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Last Updated: Thursday, 3 February, 2005, 23:06 GMT
UN oil-for-food head criticised
Benon Sevan
The report said Benon Sevan's conduct was "ethically improper"
A report into the UN oil-for-food operation in Saddam Hussein's Iraq has sharply criticised the programme's chief official.

Benon Sevan repeatedly asked Iraqis to allocate oil to a particular company, inquiry head Paul Volcker revealed in the initial findings by his panel.

Mr Sevan denies any wrongdoing and said he was being made a scapegoat.

The defunct scheme let Iraq sell oil to buy food and medicine to ease the effects of international sanctions.

It ran from 1996 to 2003.

Among the complaints about the controversial programme are claims that Saddam Hussein might have diverted part of the money for his own uses.

'Conflict of interest'

Mr Volcker was appointed last April by UN Secretary General Kofi Annan to investigate the allegations of corruption. His final report is expected in June.

A clear lapse from disciplined judgment has been found
Paul Volcker

The interim report by the independent team said Mr Sevan had "seriously undermined the integrity of the United Nations" by asking for allocations of oil on behalf of the African Middle East Petroleum Company.

Iraqi officials had agreed in a bid to secure Mr Sevan's support on issues such as funding to rebuild Iraq's oil installations, the report said.

Mr Sevan's conduct was "ethically improper", Mr Volcker told reporters in New York.

Iraqi oil pipeline
The scheme was supposed to ease the burden of sanctions on Iraqis

He "created a grave and continuing conflict of interest", the former US Federal Reserve chairman added.

Correspondents describe Mr Sevan as a veteran UN employee who has served in many of the world's trouble spots.

The Cypriot joined the organisation in 1965 and served in a variety of posts before his appointment as Executive Director of the Iraq Programme in 1997. He has now retired.

Mr Annan said in a statement following the report that he had already initiated disciplinary action against Mr Sevan.


Mr Volcker was also critical of the way in which contracts were awarded under the operation.

The panel said there was "convincing and uncontested evidence" that the selection process for three UN contractors chosen in 1996 broke financial competitive and bidding rules. The three companies were Banque Nationale de Paris, Saybolt Eastern Hemisphere BV, and Lloyd's Register Inspection Limited.

Mr Volcker criticised as inadequate the funding of the audit process for the scheme - judgements he revealed hours earlier in a US newspaper.

Writing in the Wall Street Journal, he described the scheme as "tainted", but said the UN administration of the programme appeared to be "free of systematic or widespread abuse".

Separate inquiries are under way in the US Senate and by the Iraqi interim government.

An additional report on the secretary general and his son will be published later.

Mr Annan's son, Kojo, worked for a firm involved in the programme.


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