wild speculations and accusations that have driven the story in the news media over the last two months.
(END VIDEO CLIP)
ROTH: Nevertheless, the report said Benon Sevan solicited contracts for a friend's company that turned into $1.5 million profit for the firm. Sevan says that is not true.
The report says Sevan received $160,000 in cash payments, which he told investigators came from his late aunt in Cyprus. The report wonders if she was that wealth.
The former U.N. Secretary-General Boutros Boutros-Ghali, the report says, bowed to political influence in giving the French bank BMP-Paribas, the contract to handle Oil For Food money.
Boutros-Ghali told Volcker's people he had a lot more important matters than Oil For Food to worry about. The report said the procurement process for selecting contractors in 1996 was tainted.
Overall, the money that was handled in the $64 billion program was not abused, concluded Volcker. Still, the focus remained on the Cypriot Benon Sevan, a 40-year U.N. civil servant.
I asked Volcker if Sevan was corrupt.
(BEGIN VIDEOTAPE)
VOLCKER: Well, corrupt is a strong word. We don't know why he did it and we don't know whether he got any money out of it. The investigation is continuing, but he certainly put himself in a position where he was conflicted.
ROTH: You say you don't know if he got any money out of it, but your report details how he would have profited to the tune of about $1,500,000.
VOLCKER: No, no, no. I think that is an exaggeration. The report says -- I guess $1.5 million -- how shall I describe it -- gross profits for the company that actually lifted the oil, to use a technical term. But there would be expenses involved there, and there is no reason to think that -- offhand, I would not think there is any reason to believe that Mr. Benon Sevan got all that money.
ROTH: But your report also details that he received $160,000 in cash payments. Can you explain those?
VOLCKER: Well, he explains them as payments by his elderly aunt in Cyprus, who would visit him occasionally and brought cash with her when she came.
ROTH: But as mystery writers would say, that aunt is now conveniently dead.
VOLCKER: Well, the aunt has died, I understand, yes, conveniently or otherwise. I don't attribute -- we have no evidence of wrongdoing in that connection.
ROTH: According to your report then, Mr. Sevan was negotiating for his own gain while he was in Iraq for the United Nations? Would can you explain about that?
VOLCKER: I cannot say that.
ROTH: But he was meeting with ministers over in Iraq while soliciting bids for barrels of oil, though, yes, for himself?
VOLCKER: It appears that way.
ROTH: Why can't you say -- let's call a barrel a barrel, so to speak?
VOLCKER: Well, it's just a question of what the motivation was. And we can't -- we don't have evidence.
ROTH: He wasn't getting it for UNICEF.
VOLCKER: I don't know if he was getting money at all. That's the subject of the investigation.
ROTH: But you don't want to call it a bribe, that he was down on pieces of paper and phone call records, computer access, that he was receiving money through this African.
VOLCKER: I cannot say he was receiving money when I don't know that. If we discover that, we'll let you know.
ROTH: So should Mr. Sevan be worried?
VOLCKER: Well, I -- yes. I mean, he's obviously worried and angry and he denies it. Let's say he seems to deny the bulk of it. He can't deny everything, but he denies the implications that you are drawing, certainly.
ROTH: On Boutros Boutros-Ghali, your examining his role in how a bank was selected.
VOLCKER: Yes, we did that.
ROTH: Can you explain that -- where the money involving Oil For Food was housed and what might have been wrong under U.N. standards?
VOLCKER: Well, that is correct. We do examine that, and we reach a definite conclusion, which Mr. Boutros-Ghali does not contest.
He puts it somewhat differently. He chose in the last analysis a French bank in that position for political reasons. I think the record is quite clear on that.
ROTH: What about Kojo Annan -- it's going to be in follow-up reports. What kind of cooperation are you getting from the son of the secretary- general?
VOLCKER: We have interviewed him more than once. I think we're going to have to do it again.
ROTH: Without giving away what you can't give away, I mean, was he a cooperative witness, when you interviewed the secretary-general.
VOLCKER: Oh, the secretary-general is certainly a cooperative witness, yes.
ROTH: No problems with questions about his own son?
VOLCKER: No. I'm sure it's a painful subject for him.
ROTH: What do you think when people in Congress, analysts, television anchormen say this is the world's biggest scandal and it was the U.N. Oil For Food part of it, not discussing other aspects? Are they right or are they over-blowing it?
VOLCKER: Well, I think there is a lot of let me say politely say confusion, because the biggest volume of illicit money going to the regime was from the so-called smuggling that kind of took place alongside the Oil For Food program. But not always alongside, because it began before the Oil For Food program took place. But it took place alongside the Oil For Food program for several years.
