Boutros Boutros-Ghali, a former secretary general of the United Nations, on Thursday night emerged as a key figure in the independent inquiry into corruption in the Iraqi oil-for-food programme.
Mr Boutros-Ghali is being questioned over his choice of Banque Nationale de Paris to hold the oil-for-food escrow account, Paul Volcker, the head of the UN-appointed inquiry, revealed.
Mr Volcker, a former head of the US Federal Reserve, said on UK television on Thursday night that the role of Mr Boutros-Ghali would be “very central” to the inquiry.
Mr Boutros-Ghali's name also emerged in connection with Iraqi oil contracts pursued by Benon Sevan, the UN official in charge of the oil-for-food programme, on behalf of African Middle East Petroleum, a Swiss-based company run by Fakhry Abdelnour, Mr Boutros-Ghali's cousin.
The oil-for-food programme, designed to alleviate shortages in Iraq created by sanctions, came into force in late-1996, shortly before the end of Mr Boutros-Ghali's tenure at the UN.
Mr Boutros-Ghali could not be reached for comment on Thursday night. The UN said he had made himself available for interview whenever asked and had indicated he would continue to be available.
Mr Sevan, along with another UN official, was on Thursday night facing disciplinary action after he was accused in the Volcker report of using his position to solicit and receive oil allocations for a trading company. Mr Sevan said he “never took a penny” and had been made a “scapegoat”. ” Read full statement
According to the inquiry committee's preliminary report, there was “convincing and uncontested” evidence that the choice of BNP and other companies to monitor the programme “did not conform to established financial and competitive bidding rules”.
In the case of BNP, Mr Boutros-Ghali in May 1996 confidentially met the French ambassador to advise him of the names of three French banks that Iraq would accept. BNP had not been included on a long UN list and did not meet UN Treasury criteria, but was put on the shortlist in June. “Ultimately, the selection fell to secretary general Boutros-Ghali,” the report said. The picture is further complicated by the committee's finding that a man called Fred Nadler acted as a go-between for Mr Sevan and Mr Abdelnour. Mr Nadler's sister, Leia, is Mr Boutros-Ghali's wife.
Of particular significance to the investigators is an exchange on November 17 2000, after the Geneva office of AMEP received an unexpected demand from Iraq's state oil marketing organisation for a “surcharge” of 50 cents a barrel. The report says that at 5.06 local time, Mr Nadler made a call to Mr Abdelnour. Immediately afterwards, Mr Nadler called Mr Sevan. He called again half an hour later; very shortly after that, Mr Nadler called Mr Abdelnour again.
“It looks like, at the time of a crisis, Mr Abdelnour and Mr Sevan used Mr Nadler as a conduit for their communication,” an investigator told the Financial Times on Thursday night.
