NEW YORK – Paul Volcker (search), the man tapped by the United Nations to lead a probe into the troubled Oil-for-Food program, has potentially too-close-for-comfort ties to companies he's supposed to be investigating, FOX News had learned.
While few, if any, are questioning the integrity of the man heading the Independent Inquiry Committee, there is concern about his personal and professional interests that create an appearance at least of impropriety, which some on Capitol Hill say fits the definition of conflict of interest.
Volcker acted as a paid adviser — and remains an adviser — to a company that is closely linked to Total, the French oil giant that bought $1.75 billion of oil from Iraq under the Oil-for-Food (search) program. Volcker also acted as an adviser to BNP Paribas (search), the French bank that is one of the focal points of the investigation.
"These revelations are troubling ... and it is absolutely imperative that Mr. Volcker ... come forward ... to allay the concerns that arise out of what appears to be a conflict of interest," said Rep. Mike Pence, R-Ind., who sits on the House International Relations Committee. The panel is one of five on Capitol Hill conducting investigations of the program.
Since 1987, Volcker has been a close friend and paid adviser to billionaire Paul Desmarais Sr. (search), who owns the Power Corporation of Canada. Volcker is a member of its International Advisory Council, the company confirmed to FOX News. Members of the council are paid when they meet.
Power Corporation, along with a Belgian partner, Baron Albert Frere, shares control of a holding company called Groupe Bruxelles Lambert (GBL), which in turn is the largest single shareholder of Total.
Total is a multinational energy company with operations in more than 130 countries. According to its Web site, its businesses cover the oil and gas chain — from crude oil and natural gas exploration and production to its transportation — refining, petroleum product marketing, and international crude oil and product trading. It's also a chemicals manufacturer.
Total received $1.75 billion worth of oil from Iraq and was also in discussions with former dictator Saddam Hussein (search) to get contracts to develop a number of oil fields in Iraq if and when the U.N. sanctions were lifted. Those contracts would have been worth billions of dollars more.
Until 2001, Paul Desmarais Sr. was also a director of Total; his son, Paul Desmarais Jr., now has that position.
Power Corporation also has close ties with BNP Paribas, the bank that handled all Oil-for-Food transactions and also the institution that congressional investigators have found did not properly monitor transactions involving Saddam's oil sales. BNP owns a large stake in a Power Corporation subsidiary Pargesa Holdings, as well as in Total.
Meanwhile, Michel Francois Poncet, vice chairman of BNP, also sits on Power Corporation's International Advisory Council alongside Volcker. The council had a membership of 21 people, according to the company's 2003 annual report.
A spokesman for Volcker refused to answer questions about the nature of the former Federal Reserve chairman's involvement with Power Corporation, including how much he has been paid since 1987, but instead issued a statement, which in part, said:
"Apart from the occasional Advisory Council meetings devoted to discussion of international economic developments 7 to 15 years ago, Mr. Volcker has had no stock holding or business relationship with Power Corporation."
The statement also said Power Corporation's Advisory Council has not met since 1997. The Oil-for-Food program was in place from late 1996 until 2003 and was intended as a way to get humanitarian goods to Iraqi citizens through the sale of Iraqi oil.
The latest news came soon after information surfaced regarding Volcker's relationship with the UNA-USA Business Council (search), a powerful group that has been highly vocal in its support for the United Nations since news came out that Iraq's Oil-for-Food program was plagued with mismanagement problems and lack of oversight.
Volcker was on the board of directors of the council until last year and hasn't ruled out going back once he concludes his investigation.
One of the three biggest financial contributors to the UNA-USA Business Council in 2003 was BNP Paribas. Sen. Norm Coleman (search), R-Minn., has served a subpoena on BNP Paribas.
The United Nations defended its choice of Volcker to head up the ICC.
"The secretary general's reason for choosing Mr. Volcker to head the inquiry was that his reputation puts him above such questions," U.N. spokesman Edward Mortimer told FOX News in an e-mail. "He is well known to be an American of unimpeachable patriotism and integrity, and one of the most prominent, distinguished and highly respected public servants in the world. The U.N. has total confidence in his independence and objectivity."
FOX News' Jonathan Hunt, Per Carlson and Liza Porteus contributed to this report.
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