And as I said, that was known, Whether the volumes were known, whether the amount was know, is another story.
ROTH: You said Security Council members were aware. I mean, and that's been widely reported. Are they going to get a pass on this, the countries, and Kofi Annan and the management will be.
VOLCKER: We are at a small corner of this investigation. We will -- it certainly comes within the scope of our questions.
ROTH: Should a taxpayer feel, when they hear billion dollar scandal, what was their cost? Was there any?
VOLCKER: Well, there was, I don't think any cost to the American taxpayer from the smuggling, which was big volume. Certainly an indirect cost.
I think the real cost of this program was suspicion, concern, that has arisen around the United Nations that impairs the effectiveness of that organization.
ROTH: And what is the.
VOLCKER: I don't think it's primarily a monetary problem, as important as the monetary problem may be. From what we're investigating, investigating the United Nations, it's a question of confidence in that important institution.
(END VIDEOTAPE)
ROTH: Paul Volcker, who plans a major report on Oil For Food in the summertime.
In very un-U.N. like reaction time, the organization swiftly responded to this first version, saying disciplinary action was being reviewed on Sevan, but as Annan's chief of staff Mark Malloch Brown noted, there are other, more powerful options.
(BEGIN VIDEO CLIP)
MARK MALLOCH BROWN, U.N. CHIEF OF STAFF: The real sanction is the commitment by the secretary-general that he will waive diplomatic immunity so that individuals face the full force of the law and the punishment of the courts.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: ABC took mine, I swear. I wouldn't lie to you.
UNIDENTIFIED FEMALE: Hold on, just a minute, just a minute. Sir, I promise you, we'll get more. There are hundreds, hundreds. Everyone gets one.
(END VIDEO CLIP)
ROTH: Get them while they're hot. Reporters scramble for their copy of the Volcker Oil For Food report. Only one copy per company. That wasn't nice.
Joining us, one of those eager reporters, Maggie Farley of the "Los Angeles Times." She usually has such good sources, she knows the story before the handout. And from London, Carne Ross, former British diplomat who sat in on many of the Oil For Food committee meetings of the Security Council. He directed Iraq policy for Britain at the United Nations and he now leads a diplomatic consultancy firm called Independent Diplomat. He's making a return appearance, but now has even more to say, hopefully, after reading the report.
Maggie, overall, quick assessment, Volcker report, going to put the fire out at the United Nations or just say there's a lot of legs left to this story?
MAGGIE FARLEY, "LOS ANGELES TIMES": Oh, it's really lit the fire up again.
It put to rest doubts about Benon Sevan and whether or not he was involved in taking oil from Iraqis. It said a lot about the former Secretary-General Boutros Boutros-Ghali and has mean a lot for the current Secretary-General Kofi Annan.
ROTH: Was it too tough on Boutros-Ghali in that it tried to say, well, he should have known, while Boutros-Ghali is saying, you know, there were a lot of other things to worry about and one of his former aides, Mr. Garicon (ph), said everything was political at the United Nations, he had to do things a certain way, even when it came to choosing which bank.
FARLEY: Yes. Boutros-Ghali himself chose the bank, or actually let Iraq choose the French bank, and one that wasn't even on their short list.
Even more interesting, his brother-in-law was the middleman between Benon Sevan, the official who ran the program, and a fellow who ran the oil company that Benon Sevan asked the Iraqis to give oil to.
So there is a whole very interesting web that was exposed on Thursday in the Volcker report.
ROTH: Yes, time flies.
Carne Ross, look, you were there in the meetings. You said on our show, of course, that people knew what was going on. First off, was Benon Sevan an honest man?
CARNE ROSS, INDEPENDENT DIPLOMAT: Well, I have to say, these revelations come as quite a surprise to me. We thought he was a decent operator. It's worth remembering that the whole atmosphere of the program was deeply politicized. Every decision was really controversial. We thought he was doing a pretty good job doing the splits between a divided Council and the Iraqis, but time has told a different story.
ROTH: Was Benon Sevan trying to steer the Council or those who worried about corruption, steer them away from audits or steer them away from any of these stories Volcker brought up?
FARLEY: That's not clear.
ROSS: No, he didn't. I don't recall him ever, ever trying to do that in the Council or in the 661 Committee. If we were blocked in doing anything in investigating corruption or smuggling, it was the French and the Russians who blocked us, not Benon.
ROTH: Maggie, Secretary-General Annan and his son, it's time to stay tuned, says Paul Volcker. Do you think there's going to be something really on the son, who denies any allegations that he said it's a witch hunt or the father who says he's got a clear conscience and said, as we heard at the top of the show, he's not worried.
