UN vows to discipline officials in oil-for-food probe

The UN has vowed to discipline two officials implicated in a report that detailed conflicts of interest and flawed management in the UN oil-for-food programme, while the man leading the investigation warned that more revelations were forthcoming.

The interim report zeroed in on the chief of the oil-for-food programme, Benon Sevan, saying Saddam Hussein’s regime awarded oil allocations in his name to a trading company between 1998 and 2001.

It said Sevan had “seriously undermined the integrity of the United Nations” and suggested he may have received kickbacks, possibly using an aunt to mask his trail. Sevan has denied he ever received any money.

“Obviously there were some hard knocks in the report and we are concerned about it and that’s why we intend to take action promptly,” UN Secretary-General Kofi Annan said today as he arrived at work in New York. “We do not want this shadow to hang over the UN”

Based on the report, Annan will discipline Sevan and another UN official, Joseph Stephanides, who may have ”tainted” bidding for an oil-for-food contract, said Mark Malloch Brown, Annan’s chief of staff.

The €46bn oil-for-food programme, which ran from December 1996 to November 2003, allowed sanctions-bound Iraq to sell oil to buy humanitarian supplies.

But it allegedly became a way for Saddam to curry favour and push to end sanctions – by awarding former government officials, activists, UN officials and journalists vouchers for Iraqi oil that could then be resold at a profit.

Allegations the UN itself was enmeshed in corrupt practices in the programme led Annan to appoint former Federal Reserve Chairman Paul Volcker to investigate. Several US congressional teams are also looking into it.

Volcker said the investigation found no “systematic mismanagement” of the oil-for-food programme.

But he said there were serious problems.

He said his report, which also detailed investigations into UN administrative expenses, internal audits and procurement, will begin to answer serious questions raised by critics of the United Nations.

“There are obviously problems in the institution, and we have identified some of them,” he said. “But the end of this should be a reformed and stronger UN.”

Additional wrongdoing could be exposed when Volcker’s commission releases a final report by midyear.

Investigators are still looking into the actions of the UN Security Council, which authorised and monitored the oil-for-food programme, as well as the performance of UN contractors and the activities of UN agencies in the field in Iraq.