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Oil-for-food probe names two suspects

Report alleges bribery, corruption by officials

Paul Volcker announces the latest findings of the probe into corruption in the oil-for-food program.


United Nations
Benon V. Sevan
Paul Volcker

UNITED NATIONS (CNN) -- A wide-ranging United Nations investigation into oil-for-food program abuses was published Monday, naming the group's head and one of his senior officers as having accepted or solicited bribes.

Within hours, ex-procurement officer Alexander Yakovlev was in a U.S. federal court pleading guilty to a raft of charges -- his diplomatic immunity having been withdrawn. (Full story)

Yakovlev resigned from the United Nations in June amid further allegations that he helped get his son a job with a firm doing business with the world body.

The oil-for-food program's former chief, Benon Sevan -- accused in the report of receiving more than $147,000 in kickbacks -- was believed to be in Cyprus. The program, which ran from 1996 to 2003, enabled Iraq to sell oil in return for humanitarian goods such as food, medicine and supplies.

Sevan made no comment Monday but on Sunday details of his resignation letter to Secretary-General Kofi Annan were released in which he insisted he was innocent and accused Annan and the world body of making him a scapegoat. (Full story)

Paul Volcker, the head of the U.N.'s Independent Inquiry Committee, announced Monday that the probe found that Yakovlev solicited a bribe from a French company that bid unsuccessfully on an oil-for-food contract.

The report found no evidence the company paid the desired bribe -- but it found that more than $1.3 million had been wired to a bank account Yakovlev controlled on the Caribbean island of Antigua since 2000.

"More than $950,000 of these payments came from various companies or persons affiliated with such companies that collectively won more than $79 million in United Nations contracts and purchase orders," the report found.

There was no apparent connection between those payments and the oil-for-food program, however.

Volcker's panel also said that the former head of the oil-for-food program, Sevan, allegedly received more than $147,000 in kickbacks from oil sold under the program.

The panel's report concluded that Sevan "corruptly derived substantial financial benefits" from a company that purchased Iraqi oil under the program.

The money was used to shore up Sevan's "precarious" personal finances from 1998 to 2002, the report concluded.

In his resignation letter, Sevan called his management of the program "transparent" and denied any wrongdoing.

But Volcker said investigators had "reasonably sufficient evidence" for their findings.

"In these cases, we clearly believe that standard has been met, and our conclusions are obviously significant and troubling," said Volcker, the former chief of the U.S. Federal Reserve Bank.

The committee concluded the money was funneled to Sevan through an oil-for-food contractor, African Middle East Petroleum.

One of the company's partners, Fred Nadler, made a series of cash withdrawals during the period in question from a Swiss bank account, and there was "a high degree of correlation" between those withdrawals and deposits of $100 bills made days later in accounts held by Sevan and his wife in New York, the report concluded.

The withdrawals were made in amounts of less than $10,000 -- meaning the transactions would not have to be reported to authorities.

The committee found Sevan's explanation for the deposits -- that he received the money from his late aunt -- "not credible."

"There was no relationship between the timing of those deposits and when his aunt was in New York," Volcker said.

Sevan was executive director of the oil-for-food program from 1997 until 2003, when the program disbanded after the U.S.-led invasion of Iraq. He was suspended in February after an interim report by Volcker's committee concluded he had benefited improperly from his position.

Monday's report ties up "two important loose ends in our inquiry," Volcker said, "But they are by no means the end of this investigation."

Sevan's lawyer, Eric Lewis, told CNN his client is in Cyprus and has "lost confidence" that he would be treated fairly by the Volcker probe or by Annan.

In his three-page resignation letter to Annan, Sevan said he was being hung out to dry by the world body, "but sacrificing me for political expediency will never appease our critics or help you or the organization."

"As I predicted, a high-profile legislative body invested with absolute power would feel compelled to target someone, and that someone has turned out to be me," he wrote. "These charges are false, and you, who have known me all these years, should know that they are false."

Volcker said Sevan has turned down previous requests to meet with investigators, and he rejected Sevan's call to be allowed to answer questions from the committee in writing.

CNN's Phil Hirschkorn and Liz Neisloss contributed to this report.

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