FARLEY: Yes, that's interesting. It seems to be a change in attitude on Kofi Annan's part. He seems much more relaxed about it, but.
ROTH: Well, now maybe because Sevan has been thrown over the side, he thinks maybe they've got a body to chew on for months.
FARLEY: But there have been reports of his son being involved with helping procure an oil contract for the former Saudi oil minister. That contract actually fell through, so I don't know whether you actually count it as involvement or not.
ROTH: And, really, Carne, throughout this, Volcker keeps saying there is no proof yet that Benon Sevan took money. Is it possible it's going to be one of these well, that's how business was done for corporations in the Middle East. That's how it is. You scratch my back, I'll help you here. That he was just trying to help the people of Iraq under sanctions.
ROSS: It's possible. It's possible. I mean, I think we owe it to Benon Sevan that one is innocent until proven guilty, and he's not actually proven guilty by these reports and the Volcker inquiry.
It's also worth bearing in mind that the Volcker inquiry so far -- and it is an interim report -- has only said, well, Volcker has made very clear there was no systematic misuse of funds, so the claim made by some in Washington, that the United Nations somehow connived at getting corruption and getting illegal funds to Saddam, this is not proven at this point.
ROTH: And, of course, critics of the United Nations say this shows that the whole place needs reforming, cleaning up.
Maggie, the United Nations is talking a good game about reform, discipline of Sevan and others, but this is sort of impossible, isn't it, when the countries run the show?
FARLEY: Well, this is a key question for Kofi Annan, because he's positioned himself as the leader of reform. He's really embraced it. But in Congress, they're saying that the whole place needs to be cleaned up and Kofi is part of the problem.
His whole future depends on whether he can portray himself as part of the solution.
ROTH: Maggie, what do you think of the Paul Volcker news conference? He had trouble hearing all these international journalists. He told me later he was surprised there was so much press there. I mean, how is this possible? He knows it's a huge story.
FARLEY: There were about 200 journalists in the room, and he couldn't hear many questions, and I don't know whether his auditory problems were a mask for something else, just a tricky means of evasion, but in particular, he had trouble hearing women's voices. They're like dog whistles to him.
ROTH: Oh, all men have that problem.
FARLEY: Not you, Richard.
ROTH: Carne Ross, they're talking about reform at the United Nations and Mark Malloch Brown, Annan's chief aide, saying managers will have to be more accountable. They could be more independent. If you were a diplomat still in the Council, are you really going to accept that, if a U.N. program manager said, listen, I'm going to the press, I don't like the way you're silencing this inquiry on this country.
ROSS: I think it's unlikely. It's in the nature of the United Nations that things are sort of done quietly, because there is a culture there of not wanting to offend the member states. I frankly am a little bit skeptical of all this talk about management reform. The Oil For Food program is over and done with. It's finished. It was a rather unusual case, and it doesn't kind of exist anymore.
I think the question is still very open as to whether the United Nations can reform itself in terms of personnel management, auditing, all these things that I think are very essential.
ROTH: Carne, you did Iraq policy. What about Joseph Stephanides, a viewer of this show but also named in the report by Volcker. He was the chief of the U.N. sanctions branch in '96. Did he, as the report alleged, make a call so that a United Kingdom bank could get the contract for Lloyds on good imported into Iraq and try to get a lower bid, as he says?
ROSS: Well, I'm happy to say I wasn't at the mission at the time, so I don't know if that's actually true, but there does appear to be some documentary evidence to that effect in the Volcker report that does like pretty bad for Joseph Stephanides.
I also have to say, I mean, I don't think this mitigates against the conflicts that the report talks about, but this was the way the program operated. Every single question was controversial. There was a kind of division of the spoils.
The French got the bank account where the money was kept. We got Lloyds register. I remember in a 661 Committee meeting, us questioning BNP's role in having the Oil For Food funds and the French saying you take BNP, we'll attack Lloyds. You know, it was that kind of atmosphere in the program, and it does seem a little bit harsh that Joseph Stephanides has been singled out in this way.
I think we do need to see the broader political context.
ROTH: OK.
FARLEY: But he doesn't seem to think that he's done anything wrong. He didn't get any money in his pocket. He was just trying to make sure that everything was spread out in a fair way. That's what he says.
ROTH: And people close to him say he did nothing wrong.
Both of you, please stay there, if you can.
There was also another Iraq story this week, remember, elections? The U.N. Elections Chief Carina Perelli, who advised the Iraqis on how to put this thing together, will not soon forget.
