4 February 2005

Secretary-General Initiates Disciplinary Proceedings against Officials Named in Oil-for-Food Inquiry, Pledges Cooperation with any Criminal Proceedings

NEW YORK, 3 February (UN Headquarters) -- Following is Secretary-General Kofi Annan’s statement on the interim report of the Independent Inquiry Committee issued today:

As chief administrative officer of the United Nations Organization, I am responsible and accountable to the Member States for its management.  Last year, in order to fulfil that responsibility, I set up, with the full support of the Security Council, an independent inquiry into the administration and management of the oil-for-food programme, including allegations of fraud and corruption -- so as to get a clear idea of what was wrong, and what remedial actions are needed.  I asked Mr. Paul Volcker, Justice Richard Goldstone and Professor Mark Pieth -- three men of extraordinary distinction in their respective fields of finance, law and criminology, men whose integrity and competence is beyond doubt -- to conduct that inquiry.

Today they have presented, to me and to the public, an interim report, which I have immediately passed on to the Security Council.

Mr. Volcker has said that “the findings do not make for pleasant reading”, and I agree.  Indeed, they make especially uncomfortable reading for all of us who love this Organization and have done our best to serve it over the years -- for two reasons:

First, colleagues alongside whom we have worked face serious accusations.

I made clear when I set up the inquiry that appropriate action, with full regard for due process, would be taken against individuals or entities found to have violated the rules or procedures of the UN.  Accordingly, I have today initiated disciplinary proceedings against Joseph Stephanides, the person named in the report who is still on active duty, and against Benon Sevan, the former head of the Office of the Iraq Programme, against whom the report contains extremely troubling evidence of wrongdoing.  Mr. Sevan has retired from active duties but has, until now, been kept on staff at a token salary to ensure his availability to the Inquiry.

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.  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.

Secondly, while I am very glad to note the finding that United Nations budgeting, accounting, and administration were in general disciplined in maintaining the use of funds for Programme purposes, I must also take note of the findings that the initial procurement process for companies to carry out banking and inspection services 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.

Measures have already been taken to remedy some of these defects.  Other steps will be announced soon.

Meanwhile I wish to thank the members of the Inquiry committee for this report, which I regard as 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.  I note, in particular, their intention to publish a further interim report dealing with questions related to the procurement of a contractor that employed my son.  I hope that report will come soon, and I await its findings with a clear conscience.

Finally, let me also thank the committee for judging the United Nations “against the highest standard of ethical behaviour”, and for their acknowledgement that “few institutions have freely subjected themselves to the intensity of scrutiny entailed in the Committee’s work”.

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