(BEGIN VIDEO CLIP)
CARINA PERELLI, U.N. ELECTIONS CHIEF: I have participated in many elections in my life. I usually say that the day that you lose your ability to be moved by people going to vote, you should change careers. This was probably one of the most moving elections I have ever seen and I think it is a message for all of us that beyond our discussions, beyond our diagnoses, beyond our expertise, normal people have something to say about their decisions.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
SENATOR SAM BROWNBACK (R) KANSAS: We cannot wait any longer for credible action in Darfur. The time is now for the Secretary-General Kofi Annan to lead or leave.
(END VIDEO CLIP)
ROTH: Another senator who wants Kofi Annan to resign, but not because of Oil For Food, but leadership on Sudan.
Well-traveled Kansas Republican Senator Sam Brownback there.
Maggie, this week the United Nations Commission of Inquiry on Sudan delivered a long-awaited report -- yes, another big report. This one on whether genocide was committed in Darfur. The answer: no. But it was not exactly "Pleasantville" there as government forces and militias attacked rebels and civilians.
Does the report mean the United Nations wakes up?
FARLEY: The report came as close as they could to saying it was genocide without actually saying it. They said it was massive violations of international human rights and some individuals may have acted with genocidal intent.
ROTH: Well, Carne, what do you think? What is your take on Sudan and the fact that the Security Council a year-and-a-half, two years, has done nothing?
ROSS: Well, it's kind of a landmark moment for the Security Council. Here is a report saying there's been crimes against humanity. What is the Council going to do about it.
My hope is that the Council will respond by referring this to the International Criminal Court, as has been recommended, but the signs are that the United States will probably block this because of their well-known objections to that court.
ROTH: Maggie, Sudan players come to the United Nations this coming week.
FARLEY: The First Vice President Taha, the Second Vice President -- who used to be his enemy and is now his co-vice president -- John Garang, are coming to the United Nations. They have an entourage of 46 people, so it's going to be a real Taha brouhaha.
ROTH: Well, that's good. Yes.
FARLEY: But I think it's another step of stalling.
You know, Kofi Annan has 61 names of government leaders and militia leaders in a sealed envelope in a safe in his office and some of those leaders are worried that they're going to be implicated, they're going to be sent to trial. So why should they cooperate.
ROTH: And Carne, there's a dispute on where people charged with crimes in Darfur should be sent, criminal court, international court, in the Hague -- the United States doesn't want it -- or a special Africa panel. Which way should they go, briefly?
ROSS: Well, I don't think these other options are particularly viable. There is no change of really expanding the International Tribunal for Rwanda, which is already over-burned, and .
(CROSSTALK)
FARLEY: Well, they actually said that they could do it.
ROSS: . and a new tribunal, I don't think, could be funded.
ROTH: Maggie.
ROSS: Well, I'm not sure I believe that, frankly.
FARLEY: Well, the.
ROSS: I mean, I think they've got to go to the International Criminal Court. It exists. That's what it is there for. It is there for crimes against humanity. Let's use it.
FARLEY: Exactly. Well, it's a good opportunity for the ICC, that's what it's designed for. But the United States is arguing send it to the ICTR, the tribunal in Rwanda, because it's already setup, the infrastructure is there. In 2006 they're going to have investigators free because their job will be done in Rwanda.
ROSS: I don't think these arguments are plausible, I'm afraid, Maggie. I think the ICTR has got a pretty patchy record in terms of actually delivering justice.
The ICC is this Rolls Royce system that the international community has agreed. It's waiting there for suspects to be sent, and this is a kind of real test case. It's the first time that it's been recommended that a situation be referred by the Security Council. It's now time for the Security Council to act and make that referral. Let's see it.
FARLEY: Although if the United States drags its heels hard enough, then it may get its way. Especially if Britain caves in. And we're getting signals that they may do that.
ROTH: All right. Got to be the president of this council and stop the debate. On the left, Carne Ross, former British diplomat in charge of Iraq policy. Sounds like he wants policy on Sudan to be made. And now it's -- what is it -- Independent Diplomat? Or Diplomatic Independence? Try not to steal the title of our show.
ROSS: Independent Diplomat.
ROTH: He's in charge of that -- thank you.
And on the right, Maggie Farley, "Los Angeles Times" correspondent at the United Nations. Thank you.
And that is DIPLOMATIC LICENSE for this week. Thanks for watching. The Patriots will win the Super Bowl. Watch CNN for the latest on the big game and breaking news throughout your deserved weekend.
I'm Richard Roth, in New York.
END
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